Determinants for CSR in Developing Countries: The Case of Indonesian Palm Oil Companies

Abstract

Corporate social responsibility (CSR) is playing an increasingly important role in developing countries like Indonesia, where the palm oil industry, in particular, has caused public concern over its possible impacts on the environment. A land reallocation program called NES has been initiated by the Indonesian government with the aim of harmonizing the benefits of palm oil production between the palm oil processing companies and small-scale farmers. This is of particular interest as the CSR activities of the companies could provide an indicator of their attitudes toward a socially acceptable management style. This research aims to find empirical evidence to identify the driving forces behind the CSR activities carried out by palm oil companies in Indonesia. The results of the regression analysis performed on data from a questionnaire survey of large-scale palm oil companies concluded that not only the size of the company but also the performance of the NES scheme and the perception of relationships with local communities are major driving forces that stimulate participation in CSR activities.