Discharging Corporate Social Responsibility by Bole Lemi and Adama Industrial Parks, Ethiopia

Abstract

The concept of corporate social responsibility has become a major issue in the modern world. The idea behind this concept is that business organizations should play a positive role in the community and consider the environmental and social impact of business decisions. In order to overcome global economic challenges the government of Ethiopia has established and launched industrial parks in different parts of the country. Among these parks Bole Lemi and Adama Industrial Parks were the major ones committed to producing and exporting textile and garment products. Although most of the industries in these parks are established to make profit, they are also responsible to protect the environment and contribute to social benefit of the community at large. Due to these facts, this study examined the current practices of corporate social responsibility, the major reasons for discharging corporate social responsibility, and its effect on the sustainable competitive advantage of the industries. In order to achieve these objectives, the study used a concurrent mixed research approach with descriptive and explanatory research designs. Data were collected from 612 sample respondents who were selected randomly from different industries operating in the industrial parks. Both descriptive and inferential statistics with structural equation modeling were used to analyze the data. The findings of the study confirmed that, the environmental and economic dimensions of corporate social responsibility practices are well implemented in the parks. However, the philanthropic, legal and ethical dimensions are not practiced well in the parks. The major reasons for discharging corporate social responsibility practices were the law of the land where the business regulations required them to do so, beyond that, they also have their own company policy to discharge corporate social responsibility practices. One surprising finding was that employees in the park did not participate in the company corporate social responsibility practices. Finally, the study revealed that environment and economic dimensions of corporate social responsibility have a positive and significant effect on sustainable competitive advantage. On the contrary, the philanthropic dimension has a significant but negative relationship with sustainable competitive advantage of the industries. Legal and ethical dimensions have no relationship with sustainable competitive advantage of the industries. Based on these findings, the study recommends that the industries operating in the parks should also focus on doing business in an ethical manner by considering the norms and standards of the global and local community. Moreover, the industries in the parks should also give due attention to their employees by creating conducive working environment, paying fair and competitive salary as well as providing training and education opportunities. The government should also design a policy in order to determine minimum wage practices in the country to make the salaries fair and equitable.