The social capital that bridges CSR programs and corporate sustainability : the case of Astra in Indonesia / Risa Bhinekawati.

Abstract

Recently, there have been debates in the literature about the role of companies in dealing with broad social issues in developing countries, and the need for empirical research to investigate how large companies play their ‘public roles’ in improving social condition in such context. The literature on sustainable development, corporate social responsibility (CSR), and corporate sustainability are interrelated but need to be clarified, especially in the context of developing countries. Some experts strongly argue for social capital as an alternative way of improving the livelihood of low-income people in developing countries, but empirical evidence is needed to support this. Therefore, this research has two objectives. First, to investigate the actual role of a large company in contributing to sustainable development in a developing country, and second, to explore why and how the concepts of sustainable development, CSR programs, social capital, and corporate sustainability are interrelated and evolve over time. This research used an exploratory qualitative case study to understand the evolution of the linkages between the four concepts longitudinally, over periods ranging from 15 to 40 years. A single case study of Astra International (Astra) in the context of Indonesia was chosen as an exemplary case study for theoretical or purposive sampling. Three CSR programs dealing with different social issues were chosen as embedded cases: 1) micro, small and medium enterprise development addressing weak local supply chain problems; 2) a manufacturing polytechnic founded to mitigate the scarcity of skilled labour; and 3) palm oil farmers’ development dealing with poverty and social conflicts surrounding the company’s palm oil plantations. This research found that a company can play a ‘public role’ in contributing to sustainable development. There are similar patterns of linkages between sustainable development, CSR programs, social capital and corporate sustainability across the three cases. In this study, CSR programs were driven by the company’s genuine intentions to contribute to sustainable development by solving social issues in fulfilling its business needs through CSR programs. By investing in CSR programs, the company built social capital such as social relationships (bonding and bridging), providing resources (management and technical competence, finance access and market access) for CSR programs stakeholders, and generated collective action (‘win-win partnerships’) in achieving sustainability goals for the company. The study found that enhanced social capital enabled the company to achieve higher economic, social and environmental performance, simultaneously, thereby looping back to its contribution to sustainable development in Indonesia. These research findings are amalgamated into a theoretical model that links sustainable development (as driving forces), CSR programs (as corporate inputs, actions and process), social capital (as outputs of CSR programs), and corporate sustainability (as outcomes of CSR programs). Such a model can be used by researchers and managers seeking to understand business sustainability. This study found that it is possible for companies to be responsible and yet profitable in developing countries like Indonesia, despite challenges of poverty, weak supply chains, skilled labour scarcity, social conflicts and a lack of government oversight. This study reveals that social capital plays important roles in building sustainability for both the company and society. Show more