Responsible or Redundant Engaging the Workforce Through Corporate Social Responsibility

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2011 36: 425Australian Journal of ManagementVictoria Smith and Peter Langford

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Responsible or redundant?Engaging the workforce throughcorporate social responsibility

Victoria SmithDepartment of Psychology, Macquarie University, Australia

Peter LangfordVoice Project, Macquarie University, Australia

AbstractIncreasing attempts are being made to determine whether corporate social responsibility leads to commercial

benefits. Research to date has demonstrated that corporate social responsibility is associated with attracting

job-seekers and enhancing the engagement of employees. However, much of this research focuses on the impact

of corporate social responsibility on employee outcomes independent of the impact of traditional human

resource practices (e.g. training, rewards). Using a variation of an existing employee opinion survey, and applying

Carrolls (1979) model of corporate social responsibility, this paper assesses the relationship between employee

engagement, traditional human resource practices, and corporate social responsibility. Data collected from 3147

employees showed a significant positive correlation between corporate social responsibility and employee

engagement. However, corporate social responsibility explained little additional variance in engagement beyond

that explained by traditional human resource practices. This paper concludes that allocating attention and

resources to corporate social responsibility may not be as advantageous as investing in the improvement of

core human resource practices, when the goal is to improve employee engagement. Future research needs

to examine why corporate social responsibility explains little additional variance in employee engagement,

specifically examining the manner in which employees perceive corporate social responsibility and the extent

to which corporate social responsibility encompasses traditional human resource practices.

Keywordsbusiness ethics, corporate social responsibility, employee engagement, human resources, corporate

performance

1. Introduction

Corporate social responsibility (CSR) has increased in importance over time, advancing in both

academic and practitioner circles (Carroll and Shabana, 2010). While we depend on corporations

Corresponding author:

Victoria Smith, PO Box 204, Lennox Head, NSW, 2478, Australia.

Email: [email protected].

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426 Australian Journal of Management 36(3)

for products and services, corporate practices can contribute to problems such as the deterioration

of quality of life, environmental degradation and pollution, giving corporations an important role

in addressing these problems (Dunphy and Benveniste, 2000). In line with this, organizations have

become increasingly interested in the notion of sustainability (Carroll and Shabana, 2010; Dunphy

and Griffiths, 1998) with it being recognised that businesses need to consider the social and envi-ronmental impacts of their practices, in addition to profitability (Diesendorf, 2000; Gilding, 2000;

Olson and Toyne, 2000). Furthermore, it is being recognised that organizations cannot exist alone

and as such have a vested interest in meeting individual and social needs. Organizations need

employees to have the power to operate and need consumers, purchasing goods and services, to

have a reason to exist (Benveniste, 2000).

A number of arguments exist, both for and against CSR and although the initial focus on CSR

tended to be on the benefits of CSR for society, over time a focus on the benefits that CSR could

bring to business was established (Carroll and Shabana, 2010; Mintzberg, 1983). In line with this,

there are two main perspectives on why organizations may want to invest in CSR, the normative

case and the business case. The normative case proposes that organizations should invest in CSRregardless of the impact on the bottom line, as CSR investment is the right thing to do (Bhattacharya

and Sen, 2004; Smith, 2003). The business case on the other hand is concerned with what busi-

nesses can gain from CSR, from a primarily economic perspective (Carroll and Shabana, 2010).

Organizations can be resistant to invest in CSR unless it is associated with concrete business ben-

efits (Maignan and Ferrell, 2001) making the aim to determine a business case for CSR increas-

ingly popular. CSR has been shown to benefit the bottom line in a number of ways, including

reduced risk, reduced production costs, increased financial investment, product differentiation and

improvements in a range of stakeholder outcomes (Carroll and Shabana, 2010; Diesendorf, 2000;

Smith and Langford, 2009). Carroll and Shabana (2010) provide a good review of the business

case for CSR, outlining concepts, research and practice that characterise the business case. It isimportant to note that the normative case and the business case are not mutually exclusive per-

spectives (Bhattacharya and Sen, 2004; Smith, 2003), with it being argued that engaging in corpo-

rate citizenship is both the right thing to do and a more effective way of doing business (Dunphy

and Benveniste, 2000).

While recognising the range of arguments supporting investment in CSR, this paper examines

an element of the business case, specifically the impact that CSR has on the outcome of employee

engagement (EE). CSR has been linked to improvements for a range of stakeholder groups (e.g.

consumers, investors), one of which is employees (Smith and Langford, in submission). Examining

the impact of CSR on employees is useful as employees are an important means of long-term com-

petitive advantage (Bassi and McMurrer, 2007), with employee satisfaction and commitmentimportant for increasing productivity and profits (Gollan, 2000). It has been argued that corporate

capital today is less about financial resources, raw materials, or physical assets and more about

knowledge and professional skills, making the recruitment, training and professional development

of staff essential for long-term corporate success (Dunphy and Griffiths, 1998). Determining sup-

port for a specific relationship between CSR and EE would be of importance, due to the positive

relationship EE has with a number of organizational outcomes. A meta-analysis by Harter, Schmidt

and Hayes (2002) examined the relationship between EE and a number of business outcomes. EE

showed generalisability across companies in its correlation with customer satisfaction, profitabil-

ity, productivity, employee turnover, and safety outcomes. Similarly, reporting results from over

13,000 employees from over 1200 organizations, Langford (2009) showed that EE correlated sig-nificantly with employee turnover and absenteeism, as well as manager reports of productivity,

safety, organizational goal attainment, customer satisfaction, and profitability.

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Smith and Langford 427

While CSR has been proposed as an important contributor to EE, many organizations are faced

with an uncertain decision around whether to support large investments in CSR in their attempts to

improve EE. Building on the range of theoretical and empirical evidence supporting the link between

CSR and employee outcomes, and with regards to the specific outcome of EE, this study examines

whether investing in CSR is a responsible business decision, or whether the decision to engage inCSR may be redundant. EE is defined in this study as the aggregate of organizational commitment,

job satisfaction, and intention to stay (Langford, 2009, 2010). CSR can be conceptualised by assign-

ing CSR activities to different CSR categories (Carroll and Shabana, 2010) and is defined in this

manner using Carrolls (1979) CSR model. Carrolls (1979) model is popular in empirical research

and easily operationalised, with the multi-dimensional nature of the model allowing for a more pre-

cise examination of CSR (Carroll and Shabana, 2010; Wood and Jones, 1995). Carrolls model defines

CSR as consisting of four-parts: economic, legal, ethicalandphilanthropic components.Economic

CSR includes maximising profitability and maintaining a strong competitive position. Legal CSR

encompasses legal compliance.Ethical CSR includes actions that reflect societal standards, expecta-

tions and norms that have not been specifically legislated. Finally,philanthropic CSR encompassesactions that demonstrate a business is a good corporate citizen (Carroll, 1991). Economic CSR and

legal CSR are seen as required, ethical CSR as expected and philanthropic CSR as desired (Carroll

1979, 1991; Carroll and Shabana, 2010). The recognition of economic responsibility as a consider-

ation in CSR is important in examining the business case as it reinforces that the economic perfor-

mance of a firm is important for both the firm and for society (Carroll and Shabana, 2010). In addition

to Carrolls model, this study measures CSR using two other scales social responsibility and envi-

ronmental responsibility. Social responsibility and environmental responsibility indicate actions that,

depending on their nature, can be captured within one of Carrolls four CSR dimensions.

This study begins with an examination of the relative relationships of Carrolls (1979) four CSR

dimensions with EE. Second, the study assesses the relationship between EE and the two remain-ing CSR measures (social responsibility and environmental responsibility). Thirdly, and perhaps

most importantly, the current study adds to previous literature by assessing the extent to which

CSR explains additional variance in EE beyond that explained by traditional human resource (HR)

practices. Much of the research demonstrating a relationship between CSR and employee out-

comes focuses on the impact of CSR independent of other variables that are known to impact

employees (e.g. HR practices such as training or rewards). Consequently, it is difficult to determine

the extent to which CSR practices have a greater impact on employee outcomes than do HR prac-

tices, or indeed the extent to which CSR leads to additional benefits beyond the impact of HR. If

organizations are to invest in CSR, the benefits of CSR investments should be demonstrated to

either be greater than the benefits from alternative investment options (e.g. HR investments), orcontribute additional benefits beyond those benefits gained from the practices in which an organi-

zation is already performing. Consequently, the current study examines firstly, the relative impact

that CSR and HR have on EE, and secondly, the extent to which CSR explains additional variance

in EE beyond the variance explained by HR practices alone.

2. The impact of corporate social responsibility on employees: Where

do we stand?

Early research attempts to link CSR to business benefits tended to focus on establishing a link

between a firms overall performance on social issues and its financial success. However, it hassince been argued that researchers should define a specific stakeholder group when assessing the



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relationship between social performance and corporate benefits (Wood and Jones, 1995). The

nature of a CSR program depends on the needs and characteristics of the targeted stakeholders

(Rodrigo and Arenas, 2008) and, consequently, the outcome measures that are used to assess the

link between CSR and business benefits need to take into account which stakeholder group is the

focus of the CSR program (Wood and Jones, 1995). For example, CSR programs that focus onfamily-friendly employment may be best measured in terms of employee outcomes. The current

study assesses the relationship between CSR and EE.

Two theoretical arguments that can explain why CSR may lead to positive employee outcomes

are signalling theory and social identity theory. Signalling theory can be used to explain the manner

in which individuals allocate characteristics to organizations, despite having incomplete informa-

tion about an organization. Signalling theory suggests that individuals will use the organizational

attributes which they know about to draw inferences about what it would be like to work for an

organization (Greening and Turban, 2000). A firms CSR policies have a positive impact on

employees as they serve as positive indicators of what it is like to work for a firm (Albinger and

Freeman, 2000; Backhaus et al., 2002; Greening and Turban, 2000; Turban and Greening, 1996).For example, the organizational practice of treating consumers fairly may indicate that an organi-

zation will treat employees fairly. Social identity theory states that people group themselves into

social categories that influence their self-concept (Albinger and Freeman, 2000; Ashforth and

Mael, 1989; Greening and Turban, 2000; Peterson, 2004). Individuals want their work to not only

meet their own needs, but also the needs of the community and society (Benveniste, 2000) and

organizational membership can become an important dimension of an individuals identity as

employees respond to organizational achievements as reflective of their own personal achieve-

ments (Turker, 2009). According to social identity theory, employees obtain a positive sense of

identity when associated with a firm that has a positive reputation (e.g. perhaps from investing in

CSR), and association with an organization that has a negative CSR reputation may have a detri-mental impact on an individuals self-concept (Peterson, 2004). Consequently, social identity the-

ory suggests that firms who invest in CSR may be more attractive as employers, because employees

could expect enhanced self-concept through associations with such firms (Albinger and Freeman,

2000; Greening and Turban, 2000; Peterson, 2004; Turban and Greening, 1996).

In support of the theoretical propositions linking CSR to employee outcomes, empirical evi-

dence has identified a number of positive employee outcomes resulting from CSR. Benefits have

been suggested for both job-seekers and incumbent employees. For example, job-seekers have

been shown to rate CSR as important for organizational attractiveness (Albinger and Freeman,

2000; Backhaus et al., 2002) and CSR has been found to increase the likelihood of reader response

to recruitment advertisements (Belt and Paolillo, 1982). In terms of incumbent employees, CSRhas been linked to organizational commitment (Brammer et al., 2007; Cullen et al., 2003; Peterson,

2004), job satisfaction (Gavin and Maynard, 1975; Pettijohn et al., 2008; Vitell and Davis, 1990)

and reduced turnover intentions (Pettijohn et al., 2008). Finally, CSR has been linked to

performance-related outcomes such as voluntary turnover, rates of absenteeism, manager ratings

of productivity, manager ratings of health and safety (Langford, 2009) and individual commitment

to quality, which has a significant influence on individual performance (Weeks et al., 2004).

3. Comparisons between Carrolls four dimensions of corporate social

responsibilityThe use of a multi-dimensional model, such as Carrolls (1979), to measure the relationship between

CSR and EE is important as CSR practices have been found to differ in their impact on employee



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outcomes (e.g. Albinger and Freeman, 2000; Backhaus et al., 2002; Greening and Turban, 2000).

Understanding the manner in which employees differ in their responses to CSR dimensions allows

organizations to invest in the CSR actions that are most effective. Regarding Carrolls (1979) four

CSR dimensions, it is proposed here that the ethical dimension will have the strongest relationship

with EE, with the ethical standards of an organization having been found to notably influence work-place attitudes (Koh and Boo, 2001; Peterson, 2004; Vitell and Davis, 1990).

Applying signalling theory and social identity theory, it is proposed that ethical CSR will have

a stronger relationship with EE than will economic, legal or philanthropic CSR, because employ-

ees will value the reputational and self-identity benefits that are associated with ethical CSRs

perceived contribution to social wellbeing. As defined by Carroll (1979, 1991), ethical CSR incor-

porates actions that reflect progressive social expectations, and what consumers, employees, share-

holders and the community consider fair. In contrast, economic CSR refers to practices concerned

with profit generation and maintaining a competitive position. Economic CSR recognises that

organizations have a primary responsibility to produce goods and services and sell them at a profit

(Carroll, 1979, 1991). Consequently, the benefits of economic CSR are directed towards a rela-tively focused set of stakeholders, rather than social wellbeing, and hence have limited value for

employees social reputation and identity. Similarly, legal CSR refers to practices mainly con-

cerned with legal compliance. Whilst legal CSR interacts with ethical CSR, such that values and

actions in the ethical CSR domain often precede the establishment of law (Carroll, 1979, 1991),

companies engage in legal CSR primarily in an attempt to meet minimum legal requirements,

rather than to contribute to social wellbeing. Meeting minimum legal expectations is unlikely to

enhance an employees social reputation and identity. Finally, philanthropic CSR is defined as

practices that are voluntary and not expected in a moral or ethical sense. A company is not consid-

ered unethical if it is not philanthropic. For this reason Carroll (1991: 42) described philanthropic

CSR as less important than the other three categories of social responsibility. Consequently,although philanthropic CSR can still contribute to the community, it is proposed here that ethical

CSR will be seen to have a great impact upon social wellbeing and hence employees will see ethi-

cal CSR as having the greater value for social reputation and identity.

In support of the theoretical proposition that ethical CSR will have the strongest relationship with

EE, Peterson (2004) examined the manner in which business professionals in the USA perceived

Carrolls four CSR domains and found that the ethical component was a significantly better predic-

tor of organizational commitment, in comparison to the remaining three dimensions. Peterson (2004)

suggests that future research should examine how CSR influences other employee-related measures

(e.g. job satisfaction, turnover and productivity), across various regions of the USA. Expanding on

the measure of organizational commitment, to include job satisfaction and intention to stay, thispaper examines the impact of CSR on EE, using a predominantly Australian sample. As outlined,

based on theoretical propositions and empirical findings the following hypothesis is proposed:

Hypothesis 1: The ethical component of CSR will be more highly correlated with EE, and explain the

greatest unique variance in EE, when compared against the remaining three CSR components (i.e.

economic, legal, and philanthropic CSR).

4. Comparisons between social and environmental corporate social

responsibilityIn order to further understand the manner in which employees differ in their responses to CSR

dimensions, this paper examined the relationship between two discernible CSR domains (social



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to the relative strength of their relationships with EE. Although empirical evidence has identified a

number of positive employee outcomes resulting from CSR (e.g. Backhaus et al., 2002; Brammer

et al., 2007; Gavin and Maynard, 1975; Hunt et al., 1989; Pettijohn et al., 2008; Turban and

Greening, 1996; Valentine and Barnett, 2003; Vitell and Davis, 1990), much of the research dem-

onstrating a relationship between CSR and employee outcomes focuses on the impact of CSRindependent of the impact of HR practices that affect employees (e.g. training, salary). Consequently,

the extent to which CSR and HR practices interact in their impact on employee outcomes, and the

extent to which CSR has a significant additional impact on employee outcomes beyond the impact

of HR practices, is not clear from the current literature.

Smith and Langford (in submission) reviewed the empirical and theoretical literature investigat-

ing the impact of CSR on employees, broadly proposing that organizations should engage in both

CSR- and HR-related practices to an acceptable standard, before attempting to pursue excellent

performance in either area. They propose that performing to an acceptable standard (i.e. avoiding

negative practices) in regards to both CSR and HR may be a more effective way of impacting

employee outcomes, than performing particularly well in some practices and poorly in other prac-tices. However, Smith and Langford also note that this suggestion fails to account for the possibil-

ity that employees may attribute different levels of importance to CSR and HR practices. Given the

lack of research examining the impact of CSR on employee outcomes, relative to the impact of HR

practices, the comparativeimportance of CSR and HR practices for employee outcomes is cur-

rently unclear. The current study hopes to clarify the relative importance of CSR practices and HR

practices for the outcome of EE by examining the impact of CSR on EE, relative to the impact of

HR practices.

Understanding the impact that CSR practices have on employee outcomes, relative to the impact

of HR practices is useful as the importance of HR practices for employee recruitment and retention

is well documented. An increasing number of organizations are finding that investing in peoplemakes sense in business terms (Dunphy and Benveniste, 2000) and that they must encourage con-

tinuous knowledge and skill development to attract and retain outstanding people (Dunphy and

Griffiths, 1998).In line with this, a range of corporate practices have been found to have a signifi-

cant impact on EE. For example, training can increase engagement by renewing interest in a job,

or opening up new opportunities (Aggarwal et al., 2007). In other research, EE was highly corre-

lated with corporate practices such as the management of change and degree of innovation, the

successful achievement of organizational objectives, and the provision of career opportunities

(Parkes and Langford, 2008). The current study incorporates a range of HR practices in order to

realistically assess the extent to which CSR practices relate to EE. Using a variation of an existing

employee opinion survey (the Voice Climate Survey; Langford, 2009) and Carrolls (1979) CSRmodel, the relationship that six CSR practices have with EE are examined relative to the relation-

ship that 24 traditional HR practices have with EE.

Based on the limited amount of research that has examined the relative impact of CSR and HR

on employees, there is reason to assume that at least some HR practices will have a stronger rela-

tionship with EE, than will CSR practices. Research by Albinger and Freeman (2000) found that

the impact of CSR on employees is influenced by their level of job choice. Respondents were

allocated to a high-, medium-, or low-choice group based on factors such as education and work

experience, which were assumed to impact their number of prospective job choices. Whilst a sig-

nificant relationship existed between an organizations CSR ratings and attractiveness ratings for

high- and medium-choice groups, a significant relationship did not exist for the low-choice group.One explanation for this is that the job-seekers are responding to different needs. For example, the

low-choice job-seekers may be focusing on the need to receive a pay cheque, and thus are not



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considering CSR in assessing employer attractiveness (Albinger and Freeman, 2000). Albinger and

Freemans (2000) study suggests, not surprisingly, that employees may focus first on base needs

and consider CSR practices only when base needs are being met. Consequently, employee out-

comes may be more impacted by many HR activities that impact upon base needs, rather than by

CSR activities that have a less personal and immediate impact upon employees. In line with thissuggestion, a review of research examining the impact of CSR on consumers highlighted that when

CSR is employed at a cost to traditional product attributes (e.g. quality, cost) CSR initiatives can

lead to a negative consumer response (Smith and Langford, 2009). Given the suggestion that job-

seekers may focus first on more personal needs, before considering CSR action, the following

hypothesis is proposed:

Hypothesis 3: EE will correlate more highly with traditional HR practices than with CSR practices.

In addition to examining the relative importance of CSR and HR for employee outcomes, this

paper aimed to examine whether CSR explained unique variance in EE in addition to that explainedby traditional HR practices. Whilst this study has hypothesised that EE will correlate more highly

with HR practices than with CSR practices, CSR may nevertheless play an important role in

explaining further unique variance in EE. It is proposed here that it is likely that CSR will have an

impact on EE, beyond the impact of HR practices, for a number of reasons. Firstly, as mentioned

above, an array of empirical evidence suggests that CSR is associated with a number of positive

employee outcomes, suggesting that CSR does have an impact on employees. Secondly, it is likely

that employees feel that there is a minimum level of acceptable CSR practice. Research has found

that consumers feel that superior product quality does not compensate for unethical practice (Folkes

and Kamins, 1999), suggesting that consumers feel that there is a minimum level of acceptable

CSR practice. Translating this finding to the workplace, it could be suggested that superior HRpractices may not compensate for unethical practices. Finally, another reason why CSR is likely to

explain unique variance in employee outcomes is the theoretical argument that employees want to

identify with firms that show concern for society in general. As mentioned above, organizational

membership can become an important dimension of an individuals identity (Turker, 2009) and

according to social identity theory, employees obtain a positive sense of identity when associated

with a firm that invests in CSR (Peterson, 2004). Consequently, whilst employees want to be

treated well in regards to HR practices, it is also likely that they want to work for organizations that

act ethically in their treatment of society and implement CSR practices. In order to examine the

proposition that CSR will have a relationship with EE, independent of the relationship of HR prac-

tices, the following hypothesis is proposed:

Hypothesis 4: CSR practices will explain additional variance in EE beyond that explained by traditional

HR practices.

6. Method

6.1 Participants

Data was collected in 2008 from 3147 employees, representing 316 organizations. These employ-

ees were predominantly employed in Australia (approximately 10% came from other countries

including China and the USA). The large, predominantly Australian nature of this sample is part of

what makes this study an important contributor to the literature examining the implementation and



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management of CSR. There is very little research examining the impact of CSR on Australian

employees, and the large nature of this sample allowed for an examination of individuals employed

in a variety of occupations, across a range of demographics.

Data were collected over a period of five weeks, as part of an undergraduate research project at

Macquarie University. Students were required to approach an organization and request that 10employees from a business unit within that organization complete the survey. A standardised sur-

vey form, containing instructions for the completion and return of the survey, was used to ensure

consistency in data collection. Students were also required to follow a specific process for approach-

ing organizations, obtaining consent, and collecting data (e.g. completed surveys were to be handed

directly back to students, rather than a manager). Finally, students submitted the data into an online

template, which was checked for errors. In return for participation, the business units received a

report benchmarking their scores against other participating business units.

The data collected in this study were analysed at the level of the individual, and as such no claim

is made that the sample of employees from any single organization was representative of that

organization. The most commonly reported occupational category of participating employees wasthat ofclerical or service worker(15% responding), followed by manager or administratorand

professional sales and marketing(12% responding to each). Approximately half the respon-

dents were female (54%), with the 2029 age bracket the most commonly cited (44% responding).

The most commonly cited category for annual salary was AUD$40,00069,999 (32% responding),

with 61% of respondents rating their level of seniority as in the lower third of the hierarchy of their

organization. Finally, the majority of respondents were employed in a full-time permanentrole

(59% responding), and had most commonly been with the organization for less than two years

(44% responding).

Whilst the data were not analysed at the business unit level, the manager of each business unit

was given the opportunity to provide information about their organization. Data were provided by268 of the 316 organizations. The majority of organizations employed less than 100 people (56%

responding), with 25% of organizations employing between 100 and 1000 people, and 19% of

organizations employing more than 1000 people. The majority of organizations were private sec-

tor/commercial organizations (80% responding), followed by the public/government sector

(12%) and the non-government/non-profit sector (8%). Finally, the most commonly reported

industry was that of retail trade (19% responding), followed by accommodation, hospitality,

tourism, cafs and restaurants(14% responding) and finance and insurance(7% responding).

6.2 Measure

The survey content comprised the Voice Climate Survey (Langford, 2009) and several additional

items measuring the six CSR constructs. The Voice Climate Survey is an employee opinion survey

that was designed to measure work practices and outcomes. The current study included several

additional items to measure CSR constructs as the Voice Climate Survey had not previously been

used to measure CSR at the level of detail assessed in the current study. The Voice Climate Survey

presented in this paper is copyrighted by Macquarie University.1

The survey contained 114 questions and all answers were provided on a 5-point rating scale

ranging from 1 = Strongly Disagree to 5 = Strongly Agree, with an additional option of Dont

Know/Not Applicable (responses to which were treated as missing). Employee responses to the

survey contained only 2.1% of responses that were either unanswered or were answered Dont Know/

Not Applicable. Given the small percentage of missing responses, and that they appeared essen-

tially random, all missing responses were replaced using a standard regression-based expectation



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maximisation algorithm. This method has been used in other research involving organizational

climate measures (e.g. Langford, 2009; Patterson et al., 2005).

The 114 items represented three major groups of questions: EE, HR practices and CSR prac-

tices. The outcome measure of EE and measures of HR practices were both examined using items

drawn from the Voice Climate Survey. EE was measured using 10 items, broken down into threescales (organizational commitment, job satisfaction and intention to stay). HR practices were

measured using 79 items, grouped into 24 scales. Psychometric support for these measures has

been provided elsewhere (Langford, 2009). In regards to the current study, scale means, standard

deviations, reliability estimates, example items and the number of items in each scale, are included

in Table 1.

The CSR practices were measured using 25 items developed specifically for this study, grouped

into six scales. Four of these scales measured the four components of Carrolls (1979) CSR model

(economic CSR, legal CSR, ethical CSR and philanthropic CSR). EconomicCSR measured the

extent to which an organization maximised profitability, maintained a strong competitive position,

reached goals and objectives and had a positive future.Legal CSR measured the extent to which anorganization complied with laws and regulations, respected the privacy of employees, provided

employment meeting legal requirements and performed in a manner consistent with governmental

expectations.Ethical CSR measured the extent to which an organization performed in a manner

beyond the mere generation of profits and consistent with unlegislated societal standards and

norms. Finally,philanthropic CSR measured the extent to which an organization was charitable,

promoted human welfare, contributed resources to the community and went beyond ethical expec-

tations. The remaining two CSR scales measured environmental responsibility andsocial respon-

sibility.Environmental responsibility referred to an organization showing concern for the impact it

had on the environment, and having a positive impact on the environment. Social responsibility

referred to an organization showing concern for the impact it had on the community, having a posi-tive impact on the community, making transparent decisions and being positively evaluated when

exposed to public scrutiny. Scale means, standard deviations, reliability estimates, example items

and the number of items in each scale, are included in Table 1.

In addition to the scale reliability estimates indicating that the EE, HR and CSR scales exhibited

discriminant validity, a confirmatory factor analysis (CFA) was conducted on the measure, using

AMOS, in order to demonstrate discriminant validity and provide support for the independence of

the EE, HR and CSR scales. The assumptions of CFA (e.g. multi-collinearity, sample size) were

met. Due to the large sample size the chi-square statistic was considered inappropriate for model

assessment (Bentler and Bonett, 1980; Floyd and Widaman, 1995; Patterson et al., 2005) and, not

surprisingly, was found to be significant (chi-square = 22634, df = 5799,p


12/24


7. Results

Prior to testing the main hypotheses, it was established that significant correlations existed between

the outcome of EE and a number of the demographic options. All practically important correlations

between EE and the demographic options (r .10) are outlined in Table 3. These demographic

options were controlled in further analyses. No practically important correlations were found

between EE and the remaining demographic questions about: gender; two employment status

options (part-time permanent, contract/fixed term); two marriage status options (single with depen-

dent children, married without dependent children); employee unionism; a number of occupational

categories; years until retirement; and country of employment.

In order to test the hypotheses in this study, partial correlations (controlling for relevant

demographic variables) between EE, HR and CSR were examined (see Table 1). A hierarchical

multiple regression was also conducted to test the hypotheses. The demographic options known

to correlate with EE were entered at the first step in the hierarchical regression. At the second

step, the 24 traditional HR practices included in the survey were entered. At the third step of the

hierarchical regression the six CSR scales were entered. Table 1 presents the standardised betas

for the CSR and HR practices when explaining EE, taken from the final step of the hierarchical

regression. Finally, the correlations among all the variables in the study were examined to pro-

vide further guidance around the manner in which respondents distinguished between the vari-

ables. As shown in Table 2, moderate-to-strong correlations exist between most of the variables

in the study.

The first hypothesis proposed that the ethical component of CSR would be more highly corre-

lated with EE, and would explain the greatest unique variance in EE, when compared against the

remaining three CSR components (i.e. economic, legal, and philanthropic CSR). As shown in

Table 1, the partial correlations and standardised betas only partly support hypothesis 1. The four

CSR components had correlations with EE of very similar strength. Ethical CSR, economic CSR

and philanthropic CSR also demonstrated similar regression weights in the hierarchical regression.

In sum, the results in Table 1 suggest that, of Carrolls four components, only legal CSR had a

weaker relationship with EE than ethical CSR.

Hypothesis 2 proposed thatsocial responsibility would have a stronger correlation with EE, and

would explain greater unique variance in EE, than would environmental responsibility. As shown

in Table 1, hypothesis 2 was partially supported by the finding that social responsibility had a

higher correlation with EE than did environmental responsibility. However, neither social respon-

sibility nor environmental responsibility significantly explained unique variance in EE in the

regression analysis. One possibility for why social and environmental responsibility did not sig-

nificantly explain EE in the regression analysis is that employees did not distinguish these discern-

ible constructs from Carrolls (1979) CSR components. As shown in Table 2, this possibility is

supported by the presence of moderate-to-strong correlations (r= .34.63) between social respon-

sibility, environmental responsibility and Carrolls (1979) components.

Hypothesis 3 proposed that a stronger correlation would exist between HR practices and EE

than between CSR practices and EE. As mentioned, Table 1 shows the partial correlations for the

HR practices and CSR practices with EE. Hypothesis 3 was partially supported in that the HR

practices of mission and values, rewards and recognition and career opportunities had the strongest

correlations with EE. However, all six CSR practices had higher correlations with EE than the HR

practices of facilities, role clarity, talent, diversity, work-life balance, safety and teamwork. These

results provide partial support for hypothesis 3 as they suggest that many, but not all, HR practices

correlate more highly with EE than do CSR practices.



13/24


Table

1.

Asummaryofthenumber(#)

ofitemsineachscale,alphas,me

ans(M),standarddeviations(SD),partialcorrelations(r)andstand

ardisedbetas

()whenexplainingemployeeengageme

nt.

Measur

e

Example

Items

#ofItems

Alpha

M

SD

r

Employ

eeEngagement

Ifeelem

otionallyattachedtothisorganization

10

.80

3.73

0.90

-

-

HRPractices

Mission

&Values

Ibelieve

intheoverallpurposeofthisorg

anization

3

.88

3.99

0.84

.52c

.18c

Career

Opportunities

Enoughtimeandeffortisspentoncareer

planning

3

.88

3.31

1.01

.50c

.14c

Reward

s&Recognition

TherewardsandrecognitionIreceivefro

mthisjobarefair

4

.87

3.66

0.91

.50c

.12c

Wellness

Iamgive

nenoughtimetodomyjobwell

4

.86

3.91

0.80

.43c

.09c

Involvement

Iamcon

sultedbeforedecisionsthataffectmearemade

3

.82

3.45

0.96

.45c

.06b

Leadership

Ihaveco

nfidenceintheabilityofseniorm

anagement

4

.91

3.85

0.93

.48c

.05b

Resour

ces

Ihaveaccesstotherightequipmentandresourcestodomyjobwell

3

.83

3.84

0.87

.41c

.04a

Results

Focus

Highstandardsofperformanceareexpected

3

.79

4.16

0.77

.40c

.04a

Motivation&Initiative

Myco-w

orkersputinextraeffortwhenevernecessary

3

.85

3.73

0.85

.38c

.04a

Facilitie

s

Thebuildings,groundsandfacilitiesIuseareingoodcondition

3

.88

3.62

0.96

.30c

.0

4a

Recruitment&Selection

Thisorganizationisgoodatselectingtherightpeoplefortherightjobs

3

.88

3.74

0.91

.47c

.03

Perform

anceAppraisal

Theway

myperformanceisevaluatedisfair

3

.89

3.50

0.97

.44c

.03

RoleClarity

Duringm

yday-to-daydutiesIunderstand

howwellIamdoing

3

.78

4.22

0.74

.33c

.03

Talent

Ihaveco

nfidenceintheabilityofmyco-w

orkers

3

.90

3.90

0.80

.33c

-.03

Supervision

MymanagerlistenstowhatIhavetosay

4

.92

4.10

0.87

.42c

.02

OrganizationDirection

Iamawa

reofthevaluesofthisorganization

3

.84

3.74

0.86

.39c

-.02

Processes

Therear

eclearpoliciesandproceduresforhowworkistobedone

3

.82

3.72

0.85

.39c

-.02

Diversity

Sexualharassmentispreventedanddiscouraged

4

.85

4.32

0.78

.32c

-.02

Work/LifeBalance

Imaintainagoodbalancebetweenworkandotheraspectsofmylife

4

.88

4.15

0.79

.26c

.02

Learnin

gandDevelopment

Thereis

acommitmenttoongoingtrainin

ganddevelopmentofstaff

3

.84

3.70

0.93

.44c

.01

Techno

logy

Theorganizationmakesgooduseoftechnology

3

.84

3.62

0.90

.37c

.01

Safety

Wearegivenallnecessarysafetyequipme

ntandtraining

4

.88

4.01

0.82

.33c

-.01

Teamwork

Myco-w

orkersgivemehelpandsupport

3

.88

4.18

0.74

.32c

.01

Cross-UnitCooperation

Thereis

goodcommunicationacrossallsectionsofthisorganization

3

.88

3.47

0.92

.42c

.00



14/24


Measur

e

Example

Items

#ofItems

Alpha

M

SD

r

CSRPractices

Ethical

CSR

Thisorganizationperformsinamannerthatgoesaboveandbeyond

legalrequirements

2

.84

3.91

0.89

.41c

.05a

Econom

icCSR

Thisorganizationisconsistentlyprofitable

5

.91

4.03

0.78

.41c

.05b

PhilanthropicCSR

Thisorganizationvoluntarilyperformsinacharitablemanner

4

.91

3.73

0.93

.39c

.04a

LegalC

SR

Thisorganizationprovidesemploymentthatmeetsminimumlegal

requirem

ents

5

.88

4.15

0.71

.40c

.01

SocialResponsibility

Decision

sinthisorganizationaretransparent

6

.89

3.97

0.76

.47c

.01

Environ

mentalResponsibility

Thisorganizationisenvironmentallyresponsible

3

.92

3.67

0.91

.35c

.00

1.ap


15/24


Table 2. A summary of correlations among the variables in the study.

Measure 1 2 3 4 5 6 7 8 9 10

1. Employee Engagement

2. Mission & Values .553. Career Opportunities .51 .42

4. Rewards & Recognition .50 .45 .49

5. Wellness .39 .34 .35 .43

6. Involvement .48 .41 .54 .51 .35

7. Leadership .48 .48 .51 .54 .38 .54

8. Resources .40 .39 .40 .45 .42 .39 .42

9. Results Focus .40 .48 .38 .36 .30 .38 .45 .37

10. Motivation & Initiative .39 .37 .45 .40 .35 .36 .37 .34 .34

11. Facilities .30 .33 .37 .40 .25 .35 .38 .39 .30 .33

12. Recruitment & Selection .46 .46 .49 .53 .42 .49 .59 .43 .45 .45

13. Performance Appraisal .45 .38 .54 .57 .34 .49 .48 .39 .39 .39

14. Role Clarity .36 .40 .26 .29 .36 .35 .30 .37 .39 .25

15. Talent .32 .34 .35 .35 .36 .31 .35 .31 .33 .68

16. Supervision .43 .42 .46 .47 .38 .49 .56 .36 .37 .38

17. Organization Direction .43 .52 .44 .41 .29 .44 .50 .35 .47 .31

18. Processes .38 .39 .40 .42 .41 .40 .47 .52 .44 .33

19. Diversity .32 .37 .31 .34 .30 .32 .39 .36 .39 .31

20. Work/Life Balance .22 .21 .18 .25 .48 .16 .18 .28 .22 .25

21. Learning and Development .43 .40 .52 .49 .40 .50 .51 .47 .43 .39

22. Technology .36 .37 .39 .42 .32 .37 .39 .52 .35 .35

23. Safety .34 .34 .36 .36 .33 .33 .39 .42 .35 .30

24. Teamwork .30 .33 .27 .29 .41 .26 .30 .29 .32 .53

25. Cross-Unit Cooperation .39 .38 .45 .48 .39 .50 .58 .45 .39 .40

26. Ethical CSR .44 .46 .39 .40 .29 .35 .40 .33 .30 .34

27. Economic CSR .39 .38 .38 .36 .36 .30 .42 .34 .42 .33

28. Philanthropic CSR .42 .42 .42 .39 .26 .35 .37 .30 .29 .3229. Legal CSR .41 .46 .34 .41 .36 .33 .42 .39 .38 .37

30. Social Responsibility .47 .54 .45 .47 .42 .42 .54 .41 .42 .40

31. Environmental Responsibility .36 .37 .38 .34 .30 .33 .37 .32 .30 .32



16/24


17/24


The fourth hypothesis suggested that CSR practices would explain additional variance in EE

beyond that explained by traditional HR practices. The hierarchical multiple regression was used

to test this hypothesis. As explained previously, the demographic options known to correlate with

EE (see Table 3) were entered at the first step in the hierarchical regression, and accounted for 14%

(p


18/24


8. Discussion

Applying Carrolls (1979) model of CSR, this paper assessed the relationship that four CSR com-

ponents had with EE. As hypothesised, ethical CSR had a stronger relationship with EE than did

legal CSR. However, ethical CSR, economic CSR and philanthropic CSR uniquely explained EE

to a similar magnitude. These findings allow for a better understanding of the way in which com-

panies should invest in CSR to influence employees. Namely, they suggest that companies are only

likely to gain benefits in EE by responding to ethically based societal expectations such as not

exploiting vulnerable or disadvantaged consumers (ethical CSR), by being financially successful

(economic CSR), and by being good corporate citizens through engaging in charitable practices

(philanthropic CSR). These results suggest that emphasising that an organization is legally compli-

ant (legal CSR) is not likely to improve EE. The reason why the four CSR components relate to EE

in this manner is not clear from the current results. One explanation could be that ethical CSR,

economic CSR and philanthropic CSR are all seen by employees as proactive attempts by an orga-

nization to contribute to society, whereas legal CSR may be seen as reactive compliance to rules

and avoidance of punishment.

Another explanation for why legal CSR did not significantly explain EE could be that most

organizations perform at a reasonable level in regards to legal CSR, resulting in employees taking

the legal compliance of employers for granted. However, employees may not assume employers

will always perform at a reasonable level on the remaining three components (i.e. economic, ethi-

cal and philanthropic CSR). This possibility is supported by the finding that legal CSR was the

highest rated in terms of organizational performance. The legal component (M= 4.15) was rated

significantly higher than the economic component (M= 4.03, t(3146)

= 8.44,p


19/24


will yield greater returns for organizations in terms of EE. The prominence of social over

environmental responsibility also supports the suggestion that employees respond to CSR in areas

that affect them most directly (Albinger and Freeman, 2000). Employees are more likely to directly

and immediately benefit from socially responsible action, which is likely to result in more person-

ally relevant outcomes, than they are from environmentally responsible action, which tends to havelong-term benefits.

Interestingly, the regression analysis found that neither social responsibility nor environmental

responsibility significantly explained unique variance in EE. One reason for this finding could be

that the two domains were not action-oriented enough for employees to distinguish social and

environmental responsibility from Carrolls (1979) components, and thus increase the surveys

ability to measure the relationship between CSR and EE. As mentioned, the suggestion that

employees did not fully distinguish social and environmental responsibility from Carrolls (1979)

components is supported by the presence of moderate-to-strong correlations among these con-

structs. As can be seen in Table 2, significant and practically important positive correlations were

observed between social responsibility, environmental responsibility and Carrolls (1979) fourCSR components. It will be important for future research to explore the discriminant validity and

interrelationship of various measures of CSR.

Finally, this paper also assessed the relationship between EE, traditional HR practices, and CSR

practices. Whilst the results from the first three hypotheses support a partial business case for CSR,

finding that CSR practices both correlate with and explain unique variance in EE, the results from

hypothesis four suggest that allocating resources to CSR may not be as advantageous as investing

in the improvement of core HR practices when attempting to increase EE. CSR was found to

explain little additional variance in engagement beyond HR practices (R2 =.01), questioning the

use of CSR to improve EE. The lack of additional variance explained by CSR suggests that orga-

nizations employing CSR alongside HR practices may not attain a greater level of EE than organi-zations that focus on HR practices alone. This finding highlights the importance of investigating

the impact of CSR on employee outcomes, in relation to the impact of HR practices. Investigating

the impact of CSR on employee outcomes, without considering the impact of HR, runs the risk of

suggesting that CSR may be beneficial to organizations in terms of these outcomes, when the gain

from CSR when also investing in HR practices, may be marginal.

The reason why CSR explains little additional variance in EE needs further investigation. One

of the reasons it was hypothesised that CSR would be associated with additional benefits in EE was

that employees may feel that there is a minimum level of acceptable CSR practices and that supe-

rior HR practices may not compensate for unethical practices. The lack of a significant interaction

between CSR practices and HR practices, in terms of their impact on EE, suggests that the level atwhich organizations perform in regards to HR practices does not influence the extent to which CSR

practices impact EE. This is an important finding as it highlights that the reason that CSR did not

explain much additional variance in EE, beyond HR practices, was not because employees were

not satisfied with the level of organizational performance in regards to HR practices.

An alternative explanation for why CSR explains little additional variance in EE could be due

to the manner in which employees perceive CSR. From the employee viewpoint CSR may be a

higher-order construct, encompassing many of the HR practices measured in this survey, such as

rewarding employees fairly, providing development opportunities, and supporting employee well-

being while at work. In other words, CSR and HR may not be separate activities in which a com-

pany can invest, but rather HR practices may be one of the primary ways in which an employer canbe socially responsible in the eyes of employees. If so, then it is not surprising that separate, and



20/24


more general, measures of CSR did not explain additional variance beyond specific measures of

HR practices. The possibility that employees view CSR as being closely related to HR practices

was supported by correlations between ratings of HR practices and CSR practices. As mentioned,

significant and practically important positive correlations were observed between the CSR prac-

tices and the HR practices that explained EE (see Table 2). Future research should explore theextent to which improvements in HR practices increase employee perceptions that organizations

are being socially responsible.

9. Limitations

This study is subject to some possible limitations. Firstly, employee perceptions of CSR, HR and

EE were obtained from a single source, increasing the risk of the results being subject to common

method variance (CMV). Consequently, the strength of relationship between CSR and EE, or

between HR and EE, may have been inflated as the variables may have shared a common source

of bias. Importantly, Spector (2006) claims that the suggestion that CMV will always influencevariables that have been assessed with a single measure is inaccurate, and suggests that rather than

assuming that systematic variance is produced by the use of a particular method, specific biases

should be considered. Due to the self-report nature of the current study, the specific bias that needs

to be considered is the potential for halo effects. Halo effects refer to the effect in which a general

view or rating of a person (or in this case, an organization) is based on a single characteristic

(Robbins and Mukerji, 1990).Halo effects may have occurred if a respondents ratings of the cor-

porate practices were biased by their opinion of the organization as a whole (e.g. I like my employer,

therefore the HR systems and CSR practices of my employer must be good). Due to halo effects

the strength of relationship between CSR and EE, or between HR and EE, may have been inaccu-

rate as respondents may have given inflated (or deflated) ratings of the corporate practices mea-sured in the study. Whilst it is possible that respondents may have given inaccurate ratings of the

corporate practices measured in the study, it is important to note that the crux of this paper focused

on the relative relationships between CSR, HR and EE. Consequently, halo effects would not

account for the finding that investing in the improvement of core HR practices is likely to be more

effective in increasing EE, than would investing in CSR.

It should also be noted that despite the potential for bias, it was determined that self-report was

still the best form of measurement for the current study. This study was interested in the extent to

which employeeperceptions of CSR and HR impacted their engagement levels, not in the extent

to which actual corporate practices influenced EE. Regardless of whether or not the employees

perceptions are accurate, employee attitudes, and their resultant level of engagement, is based ontheir perceptions, not on the actual practices of their organization. The extent to which employees

have accurate perceptions of corporate practices, and the manner in which organizations can ensure

that employees are aware of corporate practices, is a topic for other research.

A second possible limitation of this study is that the provision of a benchmarking report to partici-

pating organizations may have encouraged respondents to give higher than accurate ratings of

organizational practices, compromising the data collected. However, once again, whilst inflated

ratings may have influenced the strength of the relationship between CSR and EE or between HR

and EE, if respondents were giving inflated ratings it is likely they did so to all organizational prac-

tices. Hence, it is unlikely that higher than accurate ratings of organizational practices account for

the finding that HR practices are likely to be more effective in increasing EE than are CSRpractices.



21/24


10. Conclusion and future directions

This study investigates one aspect of the business case for CSR, namely the impact of CSR on the

outcome of EE. Carroll and Shabana (2010) discuss why a number of stakeholder groups may

care whether CSR impacts the bottom line. For example, corporate boards, CEOs, CFOs or share-

holders are likely to care given their interest in the firms financial welfare. Social activists may

care about the impact of CSR on the bottom line as it is in their long-term interests if companies

can sustain social initiatives and finally consumers may care as they want to pass on a better

world to their children. Regarding the aspect of the business case examined in this study, namely

the impact of CSR on EE, although ethical, economic and philanthropic CSR were all found to

uniquely explain EE, the argument to use CSR initiatives to increase EE was not strongly sup-

ported. When considered against traditional HR practices, CSR was found to explain little addi-

tional variance in EE.

These results have important implications for policy, practice and future research in terms of

implementing CSR in order to increase EE. These results suggest that investing in CSR alongside

HR practices may not lead to a greater return in EE, than would result from investing in HR prac-

tices alone. If an organization were to invest in CSR initiatives to increase EE, this paper suggests

investment in the ethical, economic and philanthropic CSR components of Carrolls (1979) model,

with a particular focus upon socially oriented activities, with less attention being given to environ-

mentally responsible actions. Importantly, further research is needed to examine why CSR explains

little additional variance in EE. Research needs to examine the manner in which employees per-

ceive CSR, specifically examining whether employees view CSR as encompassing traditional HR

practices. Further examining the way in which employees perceive CSR should also improve

understanding regarding the means by which the four components of Carrolls (1979) CSR model

relate to employee outcomes. It is also important that future research continues to examine the

impact of CSR on employee outcomes, relative to the impact of HR practices, as although CSR

was found to have limited impact on EE in this instance, the practices that impact employee out-

comes can vary over time (Bassi and McMurrer, 2007).

As well as providing useful information around the practical implementation of CSR (and HR)

practices in order to increase EE, the results of this study have useful implications for a range of

management and stakeholder groups (e.g. consumers, shareholders). EE and related HR outcomes

have been linked to a number of performance-related measures, making this a construct of interest

to a number of stakeholder groups. As mentioned earlier, EE has been linked to customer satisfac-

tion, profitability, productivity, employee turnover, and safety outcomes as well as well as manager

reports of organizational goal attainment (Harter et al., 2002; Langford, 2009). Bassi and McMurrer

(2007)highlight how the effective management of employees and investments in human capital

management (e.g. leadership development, job design and knowledge sharing) relate to perfor-

mance on measures such as sales revenue, factory safety, stock market returns and even student

scores on standardised tests. It has also been suggested that investors are increasingly opting for

organizations that are socially responsible (Olson and Toyne, 2000) and Royal and ODonnell

(2008) discuss how analysing the sustainability of human capital practices, including recruitment,

training, career planning and performance management, can allow for a more accurate analysis of

the potential future financial performance of a firm. In sum, in highlighting the HR and CSR prac-

tices that organizations can use to increase EE, this paper can have implications for performance

on a range of measures that are likely to be impacted by EE. This paper suggests that of the prac-

tices measured in this survey, the following are likely to lead to the greatest increases in EE: ensur-

ing employees believe in the organizations purpose, values and work; ensuring that enough



22/24


opportunities exists for career progression and that enough time and effort is spent on career

planning and developing skills for career progression; and ensuring that the rewards and recogni-

tion that employees receive are fair, that employees perceive the organization to be fulfilling its

responsibilities to them and that employees are satisfied with the income and benefits they receive.

Finally, although this paper examines the impact of CSR on EE, it is important to note thatincreasing EE is not the only reason to implement CSR. There are a number of aspects to the busi-

ness case, with CSR being linked to improvements in other stakeholder outcomes, as well as ben-

efits beyond stakeholder groups (e.g. long-term corporate sustainability). A number of normative

arguments also support organizational investment in CSR. Consequently, whilst the results from

this paper suggest that engaging in CSR in order to increase EE may be a redundant choice, a broad

range of corporate outcomes and other arguments associated with CSR need to be fully examined

before it is decided whether investing in CSR is, on the whole, a responsible or redundant business

decision.

Funding

This research received no specific grant from any funding agency in the public, commercial, or not-for-profit

sectors.

Notes

1. University researchers involved in non-profit research can use the Voice Climate Survey without cost, and

the data from the current study are available to staff at other institutions.

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Date of acceptance of final transcript: 9 September 2011.

Accepted by Associate Editor, Rose Trevelyan (Organizational Behavior).

Documents

Responsible or Redundant Engaging the Workforce Through Corporate Social Responsibility