Mitigating skilled labor scarcity through corporate social responsibility program: Lessons from a large company in Indonesia

Abstract

Scarcity of skilled labor is one of the daunting issues for companies operating in developing economies. This study explores the role of a corporation in solving the issue of skilled labor scarcity by fully financing and operating one of the best manufacturing polytechnics in Indonesia since 1995. It compares a theoretical framework on the linkages between responsible leadership, CSR, social capital, and corporate sustainability with the CSR practices of one of the largest publicly‐listed corporations in Indonesia. This study applies a case study approach to investigate why and how corporate leaders invest in CSR programs that contribute to social capital development and corporate sustainability. It finds that company's long‐term CSR investment in providing higher vocational education in manufacturing has a developed sustainable supply of skilled labors that contributes to the sustainability of the company. The study clarifies the actual relationships between responsible leadership, CSR, social capital, and corporate sustainability in the context of a developing country. The conceptual model from this study can be replicated by corporations operating in emerging markets, where they are expected to not only generate profit but also contribute to the achievement of sustainable development goals. Show more