Corporate Social Responsibility in Saudi Arabia Literature Review

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As he believes, that when firms are collaborating with government officials, they are creating win -- win situations for everyone involved. This is significant, because it is showing how the government wants to see these kinds of programs implemented to improve the business environment and the standard of living in various regions of the country. Once this occurs, it means that Saudi Arabia will be the focus of increased amounts of foreign direct investment capital. This will help the nation to be able to adapt and adjust with transformations that are occurring in the global economy. The information from this source is useful, because it is showing how governments are pushing social responsibility initiatives to increase economic development. This is the point that their economy will realize the long-term benefits from these kinds of programs. (King Abdullah Call for Corporate Social Responsibility 2009)

The article that was written by Gravem (2010), is discussing how there has been an emphasis on corporate social responsibility inside the Kingdom itself. This is because the government has been aggressively promoting these kinds of programs going back almost five years. The reason why, is globalization has been causing a transformation in how various services are delivered to the general public. This meant that many functions that were performed by the government had to be changed.

Instead, the various agencies had to work in conjunction with private businesses to address a host of issues affecting a number of communities. To include: a lack of affordable housing, possible environmental damage from economic development and how to shift the nation away from primarily exporting crude oil. The combination of these factors meant there were actual tools created to measure which firms have the greatest amounts of social responsibility (a.k.a. The Saudi Arabian Responsible Competitive Index). This is an index that determines which firms are contributing the greatest amounts of human and social capital to Saudi Arabia. The company that makes the biggest impact will receive the King Khalid Responsible Competitiveness Award. This is a prize that is given from: Saudi Arabian General Investment Agency (SAGIA), two non- governmental organizations, the National King Khalid Foundation and Global Account Ability. (Gravem 2008) The information from this source is useful, because it is illustrating how the government is encouraging corporate social responsibility to ensure that the economy will see stable long-term growth. While at the same time, it is more effectively addressing the needs of communities. As a result, this is an indication of how globalization has been having an impact on how governments are working with businesses. (Gravem 2008)

In the article that is titled Corporate Social Responsibility in the Kingdom of Saudi Arabia (2009) it is talking about how NCB bank has been focused on different programs that address social issues impacting the community. The most notable include: creating job opportunities, encouraging entrepreneurship, anti-smoking initiatives, computer literacy, obesity prevention, women's programs and assisting the physically challenged. These different elements are important, because the combination of them is allowing NCB to create favorable images in the minds of customers. (Corporate Social Responsibility in the Kingdom of Saudi Arabia 2009)

Evidence of this can be seen by looking at the below results of a study that was conducted by the bank on: how corporate social responsibility is influencing their relationship with the customer. What they found was that, this gave them a number of benefits that help to increase the brand image and profit margins. As respondents from surveys were underscoring these views to include:

62% of respondents who believe that good CSR will lead to improved relations between workers and communities.

63% who make recommendations to friends and family about those firms that are actively involved in social responsibility.

56% of new investors who feel comfortable working with firms that are embracing these practices.

Commenting about what these findings is Abdul Kareem Abu Al Naser (the CEO of NCB Saudi Arabia) who said, "As an extension of our commitment to corporate social responsibility in the region, NCB is pleased to support efforts toward building CSR awareness and understanding in Saudi Arabia and across the region. With these objectives in mind, we have published this study to serve as a base from which positive corporate interest can emerge and proactive development as well as implementation of CSR initiatives will be championed in the Kingdom.

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" (Corporate Social Responsibility in the Kingdom of Saudi Arabia 2009) These different figures are important, because they are showing how the bank is focusing on corporate social responsibility to improve the image of the firm and increase customer loyalty. The information from this source is useful, because it is illustrating how many private corporations will often engage in CSR related activities to improve their reputation and profit margins.

In the article that was written by Al Ashaikh (2009), he is discussing how in the past corporate social responsibility did not receive as much focus as it does today. A good example of this can be seen by looking at the below table that illustrates the total percentage of companies that were focused on CSR related initiatives in different regions of the world from 1990 to 2003.

Table 3: Total Number of Firms that are involved in CSR Activities by Region from 1990 to 2003

Area

% of Firms involved in CSR

Europe

58%

The Middle East

2%

The Americas

20%

Asia / Australia

20%

(Al Ashaikh 2009)

This is significant, because it is showing how CSR was often ignored in the Middle East. Then, a transformation occurred as many governments are working with private firms to address a host of social challenges impacting communities and entire regions. (Al Ashaikh 2009)

Evidence of this can be seen by looking at the below table with the implementation of the ISO 14000 Environmental Management System among Middle Eastern-based corporations. This is a series of procedures that businesses can use to dramatically reduce their carbon foot print and environmental impact.

Table 4: The Total Number of Middle Eastern Businesses that are using the ISO 14000

Country

ISO 14000 Certificates (in millions)

UAE

53.2

Saudi Arabia

1.4

Morocco

1.4

Jordan

7.0

Israel

51.3

Iran

7.8

Egypt

6.3

(Al Ashaikh 2009)

These different figures are significant, because they are showing how Saudi Arabia has been seeing the lowest amounts of CSR related activities. In the past, this has hurt the Kingdom's ability to attract foreign direct investment capital. As a result, there has been a transformation in how the government is addressing these issues through: having various programs that are encouraging businesses to do more. In the last five years, this has led to an increase in these kinds of initiatives with the government focusing on broad categories of CSR related activities. This is significant, because it is showing how the above figures are forcing government officials to start programs that will improve the competitiveness of the economy over the long-term. The information from this source is useful, as it is illustrating how globalization is causing governments and businesses to utilize CSR to standout against other firms in the market place. Once this occurs, is when they can maintain their competitive advantage inside the sector. (Al Ashaikh 2009)

In the piece of literature titled the Saudi Responsible Competitive Index (2008), it discusses how the implementation of any kind of CSR programs must take into account a number challenges that are facing the nation. This is because they have lower rankings in a number of areas that are important to foreign direct investors. The below table illustrates where the Kingdom ranks in comparison with the rest of the world for criteria that is of significance to multinational entities.

Table 5: Saudi Arabia vs. The Rest of the World in Favorable Investor and Business Categories

Category

Rank

Ethical Behavior of Firms

46th

Efficiency of Corporate Boards

55th

Protection of Minority Shareholders

71st

Staff Training

77th

WorkForce Diversification

130th

These figure are important, because they are showing how there are a number of areas where Saudi Arabia needs to improve upon to attract more foreign direct investment capital. As a result, the government, businesses, nonprofits and private citizens are becoming involved in a host of different projects to achieve these objectives. Over the course of time, this can have a positive impact on the standard of living and the quality of life inside Saudi Arabia. While at the same time, it is allowing businesses and the nation to receive additional working capital to keep up the tremendous amounts of growth. This is important, because it is showing why a host of organizations have become involved in CSR to help increase their.....

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