Role of CSR in Pakistan Telecom Industry

BRM-Research Paper

Business Research Methods (BRM)

Final project of: Research Paper

Role of Corporate Social

Responsibility in
Pakistan Telecom Industry

Submitted by:

Roma Afridi
Amna Mahmood
Madiha Riaz
Shahbaz Ali

Submitted to:
Sir Gulfam Khalid

Date:
DECEMBER, 2008

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Role of CSR in Pakistan Telecom Industry
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Abstract:
Companies are expanding their boundaries from the country of their
origin to the evolving markets in developing countries which have been
referred as emerging markets. With the increase of competition in the
emerging markets, companies introduce new tools in order to compete
and being stable in the dynamic environment. CSR (Corporate social
responsibility) is one of them.
Organizations are emphasizing more on CSR applications in order to
have better workforce that will contribute to achieve their competitive
advantage as well as their long term goals.

Introduction:

The business environment has undergone vast changes in recent years

in terms of both the nature of competition and the wave of
globalization that has been sweeping across markets. Companies are
expanding their boundaries from the country of their origin to the
evolving markets in developing countries which have been referred as
emerging markets. In the last few years, there has been a sea change
in relationship between the companies, the state and the society. The
evolution of relationship between companies and society has been one
of the slow transformations from a philanthropic coexistence to one
where the mutual interest of all stake holders is gaining paramount
importance.

The increase in competition among the multinational companies to

gain mover advantage in various developing countries by establishing
goodwill relationships between both the state and the civil society is
ample testimony to the transformation. The state with its duty of
protecting the interest of general public would naturally be inclined to
give preference to companies which take care of the interest of all the
stake holders. Last but not the least firms all over the world are
beginning to grasp the importance of intangible assets, be it brand
name or employee morale. Only firms that have gained goodwill of the
general public and are ideal corporate citizens will be to develop these
intangible assets into strategic advantages, to achieve organizational
goals and objective efficiently and effectively. An examination of these
factors have led to the development of the concept of corporate social
responsibility (CSR) would be ideal starting ground for the
development of firm in the competitive markets.

Research objectives:

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The general objectives of the purposed study is to identify how CSR is

being understood and implemented in company business strategies
within the telecommunication industry.

Corporate Social Responsibility (CSR):

Corporate social responsibility (CSR, also called corporate

responsibility, corporate citizenship, responsible business and
corporate social opportunity) is a concept whereby organizations
consider the interests of society by taking responsibility for the impact
of their activities on customers, suppliers, employees, shareholders,
communities and other stakeholders, as well as the environment. This
obligation is seen to extend beyond the statutory obligation to comply
with legislation and sees organizations voluntarily taking further steps
to improve the quality of life for employees and their families as well
as for the local community and society at large.

The practice of CSR is subject to much debate and criticism.

Proponents argue that there is a strong business case for CSR, in that
corporations benefit in multiple ways by operating with a perspective
broader and longer than their own immediate, short-term profits.
Critics argue that CSR distracts from the fundamental economic role of
businesses; others argue that it is nothing more than superficial
window-dressing; still others argue that it is an attempt to preempt the
role of governments as a watchdog over powerful multinational
corporations.

Corporate Social responsibility has become an effective strategy to

involve firms, large, medium and small, to achieve sustainable
development. A large number of firms are currently engaged in
delivering social and economic benefits to local communities across
the globe. The manifestation of this trend in Pakistan is also visible.
Several multinationals (PKP, SHELL, UNILEVER) and local firms (the
carpet industry, the sporting goods industry, the surgical industry) are
partnering with government agencies, NGOs and UN agencies to
further the social and economic goals. In particular, the firms are
improving labor standards, protecting bio-diversity, and providing
education and health facilities to numerous local communities in
Pakistan.

Presentation questions:

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The aims of survey were to provide answer of several questions:

• Are the firms aware of CSR dynamics?

• Do they consider CSR concept relevant to their own enterprise?
• What exactly do they consider important from broad concept of
CSR?
• Are firms and companies interested in CSR topic? What is their
level of interest (interest in obtaining more information or
greater direct engagement)?

Literature Review:

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.

Influencing Factors:

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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).

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 is possible for businesses with publicly
known CSR related problems to take no action with regard to these
problems.

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.

Employee’s Reaction towards CSR:

Sen, Sankar & Bhattacharya (2001) examined when, how, and for
whom specific Corporate Social Responsibility (CSR) initiatives work.
These researchers studied Employee' CSR responses and the means

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underlying these responses. There were two studies in this research.

The first focuses on an evaluation of the relationship between CSR and
the telecommunication industry. Meanwhile the second study focuses
on CSR's direct influence on employee’s satisfaction regarding working
conditions, incentives and environment which depends on CSR domain,
CSR and company ability, beliefs and CSR support. The results showed
that reactions from employee’s 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 as employee’s motivation regarding
workplace policies and company values.
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. 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 employees.

Approaches to CSR:

An approach for CSR that is becoming more widely accepted is

community-based development projects, such as Pakistan Tobaccos
Company. Here they have set up a Mobile Doctors team takes pride in
providing health care in areas where there are no medical
facilities.Often alternative approaches to this is the establishment of
education facilities for adults, as well as HIV/AIDS education
programmes. The majority of these CSR projects are established in
rural areas of Pakistan. A more common approach of CSR is through
the giving of aid to local organizations and impoverished communities.
In some organizations do not like this approach as it does not help
build on the skills of the local people, whereas community-based
development generally leads to more sustainable development.

Potential business benefits

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The scale and nature of the benefits of CSR for an organization can
vary depending on the nature of the enterprise, and are difficult to
quantify, though there is a large body of literature exhorting business
to adopt measures beyond financial ones (e.g., Deming's Fourteen
Points, balanced scorecards).

The definition of CSR used within an organization can vary from the
strict "stakeholder impacts" definition used by many CSR advocates
and will often include charitable efforts and volunteering. CSR may be
based within the human resources, business development or public
relations departments of an organization, or may be given a separate
unit reporting to the CEO or in some cases directly to the board. Some
companies may implement CSR-type values without a clearly defined
team or programme.

The business case for CSR within a company will likely rest on one or
more of these arguments:

Human resources

CSR can help to improve the perception of a company among its staff,
particularly when staff can become involved through payroll giving,
fundraising activities or community volunteering.

Risk management

Managing risk is a central part of many corporate strategies. Such

events can draw unwanted attention from regulators, courts,
governments and media. Building a genuine culture of 'doing the right
thing' within a corporation can offset these risks.

Brand differentiation

In crowded marketplaces, companies strive for a unique selling

proposition which can separate them from the competition in the
minds of consumers. CSR can play a role in building customer loyalty
based on distinctive ethical values.[9] Several major brands, such as
The Co-operative Group and The Body Shop are built on ethical values.
Business service organizations can benefit too from building a
reputation for integrity and best practice.

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License to operate

Corporations are keen to avoid interference in their business through

taxation or regulations. By taking substantive voluntary steps, they can
persuade governments and the wider public that they are taking issues
such as health and safety, diversity or the environment seriously, and
so avoid intervention. This also applies to firms seeking to justify eye-
catching profits and high levels of boardroom pay. Those operating
away from their home country can make sure they stay welcome by
being good corporate citizens with respect to labor standards and
impacts on the environment.

Criticisms and concerns:

Critics of CSR as well as proponents debate a number of concerns

related to it. These include CSR's relationship to the fundamental
purpose and nature of business and questionable motives for engaging
in CSR, including concerns about insincerity and hypocrisy.

CSR and the nature of business:

Corporations exist to provide products and/or services that produce

profits for their shareholders. Milton Friedman and others take this a
step further, arguing that a corporation's purpose is to maximize
returns to its shareholders, and that since (in their view), only people
can have social responsibilities, corporations are only responsible to
their shareholders and not to society as a whole. Although they accept
that corporations should obey the laws of the countries within which
they work, they assert that corporations have no other obligation to
society. Some people perceive CSR as incongruent with the very
nature and purpose of business, and indeed a hindrance to free trade.
Those who assert that CSR is incongruent with capitalism and are in
favor of neoliberalism argue that improvements in health, longevity
and/or infant mortality have been created by economic growth
attributed to free enterprise.

Critics of this argument perceive neoliberalism as opposed to the well-

being of society and a hindrance to human freedom. They claim that
the type of capitalism practiced in many developing countries is a form
of economic and cultural imperialism, noting that these countries
usually have fewer labor protections, and thus their citizens are at a
higher risk of exploitation by multinational corporations.

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CSR and questionable motives

Some critics believe that CSR programs are undertaken by companies

such as Pakistan Tobacco Company, the petroleum giant Shell (well-
known for its high-profile advertising campaigns on environmental
aspects of its operations), and McDonald's to distract the public from
ethical questions posed by their core operations. They argue that some
corporations start CSR programs for the commercial benefit they enjoy
through raising their reputation with the public or with government.
They suggest that corporations which exist solely to maximize profits
are unable to advance the interests of society as a whole.

Similarly Shell has a much-publicized CSR policy and was a pioneer in

triple bottom line reporting, however, this did not prevent the 2004
scandal concerning its misreporting of oil reserves—an act which
seriously damaged its reputation and led to charges of hypocrisy. Since
then, the Shell Foundation has become involved in many projects
across the world, including a partnership with Marks and Spencer (UK)
in three flower and fruit growing communities across Africa.

Critics concerned with corporate hypocrisy and insincerity generally

suggest that better governmental and international regulation and
enforcement, rather than voluntary measures, are necessary to ensure
that companies behave in a socially responsible manner.

Telecommunication:

The telecommunication industry consist of carrier services, fixed

telephony services, private network services, data transmittal services,
mobile telecommunication services, internet backbone services,
internet access services and other internet telecommunication
services. Some briefly introduction of major cellular companies in
Pakistan is as follow:

Mobilink

Mobilink Pakistan Premier Cellular Company Claims be to have 10

Million Subscribers nation wide what you call such a company pioneers
giants whatever but the fact is that Mobilink is the largest Cellular
Company in Pakistan.

Mobilink being the pioneers of introducing cellular networks in Pakistan

established themselves as the major cellular company of Pakistan.
Covering almost every city of Pakistan.

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Mobilink is giant is this the reason that they are still expensive as
compare to other companies like Ufone and Warid Tel. As people relay
on Mobilink services that’s why Mobilink still charging high rates
people specially business class hesitate to switch to other cellular
company.

Mobilink is major cellular company and will stand in first place many
years to come yet there will be more need to emphasis on CSR.

Warid:

Warid is operated by Abu Dhabi Group led by Sheikh Nahayan Mabarak

Al Nahayan. Warid started it services in Pakistan May 2005. Since than
Warid Telecom successfully launched the services covering 28 cities
with a total population of around 32 million people. Warid Telecom with
low rates to capture the market with already giants operating the
cellular world of Pakistan is the major task for Warid Telecom major
competitor is mobilink with already 10 million subscribers it is not a
easy task to break the market.

As warid considers mobilink a tough competitor so inorder to survive in

dynamic market they will concentrate more on CSR applications.

Ufone

Ufone subsidiary of PTCL was established to provide cellular services

across Pakistan. Ufone is currently providing quality services across
Pakistan. Ufone with the backend support of PTCL always provides
quality services to its subscribers.

Ufone claims to have 3 million subscribers and still growing. Ufone is

one of the best cellular companies in Pakistan with reliable network
and coverage to over 100 key cities and prominent highways.

Ufone is having the lowest call rates and best packages for its
subscribers and so called a customer oriented cellular company which
is an important aspect of CSR.

Telenor

Telenor can be called a little brother of Ufone (even though they are
not related). Their sound clarity is really excellent. Their GPRS is a fast

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connecting one than Ufone as its EGPRS(Enhanced). The easy load

facility is the excellent idea of re-charging account from 10 to 1000 RS
with unlimited validity.

Telenor is the king when it come to connectivity, u can pick up the

phone and just dial , it will connect, do that at anytime and it will
connect, Ufone does that too but sometimes you have to try two times
to connect but not Telenor.

Telenor soon will emerge as a big cellular company in Pakistan their

devotion and excellent services is giving a clear view that they are in
Pakistan to do some business and will grip the large portion of
subscribers by adopting the ultimate strategies regarding CSR.

Proposed methodology:

This study will follow the approach of CSR (corporate social

responsibility). The employees from public as well as private sector will
respond against the survey instrument. The proposed target industry is
Telecommunication. Almost all the small and medium sized enterprises
(SME) from Islamabad and Rawalpindi are studied by throwing
questionnaire in the relevant sector. The industry is selected for
sample as during last few years there occurs the vast progress in the
related field, and this speed is backed up by the organization’s
understanding and studies towards corporate social responsibility.

For this study non-probability sampling technique is proposed. Survey

questionnaire will be used as research instrument. Organization
operating in twin city (Islamabad and Rawalpindi) will be personally
visited and questionnaire will be distributed in those organization
personally (through reference) or by employees of CSR and HR
departments.
The aims of survey were to provide answer of several questions:

• Are the firms aware of CSR dynamics?

• Do they consider CSR concept relevant to their own enterprise?
• What exactly do they consider important from broad concept of
CSR?
• Are firms and companies interested in CSR topic? What is their
level of interest (interest in obtaining more information or
greater direct engagement)?

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The survey was conducted between November 10th 2008 and

November 20th 2008. Five firms were approached in the form of
questionnaire. The questionnaire was not only seen as the tool of
obtaining facts but also a strong instrument of promotion of CSR topic.
The survey tried to keep simple and we were interested mainly in
spontaneous reactions.

The questionnaire helps in analyzing the impact of CSR in telecom

industry. The questionnaire consists of demographics_ regarding
general information of the person who is going to fill the questionnaire.
Than there are some questions including the Work Policy, than
Environmental policy, which are backed up by Market Policy,
Community Policy and than in the last the questions regarding
Company Values are included.

Survey evaluation was conducted by mean of Excel Work Sheet. In the

work sheet we make some interpretations regarding the results:

Demographics:

1) Gender: a) male as 1 b) female as 2.

2) Age: a) 21-30 as 1 b) 31-40 as 2 c) 41-50 as 3

d) 51-60 as 4

e) 61-70 as 5 f) 71-80 as 6 g) 81-90 as 7

3) Educational Attainment:
a) Intermediate as 1 b) 14 years as
2 c) 16 years

as 3 d) 18 years as 4 e)
20 years as 5

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4) Marital status: a) married as 1 b) divorced as 2 c)

widowed as 3

d) Separated as 4 e) unmarried as 5

5) Type of employment:

a) Self employed as 1
b) Employed on contracted basis as 2
c) Employed on permanent basis as 3

6) Does your job require you to work extra hours?

a) Yes as 1 b) No as 2

7) Are you paid for overtime work hours?

a) Yes as 1 b) No as 2

8) Questions:
a) Strongly agree: 1
b) Agree: 2
c) Neutral: 3
d) Disagree: 4
e) Strongly Disagree: 5

Questionnaire:

Role of CSR in Pakistani Telecom Sector

Dear sir/madam

Your contribution in helping us analyzing the impact of CSR in your

organization. Completion of this information is voluntary and
confidential. No individual data will be reported. Please don’t write
your name and organizations name on this paper.
Thank You!

1. Gender : a) Male b) Female

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2. Age : ______________ years

3. Educational Attainment : ______________ years
4. Religion : __________________
5. Province/Region : __________________
6. Marital Status :
a) Married b) Divorced c) Widowed d) Separated e)
Unmarried

7. Industry you are currently rendering services to:

:________________
8. Current Job Title : ________________

9. Type of employment
a) Self-Employed
b) Employed on On-Contract Basis
c) Employed on Permanent Basis

10. Total Work experience (till Date) :

_______________ years
11. Work Experience in the current organization :
_______________ years
12. Daily Office/Business Timings : _______________

13. Does your job require you to work extra hours? a) Yes
b) No
14. Are you paid for overtime work hours? a)
Yes b) No
15. Your approximate monthly income:
__________________________

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Your organization encourage employees to 1 2 3 4
5
develop real skills and long –term careers strongly agree neutral agree
(e.g. via a performance appraisal process, strongly
Role of CSR in Pakistan Telecom Industry
agree
a training plan). BRM-Research Paper
disagree

Your organization consults employees on 1 2 3 4

5
important issues. strongly agree neutral agree
strongly
agree
disagree

Your organization has suitable 1 2 3 4

5
arrangements for health, safety and strongly agree neutral agree
welfare that provide sufficient protection strongly
for your employees. agree
disagree

There is a process to ensure adequate 1 2 3 4

5
steps are taken against all forms of strongly agree neutral agree
discrimination, both in the work place and strongly
at the time of recruitment (e.g. against agree
disagree
women, ethnic groups, disabled people,
etc)?.
Your organization actively offers a good 1 2 3 4
5
work-life balance for its employees, for strongly agree neutral agree
example, by considering flexible working strongly
hours. agree
disagree

Have your organization tried to reduce

environmental impact in terms of. 1 2 3 4
5
o Energy conservation? strongly agree neutral agree
strongly
agree
o waste minimization and recycling disagree

1 2 3 4
o Pollution prevention (e.g. emissions 5
strongly agree neutral agree
to air and water, effluent discharges, strongly
noise)? agree
disagree

1 2 3 4
o Protection of the natural 5
environment? strongly agree neutral agree
strongly
agree
disagree
o Sustainable transport options?
1 2 3 4
5
strongly agree neutral disagree
strongly
agree
disagree

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2 3 Page 15
4
5
strongly agree neutral disagree
strongly
agree
disagree
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Evaluated result:

Means and Correlation:

Compa
Work Environm Market Communi ny Correlati
place. ent policy. policy. ty policy. values. on
M M M M M

18.650 15.2711
8.225 12.02813 63 22.18075 3
5 4.75 6.15 6.98 5.72
11.178 10.5386
6.714286 57 13.72321 9
8.6 7.325 10.785 12.742 9.863
15.2 11.775 19.195 22.634 17.201
9.4 7.925 12.065 14.278 10.917
7 6.125 9.225 10.87 8.305
9.8 8.225 12.405 14.486 11.229
2.0357 2.36830
2.75 2.392857 14 2.294643 4
1.8958
1.5 2.083333 33 1.869792 1.83724
6.4 5.8 7.84 9.208 3
1.9285 2.45089
2.75 2.964286 71 2.160714 3
4 4 4.4 4.88 4.32
1.6666 1.92187
67 2.333333 1.75 1.9375 5
12.4 9.675 10.415 12.298 11.197

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1.2142 1.33482
1 1.857143 86 1.267857 1
5.6785 8.31026
11.75 8.964286 71 6.848214 8
9.26666
15.6 12.2 0 9.266667 7
5 4.625 6.525 7.63 5.945
5.4 4.55 5.19 6.028 5.292
1.9285 2.45089
2.75 2.964286 71 2.160714 3 1

Interpretation of survey:

After getting all the results the survey has shown that company policy
is an independent Variable according to which an organization makes
its other policies. The result interpreted by getting correlation shows
the strong interlinked relation among all these policies made by an
organization.

Conclusion:

Are the firms aware of CSR dynamics?

By keeping in view the segments of questionnaire we can say that
the telecommunication industry is aware of importance of
workplace, marketing and other related policies that help them to
improve their infra structure.

Do they consider CSR concept relevant to their own

enterprise?
CSR is now considered as an integral part of any industry. The
survey results have shown that CSR application is developing
rapidly in the telecommunication sector. This not only shows that

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the firms have understood the CSR concept but also considers it as
an important element of the rapid organizational growth.

What exactly do they consider important from broad concept

of CSR?
A broad concept of CSR considers the following aspects:
a) Awareness of social work.
b) Awareness of the bad effects of environmental pollution.
c) Considering the customers as an important part for the
Organization’s goodwill.
Considering the employees as a major asset of the firm.

Are firms and companies interested in CSR topic? What is their

level of interest (interest in obtaining more information or
greater direct engagement)?
Results have shown that firms are taking interest in CSR topic.
Because this will help them a lot in maintaining the growth and
goodwill of their organization at a high level.

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