Abstract
Although there is no agreed upon universal definition of corporate social responsibility (CSR), organizations are often ranked in terms of their CSR performance. However, two glaring gaps have been identified in the CSR literature. First, evaluation methodologies are questionable and often lack a scientific basis and second, stakeholder representation is not made explicit or is missing altogether. This paper contributes to the CSR literature by constructing a CSR index based on the Analytic Hierarchy Process (AHP), as well as ensuring that stakeholder judgments are an integral part of the constructed index. The developed index is implemented to measure CSR performance in a business setting. An AHP-based CSR Index is developed for the Services Sector in Saudi Arabia to serve as a case study. The developed index is used to measure CSR performance in over forty corporations. The paper adds to the existing literature by providing insight into how the Saudi corporations perceive and practice CSR. The paper concludes that a systematic usage of the developed AHP-based CSR index would facilitate corporations to adopt a more responsible and measurable behavior, while it offers government institutions the option to rank corporations in terms of their CSR practices in a scientific manner.
Highlights
Hoffman [1], in his historical study, concluded that the concept of corporate social responsibility (CSR) goes back to the 1920s
Very few studies have attempted to formulate a framework of analysis that systematically documents or prioritizes CSR practices
Most previous CSR literature fell short in addressing this issue
Summary
Hoffman [1], in his historical study, concluded that the concept of corporate social responsibility (CSR) goes back to the 1920s. It has grown in recognition as exemplified by initiatives like the Global Reporting Initiative in 2002, and the more recent directive of the European parliament and Council of 2013 that require a CSR disclosure in annual financial reporting. In spite of the accelerating rise of the CSR concept in recent decades, and its popularity as a research topic, it has no exact definition to date and lacks a universally accepted framework [2–4]. Bowen [5] coined the first CSR definition. He emphasized that responsibility of corporates actions goes beyond their profit and loss statement. In 2001, two definitions were proposed by the European Commission’s green paper: 1) “CSR is a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment”, 2) “CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” [6]
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