The Relationship Between Corporate Social Responsibility and Continuous Improvement Orientation and Their Effects upon Employee Attitudes*
David Hollingworth, Ph.D.
Associate Professor of Operations Management
Department of Management
293 Centennial Drive, Mailstop 8377
University of North Dakota
Grand Forks, ND 58202-8377
(701) 777-2638
Sean Valentine, D.B.A.
UND Alumni Leadership and Ethics Professor
Professor of Management
Department of Management
293 Centennial Drive, Mailstop 8377
University of North Dakota
Grand Forks, ND 58202-8377
(701) 777-3632
*A substantially enhanced version of this paper -- which may be more appropriate for use as a reference or for citation -- is available from the authors upon request. Please address correspondence to the first author.
*The authors gratefully acknowledge the cooperation of an unnamed organization which provided access and data that facilitated this research. This research was also partially supported by a grant from the College of Business and Public Administration, University of North Dakota.
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Corporate Social Responsibility, Continuous Improvement Orientation,
Organizational Commitment and Turnover Intentions
Abstract
Prior research has established that both Total Quality Management (TQM) and Corporate Social Responsibility (CSR) have positive effects upon employee attitudes. Some have posited that TQM and CSR are compatible, while others disagree. This study examines the relationship between continuous improvement oriented aspects of TQM and CSR by assessing the congruence of the values that underlie TQM and CSR. Survey data from employees of a Mid-Western (USA-based) financial services firm is analyzed to test hypotheses regarding the relationship between CIO and CSR and the effects of CSR and CIO upon employee’s organizational commitment and turnover intentions. Results provide evidence supporting 1) a strong relationship between CSR and CIO, 2) Positive relationships from both CSR and CIO with organizational commitment, 3) A strong relationship between organizational commitment and turnover intentions. Managerial and theoretical implications are discussed, as well as limitations and future research directions.
Keywords: Corporate Social Responsibility, Continuous Improvement, Total Quality Management, Employee Attitudes, Employee Turnover.
Introduction
Are corporate social responsibility and continuous improvement aspects of TQM compatible?
“The view here is that CSR and quality management are based on incompatible premises. Quality management is based on absolutist ethics, while CSR is fundamentally ambiguous. Quality management has a clear objective—customer satisfaction. CSR seems to convolute a set of objectives such as maximizing shareholder wealth and giving back to society. Strategic managers should take care before they attempt to simultaneously engage in TQM and CSR, as generally understood” (Barrett, 2009, p. 29).
“CSR could be a natural progression for those organisations that have already begun their “quality journey” (Hazlett et al., 2007, p. 672).
Based upon these two perspectives, it would appear that the jury is still out. However, the majority of existing research suggests that the practice of TQM and CSR could, in theory, be compatible (e.g. Hazlett et al., 2007; Kok et al., 2001; McAdam and Leanord, 2003; Wicks, 2001). However, there are those who take exception to the majority view, including Barrett (2009) who views CSR and TQM as incompatible, and Castka and Balzarova (2007), who view current views or interpretations of TQM as incongruent with CSR. Unlike Barrett (2009), Castka and Balzarova (2007) hold out some hope that TQM can be re-invented to be compatible with CSR.
With few exceptions, previous research focuses on theoretical investigation of the question. Unfortunately, research in this area may be stalling, probably because very little, if any empirical investigation of the theory has been reported in the literature. The present study attempts to address this gap in the literature. We report on a theory-based, empirical analysis of the relationship between CSR and continuous improvement-related practices, which are an important part of TQM. Our intent is to furthering knowledge development by testing several hypotheses which directly and indirectly assess whether CSR and TQM can co-exist in an organization. Based upon hypotheses developed from the literature, we also examine the effects that CSR and TQM have upon employee attitudes and behavioral intentions.
Literature
Quality Management
The evolution of quality management thought and practice are described by Garvin (1988). He suggests that quality practice has progressed through four stages that might be characterized as focusing on 1) products and services, 2) processes, 3) inter-organizational issues, and 4) extra-organizational issues. It is the last stage with which we are primarily interested, because of the explicit consideration that TQM gives to the organization’s relationship with society.
Research in the area of quality management appears to have developed in stages. Flynn, Schroeder, and Sakakibara (1996) describe three phases of development in quality management research. In addition to the three stages of quality management research identified by Flynn et al. (1996), and consistent with the view of Garvin, 1988) we suggest that a fourth stage followed in which scholars developed a deeper understanding of the theoretical underpinnings of quality management, while also addressing the ever-broadening perspectives on quality management (e.g. Anderson et al., 1994; Choo et al., 2007; Dean & Bowen, 1994; Detert et al., 2000; Hazlett et al., 2007; Kok et al., 2001; McAdam and Leonard, 2003; Wicks, 2001). Of particular interest to the present study, are articles that facilitate an attempt to assess the relationship between quality management and CSR.
Based upon commonly used views of organizational culture, Detert et al. (2000) synthesized general dimensions of organizational culture and described how those dimensions corresponded to specific values and beliefs underlying quality management practices. They reasoned that the underlying cultural characteristics or values of an organization can be in conflict with the cultural values inherent in practices that an organization is attempting to implement. They further reasoned that such conflict will result in failed implementation or failure to maintain effective implementation. Using their framework of the cultural values underlying quality management practice, they showed that some failures of TQM implementation can be attributed to incongruent organizational and TQM values.
Other studies explore more specifically how quality approaches and CSR might be interrelated. Kok et al. (2001) used a “quality audit” approach to evaluate the extent to which existing quality award systems (specifically, the Malcolm Baldrige National Quality Award and European Quality Award) incorporate the social responsibility directly into their evaluation processes. Their findings suggested that the award systems inadequately addressed the assessment of organizational social responsibility. From the perspective of quality management, McAdam and Leonard (2003) demonstrated how total quality management can support the implementation of CSR within organizations. This was accomplished through demonstrating that the underlying ethics values of quality management are quite similar to those supporting CSR and reasoning that compatible ethical values provide a common basis for the quality management and CSR. This same logic would also support an argument that the ethical values underlying CSR also support quality management. Wicks, (2001) reasoned that total quality management inherently includes a set of moral values and used this perspective to extend that theoretical development of total quality management. The study provides a rationale supporting the idea that successful implementation and maintenance of TQM within organizations requires an accurate understanding of and correct “enactment” of the moral values that are inherent in total quality management. Hazlett et al. (2007) discuss similarities in various definitions of TQM and CSR to identify the potential for a “fit” between TQM and CSR. They conclude that TQM and CSR are compatible. They demonstrate this through the use of six cases studies to evaluate the “fit” between CSR and TQM practice.
Corporate Social Responsibility
CSR is part of a broader construct known in the management literature as corporate social performance, which involves “the totality of a firm’s efforts to meet changing societal conditions” (Wartick & Cochran, 1985, p. 758). Carroll (1979) was one of the first scholars to provide a comprehensive overview of the corporate social performance concept, advancing a model that detailed three basic elements that drive an organization’s socially-driven strategies and actions. This framework indicated that social performance was comprised of 1) different social responsibilities related to key stakeholders, 2) varying degrees of social responsiveness from “reactive” though “proactive” positions, and 3) a set of social concerns that encourage corporate involvement (Carroll, 1979; Geva, 2008).
Other models of social performance have been proposed based on Carroll’s seminal research. For instance, Wartick and Cochran (1985) expanded Carroll’s work by specifying that corporate social performance is comprised of “principles” that guide a philosophy of social responsibility, “processes” that create a institutional profile for social responsiveness, and “policies” that establish an orientation for the administration of social concerns. Wood (1991) further distilled the corporate social performance concept by specifying that the overall system relies on basic principles of social responsibility, processes used to respond to social initiatives, and specific outcomes of organizational action. Finally, Swanson (1995) suggested that corporate social performance should be conceptualized as containing both macro- and micro-level principles of CSR that influence the cultures of organizations and the eventual societal outcomes of socially responsible corporate behaviors. Based on this proposed model and subsequent discussions (Swanson, 1995, 1999), “Swanson reoriented Wood’s framework through shifting the focus of attention from the CSP branches—processes of corporate social responsiveness, programs, policies, and social impacts of corporate behavior—to the CSP trunk: the core responsibilities that cannot be escaped because they are integral to action” (Geva, 2008, p. 3).
Corporate Social Responsibility and Quality
Several studies refer to an explicit or implicit linkage between CSR and TQM. For example, Hazlett et al. (2007) identify commonalities in CSR and TQM by examining their various definitions. Kok et al. (2001) search for direct measures of CSR within TQM award systems. Detert et al. (2000) consider TQM from an organizational culture perspective and discusses the “values” that are necessary for effective implementing and sustaining TQM, thereby providing the theoretical building blocks for a discussion of common or shared values in TQM and CSR. McAdam and Leonard (2003) extending the discussion of “values” by viewing CSR and TQM through the lens of ethics to identify ethical values which they indicate, are shared by TQM and CSR. Rothschild (2000) considers the impact that that TQM has had on creation of a more just and democratic workplace and the resulting effects experienced by society. To some extent, each of these studies contributes building blocks for the development of a theory linking CSR to TQM. As a group, they base the linkage between CSR and TQM on shared meanings and values that underlie both TQM and CSR—or a common “culture” or “ethic” that is necessary and perpetuated by both CSR and TQM. For the most part, these studies collectively suggest that a specific set of shared values or a common “culture” provide the basis for an organizational context that facilitates the successful deployment of both CSR and TQM—the absence of which will result in dysfunctional outcomes when either or both TQM and CSR are implemented within an organization. Functional and, or dysfunctional outcomes may take the form of employee attitudes, behaviors, and performance. The following section considers some of the relevant literature on employee attitudes and behavioral intentions as they relate to the present study.
Employee Attitudes and Behavioral Intentions.
Previous research shows that employees respond to their work environments with different attitudes representing affect, cognition, and/or behavioral intentions. When the workplace provides positive experiences (i.e., opportunity, collegiality, interesting job assignments, etc.), individuals often react in a favorable manner with positive feelings and thoughts that often lead to beneficial courses of action. Alternatively, when employees experience negative factors at work (i.e., poor leadership, low recognition, incivility, etc.), they can be expected to react is similarly negative way with poor work attitudes. It is therefore in management’s best interest to develop an employment context within the organization that enhances employees’ attitudes by fulfilling their basic work-related needs and expectations.
One important employee attitude that has received much attention in the management literature is organizational commitment, which involves a profound connection an individual has for a certain company or employer (Meyer & Allen, 1997; Mowday et al., 1979, Porter et al., 1974). While several types and definitions of the construct have been proposed, a common conceptualization assumes that committed employees have a “strong belief in and acceptance of the organization’s goals and values,” they possess “a willingness to exert considerable effort on behalf of the organization,” and they have “a strong desire to maintain membership in the organization” (Mowday et al., 1982, p. 27). Given these characteristics, organizational commitment represents a significant attachment to a firm, rather than only a modest preference, which encourages individuals to actively support their employer (Mowday et al., 1979).
Another key work response related to organizational commitment is turnover intention. Turnover intention involves an employee’s willingness to leave a current work situation, or more specifically, “the likelihood that a person will leave his/her job within the foreseeable future” (Elci et al., 2007, p. 287). Such intentions and actual turnover are often driven by adverse job experiences such as role stress, poor job satisfaction, and generally poor working conditions (Hom & Griffeth, 1995). Consequently, when employees are provided a workplace characterized by positive employment experiences, it is often expected that turnover intention will be attenuated.
Hypotheses
It has been suggested that CSR and TQM are related because the two concepts share common principles and require/engender similar and compatible moral values (McAdam and Leonard (2003). In addition, CSR and TQM are both anchored in similar ethical foundations and require similar organizational cultures or climates. This similarity in underlying values not only allows both to co-exist, but actually creates conditions supporting a partnership between TQM and CSR. Wicks, (2001, p. 525) reasons that the moral factors that support TQM also support CSR:
“Finally, the extension of the basic value dynamics—particularly trust, cooperation, and integrity—to relations with other stakeholder groups would appear to provide value to the firm as well as additional advantages… First, …opportunism tends to undermine one’s reputation for being trustworthy, and therefore, for sustaining willing cooperation over time. While opportunistic actions aimed at workers or suppliers would more directly affect their willingness to trust and cooperate, opportunism directed at other stakeholders would also appear to have this effect. Second, research… on trust and cooperation indicates that consistency and integrity are critical to the maintenance of trust and cooperation. For managers to sustain the internal environment, they will need to act with integrity and trust (though not necessarily at the same levels) with other groups, so the extension of such behavior is a natural outgrowth of their commitment to TQM. Third, the extensive literature on corporate social performance, though it has produced mixed results, suggests that it is unlikely that the firm would suffer significant harm from such behavior. Indeed, Donaldson and Preston (1995)… maintains that greater concern with and respect for the interests of a broader group of stakeholders tends to benefit the firm.”