Examining the relationship between corporate social responsibility (CSR) and competitive advantages — Sinopec

Chapter 1.0: Introduction

1.1 CSR and competitive advantage

Corporate Social Responsibility (CSR) has become an important component of the businesses in the 21st century, but there is increasing debate on CSR in terms of its role of competitive advantage for the business. Companies actively manage their social, economic and ethical activities, but the alignment of the components with corporate vision is fundamental for successful of the CSR  (Du, Bhattacharya and Sen, 2011).

Researchers believe that CSR initiatives which are not aligned with the strategy of the company failed to deliver long-term benefit for the organization. The value of the CSR in the light of theories proposed by neoclassical school suggests that CSR actions which are not reconciled with corporate strategies fail to produce collective benefits for the organization as well as companies (Garriga and Mele, 2013).

Furthermore, it suggests that companies who CSR activities are placed at the heart of its corporate strategy helps to develop sustainable competitive advantage. (Forsman, 2013) The action of the companies to align its CSR initiatives such preserving natural environment, safe and healthy working environment and contribution to society through alignment with the operation of the organization support to long-term partnership with stakeholders. Researchers have showed that benefit of CSR is increase product efficiencies, product differentiation as well as the development of a strong relationship with stakeholders (Saeed and Arshad, 2012).

However, the major problem behind the lack of alignment between corporate strategy and CSR actions is a lack of clarity and understanding on how to integration CSR and its outcome in terms of SCA. (Hildebrand, Sen and Bhattacharya, 2011) The fundamental question is to investigate how can CSR actions can be successfully integrated into corporate strategy and its impact on the organization. Therefore, the purpose of the study is to examine how CSR has helped to develop competitive advantage.  (Hond et al., 2014)

 1.2 Problem statement

The objective of the corporate social responsibility (CSR) to build positive relationship between with stakeholders, build relationship as well as build brand image. CSR has direct influence on the reputation and image of company. Nevertheless, there is little evident how it help the company to tackle the negative image and maintain the trust of the stakeholders for the long period of time. (Dowling and Moran, 2012)

CSR has positive benefits for the business such as lower costs, improve revenues, enhanced corporate image but their little evidence that how exactly CSR help the organization to develop sustainable competitive. The literature on CSR and sustainable competitive advantage largely exist for developed market, but studying the relationship in emerging markets such as china has enclosed a different perspective. (Jamali, 2014)

To study the CSR and its role in competitive advantage can be viewed from the consumer perspectives that are directly and indirectly affected from the actions of the organizations. The impact of CSR initiatives varies from consumer perspective and effects their purchase decisions. Researchers have argued that the benefits and results of CSR have varied and have both positive and negative effect on the consumers. (Husted, Allen and Kock, 2015)

The significant problem is managing a strategic fit between company activities and CSR initiatives. The CSR activities have two-folded perspective because when company choose activities which does not fit with its vision it fails to bring the positive benefit for the companies. (Becchettia et al., 2012)

On the other hand, CSR activities aligned vision of the company it improve the image of the company, influence the customers and create the positive association between customer and company. (Benn, Dunphy and Griffiths, 2014) Therefore, it is important to examine the relationship between CSR and competitive advantage for the organization. The focus of the study is on the Chinese company Sinopec which is one of the largest ‘Oil and Gas Company.’

 1.3 Rationale of Research

The important of corporate social responsibility (CSR) and its role in achieving the sustainable competitive is debatable. The interest of the external stakeholders based on the social and economic benefits and actions of the company which result in sustainable competitive advantage has research gap especially related to emerging markets such as china.

The specific area of concern is how CSR actions of the company for the community develop the competitive advantage. The specific factors examined are combination of the economic, ethical and legal initiatives from the customer perspective.  (Malik, 2015)

1.3.1 Research Questions

The aim of the research is to find out that

What is relationship and effect of Sinopec CSR initiatives in achieving competitive advantage in its home market china?

1.3.2 Research framework

According to Morin and Orsini (2014) the four major element of CSR are ethics, economic, environmental and legal aspect. CSR is not a new idea as well as Smith (2014) suggest that companies operates in community and as member of community it is responsibility of the organization to conduct its operations ethically, make economic contribution to the society, preserve the environment and resources and compliance with legal provision as well as control the negative effect of the operations on the society.

Moreover, Mirvis (2012) argue that CSR concerned with activities and status of the organization to meet the obligation of the stakeholders. The range of alternative for CSR includes corporate citizenship and philanthropy, triple bottom, corporate social performance as well as corporate accountability. (Marais, 2012)

CSR research framework

Figure 1: Research Framework

According to Aguinis and Glavas (2012) the motivation theory argues that CSR actions of the organization are based on the Maslow’s hierarchy of the needs. The CSR actions of the organization are fulfillment of the self-actualization need of stakeholders. (Aguinis and Glavas, 2012) CSR is multi-dimensional area and for this study the key four factors role in terms of organization action and their interaction for competitive advantage is examined.

1.3.3 Research Objectives

The objective of the research is to examine the relationship between corporate social responsibility and competitive advantages of Sinopec Corporation. The social actions of the company and customer response are evaluated to understand how CSR has contributed towards the competitive of the Sinopec. The research focused on the Chinese customers and their response towards CSR actions of the company.  The objectives of the research are

  • To determine the impact of CSR actions on the consumer
  • To analyze how customer perceived the CSR action of Sinopec
  • To find out whether company actions are aligned with operations of the company
  • To understand the value of social and economic initiatives for the community
  • To evaluate the interaction of CSR and response of the consumer
  • To understand CSR actions that has influence the customer and they have believe in company initiatives.

1.3.4 Sinopec Corporation

Sinopec Corporation is integrated company for energy and chemical. The core business of the company is to oil and gas exploration, refining services as well as marketing and distribution of the petroleum products. The range of other products is petrochemical products, chemical product, petroleum products and technology services. The corporate mission of the company is to put people, integrity, innovation and responsibility first. Company believes in win-win situation and it believe that delivering the need of stakeholders is critical for value creation of the stakeholders. Company objective is to become leading energy and chemical company in the world. (SINOPEC, 2014)

1.4 Importance of Research

The research is useful to explore the relationship between the CSR initiative and its value for the competitive advantage for the company. The focus of the research is emerging market of china which to develop different perspective as existing research largely focused on the developing market. Moreover, the area of CSR and how it contributes to competitive advantage is debatable and research will useful to clearly the relationship.

The research is useful to understand the role of CSR and its alignment with corporate strategy to improve relationship with stakeholder and deliver long-term value for the company. The significance is studying the customer attitude towards the CSR and application of philanthropic approach to achieve the competitive advantage.

1.5 Research Methodology

The research approach is quantitative based on positivist approach. Positivist approach is useful to test the theory through differencing between the research and researcher. The data collection tool is questionnaire (survey) as they are useful to develop greater insight on the issue. The questionnaire will be designed on range of theories and model evaluated in the literature. (Bergh and Ketchen, 2009)

The questionnaire will managed over the internet and confidently and privacy of the respondent will be managed with top priority. The research design will be exploratory and respondent will be asked questions based on number of CSR actions. The first involves asking questions based on the CSR actions which fits the operations of the company. (Creswell, 2013)

1.6 Limitation of the study

The study sample used in this dissertation will be based on 200 participants. The reason behind smaller population sample is exploratory nature of the study as well as the amount of time available to collect and consolidates the data. The quota sampling techniques will be used which is useful to split and classify the population based age groups and gender. Sinopec have operations in all region of china and larger sample used in future studies may highlight useful and different trends.

The CSR and competitive advantage is examined from the customer perspective only and including the qualitative perspective to conduct the interviews of the company employees will highlight the issues from internal and external stakeholder’s perspective.

1.7 Structure of the Dissertation

The first chapter of the dissertation discusses the research problem, research question and objectives, importance of the research and research methodology. The second chapter enclosed the literature review on the on the corporate social responsibility and competitive advantage and their theoretical linkage. Moreover, it enclosed the detail perspective on organization role on CSR achievement and what out CSR have for an organization. Chapter 3 of the dissertation enclosed the research methodology and research design used to explore the problem. In addition, it highlights the data collection approach and method deployed to conduct data analysis.

Moreover, chapter 4 of the dissertation has data analyzed and results of the survey. Likewise, it highlights the trend, consumer reaction, value of activities and how CSR has contributed towards the competitive advantage. Chapter 5 of the study involve the conclusion and to highlight the relationship between corporate social responsibility and competitive advantages for Sinopec Corporation.

Chapter 2.0: Literature Review

2.1 Corporate Social Responsibility

Corporate Social Responsibly (CSR) involves the action and behavior of the organization beyond traditional profit-making approach and encloses the social action to improve the life of the individuals in the society. (Hopkins, 2012) According to Schwartz (2011), CSR actions involve a situation in which companies goes beyond their tradition compliance and profit maximization approach and engage in activities that result in social good. (Schwartz, 2011)

Moreover, Schreck (2009) describe that companies get engaged in the CSR because of the increased pressure for the companies from various stakeholders such as customers, employees, government, and media. In addition, it is believed that people wants companies to get engage in CSR because they want to hold the company accountable for their activities. (Schreck, 2009)

The range of CSR approach and concepts include: (1) CSR is obligation of the organization toward the society to offer better value to the society (Amaeshi, Nnodim and Osuji, 2013); (2) CSR is effect of decision and action based on the social system (Aras and Crowther, 2012).; (3) ethical, economic and legal expectation the community from the organization (Mullerat and Brennan, 2011); (4) society and business interact based on the obligation to various groups of the society (Bunn, 2012); (5) CSR actions is concerned with managing the impact of organization actions on the society. (Visser et al., 2010)

Social responsibility can be classified as a systematic approach based on the economic and environment context which interacts with the whole system and its sub-system. In the light of the system theory, people are an important component of the non-linear system which interact in a holistic manner and have possible reverse connections. In order to resist and overcome the pressure of the external stakeholders, such system may modify its behavior to overcome the problems. (Salcines, Babiak and Walters, 2013)

Corporate social responsibility involves social equity through improving quality of life for communities, protecting natural resources and cultural by reducing pollution, controlling environmental degradation and providing sustainable development. (Blewitt, 2012) Companies have a responsibility toward the stakeholders based of business ethics, environmental policies, diversity, corporate governance and job creation.

The government was mainly responsible for addressing social issues, such as environment protection, an increasing number of companies has started to follow corporate social responsibility principles. Due to this phenomenon, CSR has been becoming to an important operational strategy that help organizations to achieve higher brand image and market share. (Bowen, 2013)

The literature on corporate social responsibility includes community and corporate interactions, corporate citizenship, a model of the environment and social impact, philanthropy and corporate giving, CSR institutions as well as CSR strategies implementations. (Garriga and Mele, 2013)

In the wake of recent development, CSR is linked with business strategy. Companies are concerned with CSR strategies to ensure that these strategic implications of these actions produce efficient results for the companies. (Lister, 2011) (Idowu and Louche, 2011)

2.1.1 Stakeholder and institution theory

According to (Freeman et al., 2012) stakeholder theory, it is important that managers must focus on the need of various elements of an organization (customers, suppliers, and community) that have an impact on the outcome of the company activities. Moreover, theory focuses that companies should focus on the CSR initiatives that have important implication for non-financial stakeholders because these groups may resist to the action of the company. Stakeholders are the individuals, organization or group of people who have an interest in the activities of the organization and directly or indirectly are affected by the actions of the organization. (Purnell and Freeman, 2012)

Moir (2011) studied that the important consideration is company operate in an environment regulated by the authorities, engage and maintain a complex relationship and with the consumer through providing the product and services. Therefore, stakeholders include shareholder or equity investors (return and dividend), the employees (wages and working environment), creditors (profitability and viability), and suppliers (timely payments and long-term relationship, consumers (purchase product and service and current and future consumption) as well as the authorities (resources and taxes). Porter and Kramer (2006) have emphasis on the moral and ethical substance of the business along with business case to perform such activity. (Porter and Kramer, 2006)

Fernando and Lawrence (2014) have highlighted the steward theory, the moral actions of the company and its management involve the ‘do the right thing’ and these decision and action should be irrelevant how they will impact on the financial performance of the company. Institutional theory focus on the importance of the role played by the institutions in order to shape and develop ecologically sustainable actions of the company especially based on deeper social structures. (Fernando and Lawrence, 2014)

Moreover, it highlights the processes such as structure, norms, schemes and routine as guidelines to develop the social behavior. According to Waldman (2011) institutions help to develop a social structure based on the high degree of the resilience.  The elements offered by the institutions involve regulative, cultural and normative which are associated with actions and resources of the company and i.e. provide meaning to social life. (Dutta, Lawson and Marcinko, 2012)

Turker, Toker and Altuntas (2013) applied institutional theory to the CSR and find that companies which interact with customers based on the trust and cooperation are considerate as trustworthy and honest because of return offered by such behavior are high for the companies. (Turker, Toker and Altuntas, 2013) Furthermore, institution theory has been applied by Brammer, Jackson and Matten (2012) to study the environmental concerns which have shown that institutions sometimes have constraining condition for resource mobilization and i.e. limit the some actions of the companies and facilitate the other activities. (Brammer, Jackson and Matten, 2012)

2.1.2 CSR – Dimension and Impact

The interaction of the corporations with society implies both social policies and business decisions to follow the principles of the shared value. It is important that benefits derived should benefit the both sides. (Coombs and Holladay, 2011)

Companies do not have a linkage between the CSR and their strategy. Therefore, CSR is usually viewed as constraint or cost. However, this perception is wrong and CSR is a source of innovation and opportunity which offers a competitive advantage. The diagram below highlights the strategic tactic through which company involved in the community (Chandler and Werther, 2013)

CSR dimension and impact matrix

The responsive approach is based on the two elements which are based on the anticipation of the negative effect of the business activities and the company acting as a good citizen. Effective social actions and activities involve creating goodwill and building a positive relationship with the society. (Doh et al., 2014) However, it is important that company should move towards the competitive CSR. Moreover, competitive CSR includes linking Social activities with strategies of the company and doing things differently from the competitors to lower the cost of the social activities and deliver better value to the community. (Binder, 2010)

Competitive CSR is more than being a good corporate citizen and company invest in the initiatives which strength company competitive position. According to (Rang, 2011) that CSR projects of the companies are so fragmented and disconnected from the core of the business and do not have linkage to the strategy of the company. Therefore, to achieve the competitive CSR companies should proposition which add social dimension as unique value and resulting it integrates the social impact to the overall corporate strategy. (Lawton and Rajwani, 2015)

2.1.3 Model of CSR

According to Schwartz (2011) the CSR is based on the four aspects which are represented in the form of a pyramid. The top of the pyramid have philanthropic which followed by the legal, social and economic perspective. Economic responsibility is at the bottom of the company which represents the profit maximization of the company through fulfilling the customers need. The legal aspect shows that company has a responsibility to comply with the law. The social aspect shows that company is acting with ethical business standards and complies in accordance with social responsibility. At the top, philanthropic responsibility shows that company is acting as a good corporate citizen and makes a contribution towards the society. (Demmerling, 2014)

According to (Freeman et al., 2010) despite the academic importance of CSR pyramid, it does have confusion in practice and does not deliver desire results. The overlaps of the CSR elements in the pyramid are ignored. Therefore, an alternative model for CSR which is known as ‘three domain model of CSR was proposed which discuss and highlight three areas for CSR as legal, economic and ethical.

According to Aras and Crowther (2013) the three elements are further explained as economic domain composes of activities which positive impact on the activities of the companies. The positive economic impact enclosed two elements which are share value and profit maximization. The direct benefits of the economic initiatives include compliance and sales increased whereas indirectly they are useful to improve employee retention. (Perrini, 2006)

The legal element is concerned with the activities which are met the legal expectation on the society. The three level of the legal compliance involve anticipation of the law, compliance with regulation and avoid of the civil litigations. (Doherty et al., 2009) Compliance is activities of the firms to streamline the procedures in accordance with law; avoidance means to avoid any lawsuit as well as law anticipation examines the behavior to satisfy the law.

At last, not least, ethical activities involve satisfying the stakeholders and expectation of the society.  The two categories of the ethical activities are conventional and deontological. The conventional standard encloses industry standards and norms for normal functioning of the company. The deontological are voluntary activities which vision and duty of the company.  (Tuan, 2012)

2.1.4 Benefits and challenges of CSR

The benefits offered by the CSR include engagement and retention of employees and customers, improve and positive relationship with the community, enhanced reputation and image of the company, better financial performance, competitive advantage, improve brand image, profitability as well as better access to the capital. (Newell, 2014)

CSR is an important tool to gain competitive advantage in difficult and turbulent business environment. Companies have failed to capitalize on the CSR actions especially when deploy CSR strategies to improve business results. The linkage of the CSR action with core business activities offers the new opportunities, innovation and competitive advantage to the company. (Bakker, Hond and Neergaard, 2012)

benefits of CSR

The challenges offered by the CSR is on-going debate as researcher believe to integrate and effectively utilize the CSR model for best result and outcome. According to Rang (2011) the major challenges faced by CSR application are to exactly determine how CSR contribute toward the strategic advantage, how CSR contribute towards the improvement of sales of the companies as well as the integration of the environmental policies at political level. (Rang, 2011)

Nevertheless, the application of the CSR in developing countries presents another important challenge. The CSR actions are influenced by range of activities such as company interaction with stakeholders, types and needs of stakeholders, institution constraining the CSR activities as well as regulation in the country. (Rajak, 2011)

2.2 CSR linkage with strategic management

According to Carroll and Buchholtz (2014) strategic management is concerned with decision making in an organization through defining objectives, procedures and actions to achieve the goals. Moreover, the strategy is the course of action to achieve specific objectives. The actions could be economic or non-economic through objectives setting and contribution to achieving the plan, maintaining a relationship with a range of stakeholders such as customers, employees, and community. (Phillips, 2011)

There are three levels of strategies which are a corporate strategy, business strategy, and corporate strategy. The term strategy in this dissertation broadly indicates the corporate strategy which is concern vision of the organization, decision making to achieve the company vision and interaction with a range of stakeholders. Therefore, strategic decision making involves economic and social impact of the organization action which makes social responsibility essential part of organization.   (Carroll and Buchholtz, 2014)

According to Pohl and Tolhurst (2012) there is interdependence between the community and corporation because of action and activities of the organization have a direct impact on the society in which it operates. Organization activities could have a positive or negative impact and management makes decisions based on the expectation of the range of stakeholders and community by taking account of the impact of these activities. (Pohl and Tolhurst, 2012)

Strategy model should include social responsibility as an essential component of strategy formulation. Corporate Social Responsibility (CSR) is an element of management which is classified through transparency and ethical relationship of the organization with its stakeholders as well as establishment of the goals and vision of the organization which results in sustainability, respect diversity, preserving natural resources and environment and reduces the social problems. (Barney, Ketchen and Wright, 2011)

2.2.1 Formulation of corporate Social Strategy

According to Husted and Allen (2010) CSR is an important internal resource to the organization and valuable source for competitive advantage. Moreover, in order to achieve to competitive advantage it is important that CSR initiatives are rare, valuable, inimitable as well as non- interchangeable. (Husted and Allen, 2010)

In other words, it can assume that CSR initiatives are a group of internal resource which includes business ethics, organization values, corporate reputation as well as the relationship with stakeholders. The two important dimensions of the strategic CSR are specificity and centrality. Specificity is a situation when CSR actions are met with barriers which are difficult to overcome. (Husted, Allen and Kock, 2015)

The centrality of CSR is could be low or high. The high level of centrality involves linkage of CSR actions with the mission of the company. Nevertheless, the centrality of CSR is low when CSR strategies are not linked to the mission of the company and these actions can easily replicate.

Therefore, the company can create competitive advantage through linking its corporate strategy with organization mission through CSR actions which are rare, valuable, inimitable as well as non- interchangeable (High level of centrality). (Costa and Menichini, 2013)

The two important approaches to develop the social responsibility strategy include ‘outside in’ and ‘inside out’ approach. The inside-out approach reflects the processes of the value chain. In other words, it is useful to identify the positive and negative effects of the company activities. The range of activities a company can examine includes transportation, emission and wastage, labor relations and safety of the worker. (Tang, Hull and Rothenberg, 2012)

Moreover, CSR in operations offers opportunities in terms of pricing and advertising practices. CSR opportunities in the support activities reflect employee training and retention, ethical procurement policies, and product safety.  On the other hand, outside in approach helps the company to look for the opportunities exist in the external environment. The activities involve addressing the community issues maintaining fair competition, rule of law, local demand and compliance with regulatory standards. (Rehbein and Schuler, 2013)

2.3 Corporate Social Strategy and its important Components

According to Jansson (2008) has highlighted four components of the strategy formulation which are opportunities available in the market, organization own resources and skills, vision and aspiration of the management as well as understanding and knowledge relevant to shareholders and community.

Therefore, Social corporate strategy is associated with industry structure, internal capabilities, vision and mission and stakeholder relationship. Moreover, social strategy is linked with overall corporate strategy which helps the senior management to find solutions fulfill needs and expectation of the shareholders and community. (Leenders and Gabbay, 2013)

Menipaz and Menipaz (2011) defines various stages and levels at which competition take place which includes flexibility and innovation, resources, skills and opportunities. In addition, social responsibility strategies can help to improve, social, economic and environment performance of the organization. (Menipaz and Menipaz, 2011) Social responsibility strategies help the organization to achieve its objectives of profit maximization and improve social performance. Moreover, it was identified that organization achieve better through strategic investment when they try to achieve the both social performance and profit maximization. In addition, social advantage involves creation of wellbeing as well as community and society advantage. The benefits achieve involves improved reputation, skilled and qualified labor, premium pricing as well as product differentiation. (West, Ford and Ibrahim, 2015)

Corporate Social Strategy and its important Components

Figure 2: Corporate Social Strategy and its important Components

2.3.1 Social strategies and competitive environment

The study of the author concludes that in order to maximize the value addition and achievement of competitive advantage, companies must connect its CSR strategies with corporate strategies. (Esty and Winston, 2009) Companies which are using social actions to enhance competitive landscape achieve a better quality environment in its operations through socially responsible actions. Company social strategies should directly link to the core operations of the business to maximize the benefits. To maximize the economic and social performance, it is important that company align social action, strategy and business activities to achieve better output from it social actions. (Husted and Allen, 2011)

According to Chandler and Werther (2013) the alignment could be best achieved through strategic analysis, excellence and leadership skills and learning. The three aspects discuss b the author involve social dimension, the general social issue as well as value chain impact. The general society issues have a significant impact on the organization and resulting does not affect the competitiveness of the company.

Moreover, value chain issues affect the society based the operations of the company. The input of the company (raw material acquisition), processes (possible environment impact) and output have a direct impact on the society. At last, not least, social dimension involves the components exist in the external environment and have a direct impact on the firm competitiveness. (Chandler and Werther, 2013)

Social responsibility strategy helps to achieve social goals of the company whereas corporate strategy achieves the objectives of shareholder wealth maximization. The result of the relationship between CSR and competitive advantages was decidedly mixed. (Carroll and Buchholtz, 2014)

On the one hand, implementing CSR performances contains costs, such as purchase cost for environmentally friendly equipment or materials, and the cost would be short-term or continuous outflows. Moreover, these costs could produce more financial pressure to the company operations. In this regards, CSR could not offer competitive advantages to the company, and bring some negative effects on short-term operations. (Schwartz, 2011)

2.3.2 Competitive advantage

Competitive advantage is condition which helps the company to get unique competitive position through its resources and strategic decision. Moreover, competitive advantage offers edge over its competitors and it helps to achieve greater sales and better customer retention. The added advantage helps the company to gain an edge over its competitors which result in better improves value for the shareholders and company. (Saeidi et al., 2015)

Furthermore, the more sustainable the competitive advantage company has, and then more it would be difficult for the competitors to neutralize it. Companies usually analyze their external environment and internal resources and capabilities in order to develop a position to make strategic choices. (Calabrese et al., 2013)

Company can develop competitive advantage if it can offer same benefit as of competitors at lower cost (Cost advantage) or it offer better value compare to its competitors (Differentiation advantage). Consequently, competitive advantage helps the companies to generate better results for shareholders and customers through better profitability and improve product quality. (Gamble and Thompson, 2010)

2.4 Relationship between CSR and competitive advantage

According to Gulati, Mayo and Nohria (2013) social responsibility has direct linkage with actions of the organization. Furthermore, companies which effectively managed the CSR action usually achieve range of benefits which include improve company reputation, better return on investment, employee motivation as well as customer loyalty. Additionally, social strategies can help to achieve competitive advantage and there is positive relationship between the competitive advantage and social actions of the company.  (Gulati, Mayo and Nohria, 2013)

According to Marín, Rubio and Maya (2012) there are three different types of social competiveness companies achieve through social actions. Firstly, some companies use social actions for short-terms gains, reputation and local benefits. Secondly, some companies integrate it as part of their risk management and strategic planning process for learning and innovation. The third type of advantage some companies try to achieve is social responsible competiveness through incorporated social responsibility into their cooperate strategy. (Marín, Rubio and Maya, 2012)

According to Wu, Lin and Lin  (2013) social responsible practices are important source of improve reputation for the company. Reputation should effectively manage by the organization because it is an internal resource of the company. Researcher argues that company reputation is an important source of competitive advantage because both internal and external stakeholders deploy reputation for communication. (Wu, Lin and Lin, 2013)

The linkage between the competitive advantage and CSR is prominent when social and environment actions and corporate interest are aligned. The effectively linkage is useful for both company and stakeholders.  CSR and competiveness of the firm is based on the three important aspects which are stakeholders, responsibility and strategy. Therefore, adopting the CSR strategy directly affect the competitiveness of the company which latter enhance and achieve the vision of the organization through corporate strategy. (Hopkins, 2012)

According to Visser, Magureanu and Yadav (2015) companies should use CSR as important tool for competiveness and better results.  The competitive advantage is achieved when company effectively deploys its strategies and competitors fails to achieve such results. Competitive advantage is achieved through internal resources but resources must be valuable (providing opportunities and eliminating threats), rare (not available to competitors), inimitable (competitors cannot copy) and non- interchangeable (no strategic alternatives for competitors). (Visser, Magureanu and Yadav, 2015)

There are studies on the CSR and competitive advantage which have shown that CSR activities in the form of differentiation help the companies to achieve competitive advantage. Moreover, study of the Boulouta and Pitelis (2014) has shown that reputation of the firm contribute to the competitive advantage of the company based on the positive relationship between the social responsibility and impact on the value of company shares. (Boulouta and Pitelis, 2014)

According to the study of the (Gonzalez-Perez and Leonard, 2013) CSR contribute to the improve market value of the company which offers better financial return and helps to achieve the competitive advantage. Khojastehpour and Johns (2014) argue that companies which have strong corporate social responsibility commitment, they would have ability to attract and retain their employees.

In this regards, the company not only reduce their recruitment and training costs, but also keep production efficiency. Therefore, organizations might actually benefits from CSR performance in terms of employee morale and productivity so that it creates competitive advantages. (Khojastehpour and Johns, 2014)

Secondly, the social reputation and brand image could be increased by good CSR performance. Indeed, these activities could help organizations increase the cooperation with other firms as well as market share. Thus, it could be said that CSR could offer true competitive advantages. (Lussier and Sherman, 2013)

According to the study of the Huber, Nerudova and Rozmahel (2015) Company CSR actions can lead to competitive advantage if company integrate range of initiatives such as (1) unique value and proposition for the customers (product quality and safety, functionality) into its products and services which competitors can no imitate; (2) deploy the business ethics in the business decision making process; (3) good corporate governance; (4) linking its CSR actions with core business. (Huber, Nerudova and Rozmahel, 2015)

Moreover, Mullerat and Brennan (2011) proposed that for competitive it is important that business operations use considerable business resources and involve stakeholders in the decision making. The two important elements which offer a competitive advantage as well are business ethics and corporate governance. (Benn and Bolton, 2011)

The implementation of successful CSR strategy is closely linked with management of the organization and i.e. it is important that corporate governance and ethics are full integration in the operation and structure of the company.  Therefore, literature suggests that company should deploy strategic capabilities and resources based approach to develop the competitive advantage. (Lawton and Rajwani, 2015)

Relationship between CSR and competitive advantage

Figure 3: Relationship between CSR and competitive advantage

The framework development for the corporate social strategy and consequently how it can help to achieve the competitive advantage is developed based on the understanding of strategic capabilities; opportunities exist in the internal and external environment. (Malik, 2015)

The competitive advantage achieved based on the social responsibility strategy is directly influenced by the resources of the firm, building reputation and image, stakeholder’s retention, economic and social performance of the company. The relationship between the resource-based view and potential benefits derived from the CSR actions, there is stronger relationship exist corporate social strategy and its value in the development of the competitive advantage. (Ramachandran, 2011)

The direct influence based on the competitive advantage includes improve brand image and ethical performance, stakeholders retention, corporate reputation and brand image, employee motivation as well as better economic performance. The alignment of the social responsibility strategy with overall corporate strategy through effect and innovative social and environment program linked to business core activities result in better social, environment and financial performance of the organization. (Orlitzky, Siegel and Waldman, 2011)

Another important element which helps the organization to achieve competitive advantage is business ethics and corporate governance. The business operation based on the trust and honesty are used to deliver long-term value for the business and stakeholders.

Nevertheless, the important criteria is which help in delivering the competitive advantage is company make its social actions valuable to society and they can strategic replaced or copy by the competitors. (Khojastehpour and Johns, 2014)

2.5 CSR and communication strategies

According to (Du, Bhattacharya and Sen, 2010) the corporate communication is usually carried out in three forms which are marketing communication, management communication as well as organizational communication. The management communication is very important to create a vision and keep employees motivated.

According to Colleoni (2013) Organizational communication involves maintaining public, investor, and labor relations. Furthermore, marketing communication is concerned with enhancing product sales through promotion and advertising. It is important that companies consider the stakeholder in their CSR communication and it should be carried as a dialogue between company the stakeholders.

To address the concerns and effectively understand the need and demand of the stakeholders, it is important that company engage in the dialog with their CSR actions. According to Marais (2012) the two effective way of communicating with stakeholders is stakeholder’s involvement strategy as well as information strategy to effectively engage the stakeholders with company CSR practices.

2.5.1 CSR in Chinese context

In china, CSR is considered as powerful tool to resolve the social and environmental problems in the community. According to (Shin, 2014) CSR is based on the three layers in the china and it believes as challenging the way business is conducted. The first important layer include the legal and economic responsibility which ensures that business comply with regulations including environment and labor law as well as increasing the value of the shareholder wealth.

The next stage comprises of philanthropic obligation of the organization which offers better value to community and managed on the voluntary basis. At last, not least, CSR plays an important role in terms of innovation of product and management.  (Wang, 2014)

Nevertheless, china as emerging market has country specific challenges to implement CSR. There is lack of clarity between the CSR actions and charitable deeds. In large number of Chinese companies donation of money and food is considered as fundamental and principle objective of the CSR initiatives. (Warner and Rowley, 2013)

Moreover, companies manage their CSR practices based on the geographical in the country. For example, southern china has greater value and acceptability of the CSR strategies. At last, not least, many companies do not implement the CSR initiatives because of the cost and obstacles attached to implementation of CSR initiatives.  (Zhao, 2014)

2.5.2 CSR practices of Sinopec

Sinopec is one of the largest integrated ‘Oil and Gas Company’ in china. Since 2011, company has published its CSR actions through deploying the principle of ‘Making Every Drop Count’.  The company has focused on a range of activities such strengthening the corporate governance, stakeholders’ engagement as well as social performance to deliver better value for the organization and community.

The company has achieved the People’s Social Responsibility Award and has deployed a range of CSR initiatives. To achieve social and economic development it has a focus on sustainable resource development, integrated and value chain, deployment of technology for safe and sustainable operations. Another important care where the company has focused is care of its employees and customers.

The company focuses on the fight against climate change as well as focus on the development and trying of the employee. At last, not least, the company believes in reward for the society. The key community initiatives include funding for the educational program, helping those who are in need of as well as Sinopec has actively participated and promoted local employment and company development.  (SINOPEC, 2014)

2.6 Conclusion

The literature indicates that company can create competitive advantage through identifying the appropriate CSR issues which and linking them to core business of the company. The company can link the CSR with corporate strategy through developing and deploying corporate social strategy.

Competitive advantage helps the organization to provide better value to its customers. Company achieve competitive advantage based on three variables which are social integrity of business operation which mean company does not harm other stakeholders; environmental integrity which means integrity of the ecological issues as well as economic prosperity which mean financial success, improved reputation as well as stakeholder loyalty.

The communication for CSR plays a role in order to effectively interact with the stakeholders to communicate the social strategy. The fundamental objectives would be to determine whether CSR actions of Sinopec have offered competitive advantage or these programs are responsive CSR.

Chapter 3: Research Methodology

3.1 Introduction

The success of the research is based on the design of the research. Research methodology is concerned with research design as well as techniques used to collect data. (Johnson, 2004) The research design used in this is quantitative using the exploratory approach. This will allow understanding the human behavior. The sample size used in the dissertation is 200 and it is ensure these people use the products and services of the Sinopec. (Bernard, 2012)

The sampling techniques used are quota sample which will enable to integrate the perspective of customers with diversity. To analyze the data descriptive statistics will be used. It will be useful to analyses the relationship between the CSE and competitive advantage in the light of number of variables. To examine the relationship between the CSR and competitive linear regression analysis will be used. (O’Dwyer and Bernauer, 2013)

The nature of is exploratory to find the relationship between he CSR and competitive from the customer perspective. The exploratory and inductive research is useful as it allow narrowing the wider perspective in narrow down detail process. (Teddlie and Tashakkori, 2009)

The questionnaires are tested based on the scenario in which company activities and operations aligned and scenario where ad-hoc approaches for CSR is adopted. It will enable to highlight how CSR contribute toward the competitive advantage for the company.

The objective of this study is to examine the relationship between corporate social responsibility and competitive advantages of Sinopec Corporation. The goal is to evaluate the range of company CSR activities and how they contributed towards the competitive advantage for the company. (Maxwell, 2012)

3.2 Research philosophies

3.2.1 Positivist Approach

It involves using the natural science approach to study the social event and determine the cause of the phenomena. It involves highly systematic and structured approach to examine the problem which enables the researcher to analyze and draw valid and reliable conclusion through quantifiable observations. (Drummond and Embree, 2013)

The focus of Positivist to understand the social phenomena without any relation with the subject as it is useful to separate the research and researcher from the situation. The Positivist believes the social reality event independent of the researcher and it is not relevant where people are aware of reality or not. Therefore, with Positivist the problem is study through using high structure framework. The focus of the research is to understand the scenario based on deductive reasoning. (Edgar, 2004)

3.2.2 Phenomenological Approach

Phenomenological approach is different to Positivist approach as it argues that problem exist independent of the human attitude and behavior. Moreover, the application of the physical science law to real world is difficult. Therefore, phenomenological approach is useful to investigate and understand the social events. (Husserl, 2014)

It allows studying the problem when it is difficult to separate the researcher and research. It is useful to investigate the problem from the researcher frame of reference to examine the social event. The focus is to develop an understanding of the social event based on inductive reasoning. Therefore, it is useful to examine the attitude and experience of people in conjunction with action and thoughts of the subject. (Smith, Flowers and Larkin, 2009)

3.3 Research design and process

The research method for this dissertation is quantitative approach. This is useful to identify and explain the problem. The numerical and subjective techniques are useful to gain better insight of the problem. The purpose of using the quantitative approach is to study the relationship between corporate social responsibility and competitive advantages of Sinopec Corporation. (Denzin and Lincoln, 2011)

3.3.1 Quantitative techniques

The fundamental difference between the two approaches is methodological substance. Quantitative research is more useful to measure the interaction between variables based on quantification of data. It is effective to examine the outcome of the variable’s based on data quantification and research can separate from the situation. Quantitative research is useful to explore the relationship between variables as well as identify the causes of the problem. (Goldkuhl, 2012)

Quantitative methods are useful to confirm the hypothesis and study the problem in highly structural manner. The data is usually collected through using the questionnaire and statistical analysis are used to confirm the hypothesis. It is useful to investigate the unintentional connections between the variables and question present to the respondent are usually numerical data with closed end questions. The design and structure of the questionnaire does not allow the flexibility to the researcher to adjust it according to need of situation. (Miller and Holstein, 2009)

3.3.2 Qualitative Technique

Qualitative research is useful to study the problem and develop the understanding in social context. It is concerned with the evaluation the relationship between the variables. Qualitative research study in-depth relationship between the variables based on scenario that research and researcher cannot be separated from the situation and it employed non-quantifiable approach to analyze the situation. (Mukherji and Albon, 2009)

Nevertheless, the important benefit of qualitative approach is that it enables to analyses the problem in border context in shirt time. Qualitative approach focused on the studying the social phenomena and data collected is non-numerical and based on the participative approach.  It is effective to understand and explain the relationship between the variables and define the problem in social context. The questions are adjustable respondent have greater flexibility to respond to the problem. (Creswell, 2013)

3.4 Descriptive, Explanatory and Exploratory Research

Descriptive research is useful to provide the description of the problem through gather data about particular event at specific time. It is useful to develop and evaluate the environment surround the event and provide detail overview. In descriptive research, key variables are defined and objective is to map and evaluate the event. Moreover, exploratory research involves conducting the research for the secondary from literature of conducting primary to develop the understanding of the situation. (Saunders, Lewis and Thornhill, 2009)

The key variables are classified in explanatory research which helps to define the process. It is useful to determine to identify and explain the variables. (Hesse-Biber and Leavy, 2010)

At last, not least, explanatory research is useful to understand the relationship and useful to test the hypothesis. It is more useful to define the relationship between the existing variables. In this study, exploratory research is used to as key variables are not defined. It will be useful to investigate the relationship between corporate social responsibility and competitive advantages of Sinopec Corporation based on the existing theory. (Stebbins, 2011)

3.5 Deductive and Inductive reasoning

It is important to understand that whether research is inductive or deductive. Deductive approach is effective and useful to test the existing theory and knowledge. On the other hand, inductive approach is concerned with building the theory and studies the problem from wider context. The inductive approach is deployed to investigate and study the events in wider context as it is useful to narrow down the problem. (Hibberd, 2006)

For this research, deductive approach is used to analyze and evaluate the relationship between corporate social responsibility and competitive advantages of Sinopec Corporation. It will enable to analyze the impact of various CSR actions of the company. Moreover, it will useful to evaluate and test the theories based on the framework proposed by the researcher. (Blaikie, 2009)

3.6 Data collection

To achieve the outcome of the research, data collection is very important as it helps to identify the pattern of behavior and draw the valid results from it. It is important that data collected is reliable, valid and accurate as it enables the researcher to understand and evaluate the problem. (Wrenn, Stevens and Loudon, 2013)

There are two types of data collection which are primary and secondary data. Secondary data is one that already exist and important to understand the problem. It enables the researcher to define the problem and evaluate the possible solutions. The critical source of the secondary data is literature which helps to develop border and develop understanding of the problem. (Pawar, 2004)

The other sources of the secondary data include the books, journal articles, publication and annual reports. On the other hand, primary data is data which does not exist and collect for specific research. The primary data is collected when existing data cannot answer the problem or secondary does not exist to answer the research questions. (Heshusius and Ballard, 1996)

3.6.1 Survey

Surveys are useful to gather data directly from the public and most commonly used tool is questionnaire. The advantages of the survey are that it enables the data collection in quick manner as well as it has low cost associated with it. The questionnaire can be emailed or get filled online which enable quick data collection. Nevertheless, the problem associated with questionnaire through email is low response rate. (Edgar, 2004)

The critical component of the survey is that data collected should be unbiased and represent larger population. According to Creswell (2013) in order to study and manage the survey for CSR measurement it most to use the exploratory surveys. To ensure survey represent the wider population the questionnaire in different region or ensure it reflect the perspective of large population. The advantage of conducting survey over the email is that it allows low cost collection from larger geographic area. (Wrenn, Stevens and Loudon, 2013)

3.6.2 Survey population

The sample selected for this was based on the quota sampling. The advantage of the quota is that it enables the participation of the respondent from different backgrounds. This ensures that survey population represents the larger population.

The sample of the survey is made form 200 participants with age between 25-65 years old. To reflect the border perspective it has been ensure that the survey population is equally split between man and women.

According to Cox et al (2011) it is important to determine the reason size of survey. If survey size is too larger then it would difficult to handle data in limited and make the data sensitive. On the other hand, smaller sample size does not provide the enough information to generalize the situation. (Brace, 2013)

Table 3: Survey population

3.7 Format and design of Questionnaire

The questionnaire was design to gather data on five variables. Corporate Social responsibility was taken as independent variables along with four variables of economic, legal, social and ethical concerns and competitive advantage was taken as dependent variable. The response of the participant was gathered on Likert scale design on the scale of 1-5 (five point Likert scale).

The questionnaire was designed to examine each of the components of CSR and integration with strategy and consequently highlight the competitive advantage perspective. The questionnaire was deigned based on the mission statement of the Sinopec and objectives were to determine the aligned activities and competitive advantage and how ad-hoc activities add poor value for the organization.

The five Likert scale questionnaire is used to gather the data and total of 14 questions were designed to check whether company is performing activities in efficient manner to achieve competitive advantage.

A. Sinopec Vision

Sinopec sets ‘fueling beautiful life’ as its corporate mission, puts ‘people, responsibility, integrity, precision, innovation and win-win’ as its corporate core values, pursues strategies of resources, markets, integration. (SINOPEC, 2014)

Corporate Social Responsibility

Corporate social responsibility involves social equity through improving quality of life for communities, protecting natural resources and cultural by reducing pollution, controlling environmental degradation and providing sustainable development

 

  1. Economic Performance
  • Company activity contribute to welfare of the society in the long-term and they reflect the vision of the company
  • Company participate in the social programs which helped to deliver economic benefits and improve living of people
  • Company have always paid taxes which ensure the contribution toward community development
  1. Environment
  • Company preserve and care for the environment though implementing range of initiatives and minimize the negative impact on the society.
  • Company minimize its environment through range of program and encourage the sustainable development
  1. Ethical Value
  • Company recruit people on merit and unsure the people selected on merit.
  • Company ensure it meet the legal and safety compliance and minimize the harm to community
  • Company product are good quality and reflect accurate information
  • Company respect the labor and human right policies and it committed to make contribution to the society
  1. Social Performance
  • The local project and activities reflect the vision of the company and they add value to life of local people
  • Company co-operate and contribution in local project which contribute to welfare of the local public in long terms
  • Company consistently start the program which contribute towards the welfare of the society and improve quality of life
  1. Reputation
  • Company have program such as Reducing pollution, controlling environmental degradation and providing sustainable development to promote sustainable development in local communities
  • Company CSR activities are not promotion activities and go beyond traditional donation of money and food rather it add value to local community

Competitive advantage

Competitive advantage is condition which helps the company to get unique competitive position through its resources and strategic decision. Moreover, competitive advantage offers edge over its competitors and it helps to achieve greater sales and better customer retention

  • I trust the company based on CSR actions and will continue to long-term relationship company through purchase its products
  • I believe in the action and practices of the company in terms of contribution to the society in preference to competitors
  • I prefer the company approach to community in terms of economic, social, legal and environment approach and have long-term relationship with Sinopec

3.8 Data coding and Analysis Approach

After the completion of the survey and all 200 responses were collected, the important task preparation of codes and entering the data in the SPSS software. Questionnaires were and ensure they are accurate. The questions were coded 01-200 and code will be checked against the 1-5 response. The data were analyzed using the SPSS software and used in the analysis section as table formed.

However, to change decision to integrate diverse information from research specific context Microsoft Excel is also used. To analyze the data, multivariate analysis was used which has helped to understanding the variables such as demographic, response rate as well as the questionnaire which are missing or incomplete.

Moreover, descriptive statistics was used to analyze and validate the reliability of the data. The relationship among various variables was examined using the multiple regression analysis and regression coefficient is used to determine the impact of CSR and competitive advantage.

3.9 Confidentiality and ethical considerations

The surveys are useful to outline and guarantee that no personal data of the respondent is gathered and additionally information is kept in secure way. Clients were just made inquiry to focus the impact on CSR and competitive advantage and no personal data was being inquired. (Kimmel, 2009)

The privacy and confidently of the respondent were taken as top need at all times. The review did not gather any individual data and additionally email location has kept under strict control to ensure security. Also, members were requested that sign the consent before the study and after fulfillment of their examination all information will be safely destroyed. (Babbie, 2015)

Chapter 4: Data analysis and presentation

4.1 Overview

This chapter explores the relationship between corporate social responsibility and competitive advantages of Sinopec Corporation. The inter-relationship as well as understanding of each question is analyzed using the descriptive statistics and regression analysis. The chapter starts with profiling of the respondent such as response rate and demographic.

The each question is tested using the standard deviation and mean along with normality test. The relationship of the dependent variables (competitive advantage) and independent variables (CSR) will be tested using the multiple regressions. The conclusion of the result will enclose in chapter 5.

The data collected for this research was based on the surveys in which respondent were select using the quota sampling technique. The demographic used in this study was age and sex of the participants. The response rate of the questionnaire has remained high as people were sent the linked to fill online survey. The respondent was told there all question of the survey are closed-end and will not take more then 3-5 minutes. The time flexibility and size of the questionnaire was motivating factor and high response rate was achieved.

4.2 Descriptive statistics

The descriptive statistics are used to conduct mean of data as well as standard deviation mean. According to (Nishisato, 2006) mean are useful to understand the overview of the participant response. The Likert scale is used on the scale of 1-5 in which 1-2 represents the disagreement range, 3 is neutral and 4-5 shows the agreeable range.

Data normality is an important aspect when conducting the multivariate and descriptive analysis. To examine the normality of data, Skewness test has been conducted which shows that data is normal and neither it is positively or negatively inclined. The result of the values is between 1 and -1 which represent the acceptable range. (Tuffery, 2011)

The mean score for the customer relationship (competitive advantage) is relatively high for the company. The range of results exist between 3.06 – 3.37 (Table 1) which shows that CSR activities are views positively by the customers. The score shows that customers value the relationship with the company and looking forward purchase the products.

However, the overall score of the CSR initiatives and customer attachment with the company is 3.06 which shows that company need to make an improvement to ensure its overall activities deliver positive benefits and reflect the vision of the company. Customers have allocated a reasonable heavy score of 3.28 in terms of CSR actions of the company are better than competitors and consequently customers prefer to purchase company, value the CSR and maintain a long-term relationship with Sinopec.

Economic performance of the company have a scored between 3.21- 3.43 (Table 1) which represent company economic contribution is valued by the customer. Customers believe that company activities aligned with the operation of the Sinopec and social response do contribute to the society.

The standard deviation is relative consistent with a variation of 1 which a large number of respondent were satisfied. The social program of the company is valued by the customer and score of 3.43 shows that company CSR actions deliver economic value for the local community. There is the relatively low score for the company contribution to the society in terms of taxes. The score of 3.21 shows that customer believe the company could have contributed more to the society.

The environmental factors have a low score of 2.51-2.54 (Table 1) which shows that company activities to tackle the environment have not been much appreciated by the customers. The environmental concern shows that company has not managed to reduce its negative environment image. Company preserve and care for the environment has a score of 2.51 which shows that company environment program should be reviewed.

Moreover, a score of 2.51 for encouraging the sustainable development in the local community need to be reviews and aligned with activities of the companies. For ethical and legal actions company score is 2.94-3.15 (Table 1) which shows that company activities are better than environment action but weaker than the economic impact it has made in the local communities.

The score of 3.15 (Table 1) for company ethical substance such as recruitment of people on merit and ensure the people selected on merit shows that to some extent customer are satisfied as company hires people on merit which to an extent has satisfied the local population. The standard deviation score is relatively higher for ethical and legal value for the company.

Moreover, the legal and safety compliance and minimize the harm to the community also have a very low score. This represents that safety and safety policy and procedure of the company has not much valued by the customer. The standard deviation is relative higher for legal and safety compliance and minimizes the harm to the community which represents greater variation in the score.

The probability distribution for overall ethical is significant. Another ethical action involves labor and human right policies and it committed to making contribution to the society and its contribution to the society. The results show that company score is relative lower along higher standard deviation. It reflects that company values are less valued by the customers and their greater degree of disagreement based on standard deviation (1.69) and Skewness (0.71).

At last, not least, the company products are good quality and reflect accurate information has lowest score in all categories which show that customer have average perception towards the company product and believe the information provided by the company product and services.

The social performance of the company has relative highest score among all variables examined. The score between 3.57-3.82 (Table 1) shows that company social performance is relative higher along with low standard deviation. The range of social action of the company has contributed positively to the life of the people.

The high score of 3.82 for local project and activities reflect the vision of the company and they add value to life of local people shows that company contributes to society through programs which are views as positive actions of the company.  In addition, co-operate and contribution in the local project has a positive response from the customer and believes it can bring positive change in the life of local people.

The reputation of the company have mean score of 3.09-3.14 (Table 1) shows that company have a good reputation in the market and people believe company contribute to the society through a range of effective programs. Sinopec have social programs such as reducing pollution, controlling environmental degradation and providing sustainable development to promote sustainable development in local communities has score of 3.14 which shows that company program to an extent are reliable and valued by the customers.

In addition, a score of 3.09 (Table 1) CSR activities are not promotion activities and go beyond traditional donation of money and food rather it add value to local community have remained relatively lower. This represents the company is not managing the CSR program inefficient and managed through traditional ad-hoc through providing short action in the society. In addition, the standard deviation is relative higher which shows a greater degree of disagreement among the respondent.

To summarize, Sinopec CSR initiative has managed to attract and maintain a long term relationship with the customer. Customer are willing to maintain long term relation with the company, value its social project and believe it’s CSR activities is better than competitors and purchase the products and services from companies over the long period of time.

This represents social strategy of the company is aligned with a corporate vision to develop a sustainable society and contribute to the life of people. Nevertheless, environment and legal activities of the company has remained a significant challenge. Customer believes that legal and ethical performance is lower which has reduced the over value of CSR actions for the company.

The company has strong reputation, better social and economic performance, but legal complication has impacted the image of the company. CSR actions which are aligned with the vision of company and design on the need of community have created a competitive advantage for the company. The descriptive statics are enclosed in the table 1 below.

4.3 Reliability of Measurement

To ensure the consistency of the items it is important to conduct the reliability test of data. Reliability test is useful when performing the regression analysis because it ensures high the stability of the data. The construct of separate variables should give the same results as measure of each element.

According to Meyer (2010), if variables failed to make the data construct it means variables are not useful to answer the problem. The items which are useful to measure the reliability of the data for regression analysis are Cronbach‘s Alpha and range (inter-items) is useful to measure reality of the data. The benchmark tool to ensure the data consistency is that Cronbach‘s Alpha should be greater the 0.6 as well as item correlation must be greater than 0.5.  (Scholtes, Terwee and Poolman, 2011)

The values of 0 and 1 shows that no internal reliability or greater reliability consequently. The table below highlights the reliably of data which is used in this dissertation. (Tavakol and Dennick, 201)

The results in Appendix 1 have shown that alpha value for all variables is grater then 0.6 as well as value of the correlation per item is greater than 0.5 which shows that data is reliable. (Appendix 1)

4.4 Variables — Exploratory analysis

The variable explanatory analysis is important to ensure that each variable used in construct in in right manner. The individual variable analysis is useful to examine that variables construct in right manner. The three important factors involved in the variables analysis determining the suitability of variables used in the study, estimating what variables exactly should be used and lastly examining each the viable independently. (Williams, Brown and Onsman, 2012)

The variables suitability is measured by using the correlation matrix. The tests which are critical to ensure the reliability of the data are KMO Bartlett data as well as measure of the adequacy. For the KOM test it is important to ensure that value exceeds 0.6 but value of greater than 9 is more favorable. On the hand, ‘Bartlett‘s Test of Sphericity’ value should be greater the >0.07. (Islam, Rahman and Hossain, 2015)

4.4.1 Corporate Social Responsibility

The correlation matrix for CSR variables are shows in the table 2 below. The social and economic preference component have two significant factor with high Eigen-value value of 5.02 which much higher than the recommend value of 1 along with high cumulative percentage variance of 38% which is within recommendation percentage of 50%.

The value represents important contribution toward the CSR initiatives of the company as well as there is no cut off which make it’s significant and it’s should be kept. The ethical and environment have higher value of 4.107 which is much higher than the recommend level of 1. Nevertheless, the absolute error level is more than 60% and i.e. it is above the recommend that it should be retained as well.

The significant factor is that the Communality of the variables which are examines to understand the CSRE and competitive inter-relationship shows that all value exceeds the recommended value of 0.6. Corporate social responsibility and reputation has proved an important factor to ensure that company achieves competitive advantage.

The engine value for reputation is 2.4 (table 2) which is above the level of 1 but 63% has ensure to keep the variable. Therefore, it confirms that variables selected to examine the CSR and competitive hold absolute relevance to examine the relationship between corporate social responsibility and competitive advantages of Sinopec Corporation.

The variables economic (Job opportunity, community welfare), social performance (co-operate and contribution in local project, environment concerns (reduce noise and pollution), ethics (giving equal opportunity and reputation (good corporate citizen) are factors to examine the relation between the variables and its impact on competitive advantage.

4.5 Corporate social responsibility and competitive advantages of Sinopec Corporation

The variables exploratory analysis for the final variable includes dependent variable of competitive advantage and CSR variables which represent the independent variables. To analyze the relationship regression analysis will be used. The multi-regression analysis is useful to identify and understand how much dependent variable is explained by the independent factors.

To produce the final variables summated scale is used as it is useful to understand attitude, characteristic and perceptions of the people. The advantage of the summated scale is that it they are lot reliability compare to single scale. The summated scale required a population size of 100-200 people and it produce good reliable measure.

To analyze the relationship between CSR (independent variables) and competitive advantage as dependent variable a multiple regression analysis used. The CSR variables such as economic and social performance, ethical and environment along with reputation is used against the dependent variable (competitive advantage)

Therefore, the relationship between corporate social responsibility and competitive advantages can be written as

Moreover, t-value for the all the variables is above 2 which represent all the variables has significant impact on the dependent variables. The amount of change in the independent variable is likely to effect the competitive for the company. In addition, beta values are useful to examine which variable have what degree of influence.

For example, economic and social performance has beta value of 0.312 which represent these two factors have lowest impact when compare with environment, legal and reputation the company. The beta of 5.51 suggest that reputation of the company is most significant factor and most impact when compare with other variables.

To summarize the results, chapter 4 (data analysis and presentation) discussed and evaluated the profile of survey respondents and used exploratory data technique to conducted analysis a general perspective of the CSR variables and competitive advantage. CSR elements investigation was conducted to focus the variables to which could impact on the dependent variable in achieving the competitive advantage. The regression analysis helps to identify and understand relationship between the variables.

The objective of the study was to clarify how CSR actions of the company help to achieve the competitive advantage. The exploratory research approach was used to identify and evaluate the data a through descriptive analysis.

The descriptive analysis helped to measure the mean and standard deviation was used analyze the response as well as check reliability of the data. The Likert scaled based questionnaire was used to gather the data on in the 1-5 Likert scale range. The reliability and validity of information was examined through regression analysis.

To ensue data integrity and benchmarked the results a Cronbach’s Alpha over 5 was used.  The result has shown that reputation and ethical variable have significant impact in achieving the competitive advantage for the company. Sinopec pack social action for economic and social perspective but environment perspective has lower value for the company. The results have suggested that reputation and environment action as significant impact on the action of the company.

Chapter5.0: Conclusion

5.1 Research Overview

The focus of the study was to examine the relationship between corporate social responsibility and competitive advantages of Sinopec Corporation. The goals were to explore the impact of the CSR actions and how could they contribute to competitive advantage of the company. The research gap addressed in this research was how CSR actions can help to achieve the competitive advantage for the Sinopec in china.

The objectives was to understand how customer value the social response of the company as well as CSR practices aligned with vision and strategy of the company helped to achieve better results. The overall goal was to explore the relationship and determine the impact of activities from the customer perspective. The questions were developed with goals that it helps to understand the customer perspective on Sinopec CSR actions.

The focus was to understand whether activities of the companies are integrated in the corporate strategy of the company. This was done through understanding the perception of the customer that whether the activity of company helps to provide incentive to community and help to reduce the negative impact of the company actions.

The survey was conducted on the CSR action of the Sinopec in china. The questions were divided into five sub-sections as evaluated in the literature. The questionnaire was built around following framework from the literature review (resource based view). The five areas were economic performance, ethics, social and legal actions as well as interaction with the stakeholders.

To conduct structure investigation positivist approach is used. The quantitative research has helped to explore the relationship between the variables.  The study was conducted based on the sample of 200 respondents. The data collected was analyzed and evaluated using the descriptive statistics and regression analysis. The data analysis was conducted in three approach stages; first the descriptive statistics was conducted to find out mean and standard deviation of to determine the generalize response.

At the next stage, regression analysis was conducted to investigate the impact of the variables. To explore the relationship between CSR and competitive multi-regression approach was used.  To analyze the border perspective all four components of the CSR were included to develop the broader perspective on the relationship between the variables.

5.2 Discussion of the Results

The data analysis has highlighted that consumer evaluate the CSR practices of the company from number of different perspective.  The questionnaire was design based on resource based view (inside out approach) and based on the framework of literature reviews all dimension were include in the study. The first area analyzed was the economic and social performance of the company. Corporate social responsibility involves social equity through improving quality of life for communities, protecting natural resources and cultural by reducing pollution, controlling environmental degradation and providing sustainable development. (Blewitt, 2012)

The result has highlight that consumer believe company CSR actions are aligned with operations of the Sinopec and they believe that it contribute to the society. The economic mean sore for the company was relative and consumer was satisfied with the actions of the company.

It shows that customer believe that company is doing which is best of the local community. The economic contribution made by the social project improves the quality of life. The benefits offered by the CSR include engagement and retention of employees and customers, improve and positive relationship with the community, enhanced reputation and image of the company, better financial performance, competitive advantage, improve brand image, profitability as well as better access to the capital. (Newell, 2014) It is evident that customer are satisfied with CSR activities of the Sinopec and believe it have strong positive contribution towards the society.

Competitive advantage is condition which helps the company to get unique competitive position through its resources and strategic decision. Moreover, competitive advantage offers edge over its competitors and it helps to achieve greater sales and better customer retention. The customer repose evident that customer has preferences to maintain positive long term relation with company.

Moreover, it is evident from scenario they believe that CSR actions of Sinopec have influenced them to purchase the company product over the long period of time. Nevertheless, the data analysis has highlight the ethical issues are not effectively deal by the company. The data analysis has shown that the mean score for the ethical and environment is relative low for company when compare with other actions of the company.

Customers believe legal compliance and ethical practices are flawed and they do not help to minimize the negative impact on the society. At last, not least, customer’s environmental efforts of the company were rated very low and which has also impacted the overall score of the company. At last, not least, it is evident for the scenario that company has good reputation for its social responsible practices. Corporate reputation is most important intangible assets and fundamental to the success of the organization. Prioritizing and fulfilling the need of various stakeholders is important to create the reputation for the company (Chandler and Werther, 2013). The customer have positive attitude towards the action of the company.

5.3 Evaluation of result

The descriptive statistics has highlighted that mean score for the CSR actions of the company were 2.9-3.9 for various activities.  This represents overall company activities are valued by the customer. The high score for economic and social responsible practice indicates that company initiatives to local community through range of measures have helped to improve the image of the company. The social project and their benefit are appreciated by the customers.

This represents that company actions community initiatives include funding for the educational program, helping those who are in need of as well as Sinopec has actively participated and promoted local employment. Nevertheless, the mean score for ethics and environment concerns shows that company has failed to deliver the program which is part of its corporate strategy. Company is in the segment of oil and gas as well as chemical and its environment initiatives are lagging behind to address the environment concerns.

Moreover, multiple regression analysis has highlighted that CSR initiatives have direct impact on the competitive advantage because if customer believe that company CSR actions are not suitable and does not deliver the value then customers are unlikely to support the action of company. The t-value has value of greater 2 which shows that CSR action as significant impact on competitive advantage.

The relationship between the CSR and competitive has highlighted that environment and ethical factors are major impact on the competitive advantage. Therefore, it is important that company align the CSR action with its core business to achieve competitive advantage.

5.4 Research implications for Sinopec

The research has highlighted valuable insight for the company to maximize the benefit from the CSR activities. Company activities are not directly aligned with corporate strategy and it believe that company is using CSR as promotion tool for short-terms benefits. The number of social and economic programs for local community is making differences to local people.

However, the area which is environment and ethics are area of concern for company. Company should re-evaluate its social strategy to align these practices with core business of the company. The alignment of CSR practices can help to achieve competitive advantage.

The relationship between CSR and competitive advantage has suggested that each component (Economic, social, legal and ethical) have significant value in order achieve competitive advantage. Customers are responsive to practices of organization which reflects the solution to tackle the problem based on core business of the company.

 

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Questionnaire

Questionnaire

Sinopec sets ‘fueling beautiful life’ as its corporate mission, puts ‘people, responsibility, integrity, precision, innovation and win-win’ as its corporate core values, pursues strategies of resources and welfare of society. (SINOPEC, 2014)

Please Tick (√) your response

1 = Strongly Disagree

2 3 4

5 = Strongly Agree

 

 


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