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 PRACTISING
CORPORATE SOCIAL
RESPONSIBILITY
IN MALAYSIA
A Case Study in an
Emerging Economy
Loi Teck Hui
Practising Corporate Social Responsibility
in Malaysia
 Loi Teck Hui

Practising Corporate
Social Responsibility
in Malaysia
A Case Study in an Emerging
Economy
Loi Teck Hui
Loi & Mokhtar (Chartered Accountants)
& Loi & Mokhtar Consulting
Bintulu, Malaysia

ISBN 978-3-319-62475-4 ISBN 978-3-319-62476-1 (eBook)

DOI 10.1007/978-3-319-62476-1

Library of Congress Control Number: 2017948254

© The Editor(s) (if applicable) and the Author(s) 2018

This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether
the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse
of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and
transmission or information storage and retrieval, electronic adaptation, computer software, or by
similar or dissimilar methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are exempt
from the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this
book are believed to be true and accurate at the date of publication. Neither the publisher nor the
authors or the editors give a warranty, express or implied, with respect to the material contained herein
or for any errors or omissions that may have been made. The publisher remains neutral with regard to
jurisdictional claims in published maps and institutional affiliations.

Cover credit line: Pattern adapted from an Indian cotton print produced in the 19th century

Printed on acid-free paper

This Palgrave Macmillan imprint is published by Springer Nature

The registered company is Springer International Publishing AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
 Acknowledgements

I felt deeply honored in 2012 when Bintulu Development Authority

permitted me to research into the practicing corporate social respon-
sibility aspects of the organization since its establishment in 1978 for
advancing knowledge in the areas. Under the leadership of Bintulu
Development Authority’s top management, the recent industrializa-
tion process, and township modernization in Bintulu have moved to a
whole new level. Therefore, this study is timely and compelling in an
era calling for greater public accountability and sustainable develop-
ment. As the premier industrial town in Malaysia, it seems that Bintulu
is well positioned to attain the friendly industrial city status by the year
2020 as articulated in the vision statement of Bintulu Development
Authority.
Outside my immediate environment, I am thankful to all the
dedicated staffs of Bintulu Development Authority who provided
the required information in making this corporate social responsi-
bility intellectual discourse a success. In particular, I am indebted
to Mr. Shukarmin Chasemon, the deputy general manager of
Bintulu Development Authority and the chief internal coordina-
tor of this research project, on his diligent liaison efforts on all the

v
vi   Acknowledgements

aspects concerning this research. I am also grateful to Department of

Environment, Department of Statistics, Malaysian Palm Oil Board,
State Health Department, the related private and public agencies, inter-
national reviewers, and family members for their efforts in providing
some crucial datasets, comments, and encouragements. Photo cred-
its are also given to some online sources. Some portions of this book
are based on and adapted from some related research works previously
presented and published in several premier academic outlets such as
the Strategic Management Society’s special conference, Emerald Group
Publishing, and Routledge. The administrative and editorial work by the
Palgrave Macmillan team on this book project has been excellent.
 Contents

1 Introduction 1

2 Theoretical and Managerial Framework 13

3 Contexts 49

4 Integrating Corporate Social Responsibility

into Strategic Intent and Mission 63

5 Integrating Corporate Social Responsibility

into Development Agency Role 73

6 Integrating Corporate Social Responsibility

into City Council Role 89

7 Transformative Corporate Social Responsibility 107

8 Implications on Corporate Social Responsibility

and Corporate Sustainability 159

vii
viii   Contents

9 Concluding Remarks 173

Appendix A: Research Methodology 179

Appendix B: Development and municipal expenditures 183

Name Index 187

Subject Index 191

 Abbreviations

ADAB Australian Development Assistance Bureau

BDA Bintulu Development Authority
CSR Corporate Social Responsibility
EC European Commission
FDI Foreign Direct Investment
GDP Gross Domestic Product
GLGs Government-linked companies
ISO International Organization for Standardization
PLCs Public Listed Companies
RECODA Renewable Corridor Development Authority
RM Ringgit Malaysia
SCMD Sarawak Chief Minister’s Department
SCORE Sarawak Corridor of Renewable Energy
TGRI The Global Reporting Initiative
The ASEAN The Southeast Asian Nations
TQM Total Quality Management
WEF World Economic Forum

ix
 List of Figures

Fig. 3.1 Bintulu Development Authority’s headquarters in Bintulu 53

Fig. 3.2 Bintulu Development Authority’s municipal services center 53
Fig. 3.3 Organization chart of Bintulu Development Authority 55
Fig. 4.1 Bintulu development plan completed 66
Fig. 6.1 Trends in municipal income and expenditure 2009–2012 90
Fig. 7.1 Trends in financial performance and position 2009–2012 131
Fig. 7.2 Air quality status in Sarawak in 2012 138
Fig. 8.1 Bintulu Development Authority’s practicing corporate
social responsibility model 161

xi
 List of Tables

Table 2.1 Corporate social responsibility trend and development

in Malaysia 17
Table 2.2 Corporate social responsibility and ethical practices 23
Table 5.1 Contributions as a development agency—the first boom
period (1979–1988) 76
Table 5.2 Contributions as a development agency—the second
boom period (1989–1998) 80
Table 5.3 Contributions as a development agency—the third boom
period (1999–2008, till 2013) 83
Table 6.1 Contributions as a city council—the first boom
period (1979–1988) 92
Table 6.2 Contributions as a city council—the second boom
period (1989–1998) 94
Table 6.3 Contributions as a city council—the third boom
period (1999–2008, till 2013) 100
Table 6.4 Municipal services Center’s income and expenditure
2009–2012 103
Table 7.1 CSR and social programs by Bintulu
Development Authority 110
Table 7.2 Community and social development projects by Bintulu
Development Authority 113

xiii
xiv   List of Tables

Table 7.3 Three stakeholder management cases—background

and development 119
Table 7.4 Balance sheet for financial years 2009–2012 128
Table 7.5 Profit and loss accounts for financial years 2009–2012 130
Table 7.6 Revenue of municipal councils in Sarawak 132
Table 7.7 Expenses of municipal councils in Sarawak 133
Table 7.8 Principal exports value and percentage distribution
in Sarawak 134
Table 7.9 Major investments in the oil and gas industry 135
Table 7.10 Cargo exported and imported at principal ports
in Sarawak 142
Table 7.11 Number of persons and average annual growth rate
by division in Sarawak 143
Table 7.12 Major confirmed investment projects at Samalaju
Industrial Park 145
Table 7.13 Bintulu central business district development
packages 147
Table 8.1 Commonality in corporate social responsibility models 163
 1
Introduction

Abstract This chapter presents the introductory contexts, purpose

statements, research aim, and research objectives of this CSR research.
The organization is tightly embedded in the society and the natural
environment. Managing diverse interests of its stakeholders can be an
uphill task. Lacking of qualitative narratives on a holistic CSR process
coupled with diverse CSR definitions in the field might have eroded
the actual values of CSR in contributing to an organization’s sustained
value creation capability. That said, whether practicing CSR can gen-
erate resilient socioeconomical performances simultaneously requires
further academic investigations. This research takes CSR in a holistic
approach, i.e., examining its adoption in a firm’s strategic planning pro-
cesses from multiple perspectives. It also accesses valuable governmental
datasets, covering the core functions of public sectors such as develop-
ment agency and city council which receive little attention in the cur-
rent literatures.

Keywords CSR · Stakeholders · Holistic · Definitions · Value-creation

Strategic planning

© The Author(s) 2018 1

L. Teck Hui, Practising Corporate Social Responsibility in Malaysia,
DOI 10.1007/978-3-319-62476-1_1
2   L. Teck Hui

The world and its natural laws interact with human societies to affect
the health, activity, life, and well-being of all living things. Different
natural components of the earth interrelate to determine how the
human can make choices to support sustainable development. Scientific
principles are applied to create inventions to support human progress
and to establish a sense of community that supports human endeav-
ors. On the other hand, organizations are also established to address
the needs of communities via viable use of finite resources through eco-
nomic exchanges. Mobilization of economic activities relies on systems
of production, distribution, and consumption of goods and services.
Satisfying the diverse interests of living things is dependent on a com-
plex balance of interconnected factors. The organizations set corporate
missions, establish code of ethics, and develop crucial resource capabili-
ties in order to deploy and share better the finite resources with other
living things.
Economic growth, social progress, and ecological balance are the fun-
damental components of sustainable development. An organization,
be it public or private, is not detached from the society and the natu-
ral environment. Given the tight interconnectedness of human-made
systems, communities, and environments, it is an uphill task for the
organizations to balance the diverse interests of their stakeholders in a
fast-changing world. Living up ethically to the sound corporate respon-
sibilities whether can be something that actually has a bottom-line pay-
off for the organizations remains an enigma. Hence, there is an urgency
to look into the roles and manners of modern organizations in building
a better future without forsaking universal principles.
People cling on to or thrust aside social artifacts. Exploration and
exploitation with local and international mindedness can lead to new
understandings, opportunities, and changes. The object of management
is a human community held together by the work bond for a common
purpose. Management always deals with the nature of man, and with
good and evil (Drucker and Maciariello 2004). Its process in essence
is a system of interdependency (Miller and Whitney 1999). Pragmatic
management upholds the output, often justifying the inputs in terms
of the results. Corporate mishaps imperil modern enterprises’ influence
on others through morality practices. Accounting irregularities, insider
 1 Introduction    
3

trading, and misuse of entrusted power for personal gains, as reflected

in the corporate failures around the world, still pervasive in the behav-
ioral inputs to the modern management processes (Atkinson and Field
1995; Hui 2008, 2010). The pervasiveness of such phenomena in all
kinds of human-run organization can become an evolving organiza-
tional disease that impairs a firm’s long-term corporate sustainability.
As such, morality is still an issue of general concern especially where
the orthodox world of organizing is increasingly subjected to disorder-
ing. The existence of such trends provides another new opportunity to
understand organizations and to build more encompassing theories and
practices on corporate responsibility.
There is nothing inherently wrong with the fruits of affluent. The
current troubled world economies, corporate failures, and geopolitical
environments suggest that the perspective needs to be recalibrated. As
the steward of the earth, the human ought to safeguard the continuous
fruitfulness of the finite resources by developing all potentialities built
into the natural world (Atkinson and Field 1995; Hui 2008, 2010).

1.1 Purpose Statement, Aim, and Objectives

1.1.1 Purpose Statement

Milton Friedman (1970), a recipient of the 1976 Nobel Memorial Prize

in Economic Sciences, argues that the primary social responsibility of
business is to increase its profit without deception. There have been sev-
eral works written to point out the limitations of his works especially in
a more agile kind of economy (Denning 2013; Grant 1991; Husted and
Salazar 2006; Mulligan 1986). A firm develops, acquires, and utilizes
resources to create the capability to endure. An unspoken key tenet of
corporate social responsibility (CSR) is that the society, within which the
firm operates, grants it the license to operate. Unfortunately, the unyield-
ing need to maximize shareholder wealth has triggered corporate failures
(Chatterjee 2003; Jackson et al. 2013). In real world, any practice with
a negative externality that causes other to take a significant loss without
consent or compensation, can be seen as unethical (Cosans 2009). The
4   L. Teck Hui

firms ought to attain sustainability through balancing the complex rela-

tionship between current economic, environmental, and social needs,
also known as triple bottom line, in a manner that does not compromise
future needs (The Global Reporting Initiative [TGRI] 2002). Also, pre-
senting business as a combative pursuit may not be practical in the social
era that would reward fluid organizations and transient competitive
advantage (McGrath 2013; Merchant 2012). A responsible competitive
advantage does not monopolize, but create healthy competition in the
long run that motivates other firms to provide even better goods and ser-
vices (Hui 2008). Separately and together, the above developments raise
a relatively noble set of issues in CSR research to address the question of
what is the role of a firm in society.
A firm essentially is a strategic management system, concerned with
deciding on an actionable strategy for organizational effectiveness and
environment adaptation. Confirming and disconfirming in a stand-
alone context is incomplete to explain the strategic value of CSR. There
have been concerns associated with some prominent yet futuristic CSR
paradigms with: (a) limited empirical testing; (b) confinement largely to
specific projects and products rather than the entire firm; (c) incomplete
CSR definition constructs used in explaining what constitutes multi-
dimensional aspects of CSR; and (e) the tension between maximizing
profit for shareholders and optimizing returns for stakeholders (Crane
et al. 2014). In the current lackluster global economic and geopolitical
environments, it is critical therefore to consider the consequences of the
aforesaid concerns, and to re-examine the adequacy of the existing CSR
models that may not bode well for societies, ecologies, and firms.
That said, it is compelling to explore the current state of CSR being
practiced in major firms, in particular seeing the CSR intent, planning,
implementation, and evaluation processes, and how the CSR initiative
changes as the process of implementing and thinking about it changes
over time. To date, there has been little known about the areas as an
integrated, holistic process for sustained value creation. The actual posi-
tion and the interactive process of a typical CSR planning cycle within
the firms’ larger corporate strategic planning process, and the firms’
strategic actions on their CSR performance also require further exami-
nation and clarification. Taken together, exploration in the areas can
 1 Introduction    
5

provide a more complete comprehension on the existing CSR phenom-

enon and the sustained value creation capability of CSR initiatives.

1.1.2 Research Aim and Objectives

Against the above backdrops, the author conceives that CSR is much
more than an effective strategy or auxiliary social practice. Rather, it is
how the firm and its stakeholders interact and determine each other’s
future by sustaining the continuous fruitfulness of finite resources.
Thus, a central CSR question that this research aims to address is: does
a firm’s CSR and ethical practices really matter for it to fulfill economic self-
interests and societal expectations?
Using qualitative research methods, the research has the following
research objectives that seek to examine and understand holistically:

(a) the strategic intent and mission of a major corporatized govern-

mental development agency and municipal services provider in
Malaysia, Bintulu Development Authority (BDA), in engaging
CSR practices;
(b) the main features of stakeholder management mechanisms,
CSR planning and implementation processes, as well as major
stakeholder problem-solving incidences in order to ascertain
how the organization incorporates CSR strategies and programs
into its core routines for value creation;
(c) the management of CSR performance outcomes resulting from
the CSR initiatives and routines; and
(d) the value of CSR initiatives and sustained value creation capa-
bility of such initiatives to the organization in fulfilling its cor-
porate goals and the expectations of its stakeholders.

Sections 2.2, 2.4, 2.5, 2.6, and 2.7 in Chap. 2 provide the theoretical
cores for the above four research objectives.
Emerging markets constitutes over two-thirds of the world’s popu-
lation. The annual growth rates in gross domestic product (GDP) for
China and India have even sustained over the past few years at 7–10%.
6   L. Teck Hui

The emerging countries are gaining more economic and political clouts.
Country leaders, international managers, civil servants, and researchers
are in need of some guidance on how to respond to increased challenges
of practicing and maintaining corporate responsibility under the state
of uncertainty and value disparity. The emerging markets and emerging
firms can, therefore, be the important testing grounds for existing busi-
ness models and theoretical concepts. Malaysia was ranked among top
20 most competitive economies 2014–2015 by the World Economic
Forum (World Economic Forum [WEF] 2014). Among its 13 states,
Sarawak has one of the strongest economies and is the only state to
receive an A-rating from Standard & Poor’s (Renewable Corridor
Development Authority [RECODA] 2014). Located in Bintulu of the
Sarawak state, the premier energy town of Malaysia, BDA is a represent-
ative local government, a prevalent form of governmental institution,
which can reflect the state of practicing CSR in the areas in Malaysia.
To strengthen the analytic generalization of this research and to
lessen the critical of disadvantages in limiting the research sample, the
author also conducted online information and secondary data analyses
on five representative city councils in the world to find out the com-
monalities of their CSR and social practices with BDA. The city coun-
cils are, namely Hong Kong District Councils, Vancouver City Council,
London Councils, Sydney City Council, and New York City Council.
The author believes that the findings of this CSR research can be repli-
cated in other local governments.
What constitutes wealth creation remains an enigma when a firm is
deeply intertwined with the social milieu. It seems that the current chal-
lenging global economy can sound difficult for the firms to implement
CSR programs, not linked to their overall business strategies and profit
creation goals. This exploratory CSR study shows that by adhering to
good corporate citizen practices, the commitment to practice CSR as an
organizational core routine can be of value to the firms for demonstrat-
ing uniqueness that generates a form of corporate sustainability with
broader societal acceptance. It also informs the ongoing debate on the
strategic role of CSR, and highlights how governmental agencies adopt
CSR by providing novel descriptive data in the areas. This can be an
important first step for the subsequent large-scale quantitative research.
 1 Introduction    
7

1.2 Chapter Outline

This CSR intellectual discourse consists of nine chapters with the fol-
lowing organizations and brief contents. From Chaps. 1 to 3, the author
reviews the related theoretical foundations and analyzes the contextual
backgrounds of the study. In what follows, the author analyzes and pre-
sents the research datasets, discusses the research findings (Chaps. 4 to 7),
and highlights the strategic implications of this research (Chap. 8),
before making the concluding remarks (Chap. 9). Appendices present
the research methodological issues and CSR budgetary figures.
Chapter 1. This chapter presents the introductory contexts, purpose
statements, research aim, and research objectives of this CSR research.
An organization is tightly embedded in the society and the natural
environment. Managing diverse interests of its stakeholders can be an
uphill task. Lacking of qualitative narratives on a holistic CSR process
coupled with diverse CSR definitions in the field might have eroded
the actual values of CSR in contributing to an organization’s sustained
value creation capability. That said, whether practicing CSR can gen-
erate resilient socioeconomical performances simultaneously requires
further academic investigations. This research takes CSR in a holistic
approach, i.e., examining its adoption in a firm’s strategic planning pro-
cesses from multiple perspectives. It also accesses valuable governmental
datasets, covering the core functions of public sectors such as develop-
ment agency and city council which receive little attention in the cur-
rent literatures.
Chapter 2. This chapter surveys the related literatures in CSR and
strategy to establish the theoretical framework, in line with the research
aim and objectives. Section 2.1 reviews the trends of CSR concepts
and definition. A comprehensive CSR definition is, then, adopted. The
state of CSR trends and developments in Malaysia are also reviewed.
Section 2.2 deals with the related stakeholder literatures that form the
theoretical core to understand the state of BDA’s stakeholder manage-
ment in addressing multiple stakeholder interests. Section 2.3 discusses
the dimensions of CSR and ethical business practices with specific
examples given in each of the dimensions. Section 2.4 contends with
the literature on strategic intent and strategic mission, Sect. 2.5 deals
8   L. Teck Hui

with the dimensions of CSR planning and implementation processes,

and Sect. 2.6 reviews CSR performance issues. The author examines
two major theories of the firm, the characteristics of a good strategy, and
the salient features of a transformative CSR in Sect. 2.7.
Chapter 3. The contextual information of BDA is examined in
this chapter. Malaysia was placed in the world top 20 in the Global
Competitiveness Index 2014–2015 compiled by the WEF. Bintulu,
where BDA is situated, is located in Sarawak, Malaysian Borneo.
It is known as a town of resource-based industry, oil and gas, as well
as renewable energy in Malaysia. Sarawak, on the other hand, is the
only state in Malaysia rated A by the Standard & Poor. The discovery
of large reserves of natural gas offshore in 1968 saw the turning point
for Bintulu from a coastal settlement to a major industrial town in
Malaysia. BDA was formed in 1978 to act as the central governmental
body that can both coordinate and implement development projects on
its own in the Bintulu region.
Chapter 4. This chapter examines the strategic intent and mission of
BDA in engaging CSR. The corresponding structured and action plans
that attempt to translate them into reality are also highlighted. The
vision and mission statements suggest that BDA has a future point of
view on CSR. Two master development plans, prepared by the estab-
lished international consultants, have guided the orderly and integrated
socioeconomic developments of the Bintulu region since 1979. Also,
BDA is endowed with the authority of collecting land premium from
the sales of governmental state lands. The ability to generate its own
income increases the organization’s strategic flexibility to embed deeper
and broader CSR elements in all its corporate agendas for the better-
ments of its stakeholders.
Chapter 5. Whenever a firm organizes and strategizes its organiza-
tional routines, it triggers somehow the elements of the triple bottom
line. Chapters 5 and 6 analyze the core businesses of BDA as a gov-
ernmental development agency and municipal services provider, and
the embeddedness of CSR perspectives in the two statutory functions.
Chapter 5 analyzes the role of BDA as a governmental development
agency, which entails it to embark on residential, industrial, and com-
mercial development activities. Besides, BDA also undertakes business
 1 Introduction    
9

ventures in collaboration with private firms through incorporating

companies; an additional authority not enjoyed by other local authori-
ties. The organization’s major contributions, with CSR added on, in
the development of public infrastructures, industrial estates, housing
estates, and commercial centers over the past 35 years are presented.
Chapter 6. The major contributions of BDA, with CSR added on,
over the past 35 years in performing its municipal services provider role
are presented in this chapter. Municipal functions include provision
of sufficient public amenities and quality municipal services, engag-
ing in community services, conducting valuation on ratable properties,
and charging rates on buildings. Both municipal income and expendi-
ture have been on the rising trends, in line with the economic growth
in Bintulu. In 2012, the revenue and expenditure figures of BDA were
more or less the same as the combined figures of the North City and the
South City of the administrative capital of Sarawak, Kuching.
Chapter 7. Apart from integrating the triple bottom line elements in
the value statements and core routines of the organization, this chapter
analyzes the regular CSR and social programs carried out by BDA, three
major stakeholder management cases with international orientations,
CSR planning and control processes, and the corporate and social per-
formance associated with the core organizational routines as well as the
CSR programs. BDA possesses strategic flexibility to select the projects
that will yield maximized financial returns. At the same time, it also has
the required financial strengths to enter, at the command of its major
stakeholders, those projects whereby the social and/or environmental
impacts outweigh the financial returns. The shared values created by
BDA, reflected as better population growth, industrialization, invest-
ment growth, standard of living, and urbanization in Bintulu, have
broader and longer term of transformative impacts on its stakehold-
ers. The organization is able to fulfill its economic self-interests while
addressing fullest possible the expectations of stakeholders.
Chapter 8. This chapter presents a practicing CSR model of BDA and
the implications, contributions, and limitations of this research. A CSR
routine can be a valuable resource capability if a firm is capable of using
it to create competitive advantages that further its corporate agendas.
The holistic approach to researching and analyzing, used in this study,
10   L. Teck Hui

advances the knowledge in the areas. To lessen the critical of disadvantages

in limiting the research sample, this chapter presents also the CSR and
ethical practice commonalities between BDA and five other major city
councils. It seems that the resulting CSR and social practices do not differ
much from one council to another. The findings in this CSR research are
capable of making an analytic generalization to other major firms.
Chapter 9. This chapter concludes that by fulfilling an obligation
to make core organizational decisions with CSR added on, a firm can
demonstrate social responsibility values that benefit its stakeholders
apart from fulfilling its economic self-interests for achieving corpo-
rate sustainability. The large oil and gas reserves and richly resource-
based industries might have fueled the first 30 years of development
in Bintulu. In 2008, the region is embarking on the next 30 years of
growth with the launching of a renewable energy industrial park,
Samalaju Industrial Park, which has attracted confirmed investments
worth over Ringgit Malaysia (RM) 30 billion. This is a strategic indus-
trial diversification which brings additional sources of revenue to the
economy of Bintulu region.
Appendices. The appendices explain the rationales for choosing the
qualitative research methods, different data collection techniques, addi-
tional field works done, sample selection, and data collection process for
this CSR study. This research has the access to valuable governmental
datasets of a major governmental development agency cum city council,
BDA which plays multifaceted governmental, societal, and business roles.
It has interfaced extensively with both notable local and international
actors in fulfilling its statutory obligations. Along the line, the organiza-
tion’s years of budgetary figures with CSR added on are also presented.

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 2
Theoretical and Managerial Framework

Abstract This chapter surveys the related literatures in CSR and strat-
egy to establish the theoretical framework, in line with the research
aim and objectives. Section 2.1 reviews the trends of CSR concepts
and definition. A comprehensive CSR definition is, then, adopted. The
state of CSR trends and developments in Malaysia are also reviewed.
Section 2.2 deals with the related stakeholder literatures that form the
theoretical core to understand the state of BDA’s stakeholder manage-
ment in addressing multiple stakeholder interests. Section 2.3 discusses
the dimensions of CSR and ethical business practices with specific
examples given in each of the dimensions. Section 2.4 contends with
the literature on strategic intent and strategic mission, Sect. 2.5 deals
with the dimensions of CSR planning and implementation processes,
and Sect. 2.6 reviews CSR performance issues. The author examines
two major theories of the firm, the characteristics of a good strategy, and
the salient features of a transformative CSR in Sect. 2.7.

Keywords CSR · Literature review · Definition · Malaysia

Stakeholder management · Ethical business practice · Implementation
Transformative CSR

© The Author(s) 2018 13

L. Teck Hui, Practising Corporate Social Responsibility in Malaysia,
DOI 10.1007/978-3-319-62476-1_2
14   L. Teck Hui

The concept of CSR has already existed in different names, forms, and
practices before the beginning of its growing popularity in the late
1990s, the aftermath of major economic crises and corporate debacles.
The CSR ranks high on corporate practice and academic research agen-
das. Regulators even introduced the Sarbanes-Oxley Act and the Higgs
Report for corporate reforms. The classic view holds that the fundamen-
tal goal of a manager is to maximize a firm’s profit. Conversely, the hap-
pening of corporate failures informs the importance of aligning a firm’s
strategy process with appropriate morality values and management prac-
tices in order to create, deliver, and share value.
This chapter has the following organization. Section 2.1 reviews in brief
the origins and evolution aspects of CSR concepts. A well-encompassing
CSR definition is, then, searched and adopted. The state of CSR develop-
ments in Malaysia, informed by the existing literature, is also presented.
Section 2.2 presents the core stakeholder literatures, seeking to investigate
the state of BDA’s stakeholder management mechanism in addressing
and balancing multiple stakeholder interests. Section 2.3 provides some
specific examples in each dimension of CSR and ethical business prac-
tices identified with reference to the CSR definition adopted in Sect. 2.1.
The categorizations of CSR and ethical business practices that form the
framework for analyzing the commonality of the practices between BDA
and five other major city councils in the world are presented in Sect. 8.2,
Chap. 8. In what follows, Sect. 2.4 deals with the literature on strategic
intent and strategic mission, Sect. 2.5 copes with the dimensions of CSR
planning and implementation processes, and Sect. 2.6 reviews CSR per-
formance issues. Before wrapping up Sect. 2.7, the author examines two
major theories of the firm, the characteristics of a good strategy, and the
salient features of a transformative CSR.

2.1 Corporate Social Responsibility Concept

and Trend in Malaysia
The antecedents of CSR concepts, definition constructs, and trends cov-
ering the period between the 1950s and 2010s have been reviewed exten-
sively in several works (Carroll 1999, 2008; Carroll and Shabana 2010;
 2 Theoretical and Managerial Framework    
15

Moura-Leite and Padgett 2011). The main idea of Bowen’s work (1953)
perhaps marked the beginning of the modern era of social responsibility
in the 1950s (Carroll 1999). Core areas of the CSR development dur-
ing the era included management as a public trustee, balanced claims to
corporate resources by the sum of interests, and relating Christian ethi-
cal principles of conduct to solve business problems (Frederick 1960),
although there was scant CSR definition in the literature (Carroll
1999). The 1960s marked a significant growth in the CSR literature in
attempting to more accurately state what CSR meant and its impor-
tance to business and society (Carroll 1999; Moura-Leite and Padgett
2011). At a macro-social level, many CSR issues, for example, the rela-
tionship between corporate social performance and financial returns
were superficially discussed (Lee 2008). The definitions of CSR contin-
ued to proliferate in the 1970s. Perhaps Carroll’s (1979) definition on
a theoretical four-part of CSR, namely economic, legal, ethical, and
philanthropic, embedded in a conceptual model of corporate social
performance was the earliest, more established framework of CSR
(Carroll 1999).
Carroll’s (1979) CSR framework was refined during the 1980s (Jones
1980; Wartick and Cochran 1985), the 1990s (Wood 1991), and the
2000s (Schwartz and Carroll 2003). During the 1980s and 1990s,
there were more empirical studies, fewer original but refined CSR
definitions. The CSR concept served as the building block for alterna-
tive or complementary themes (Carroll 1979, 2008). From the 1990s
onward, the concept of CSR has become almost universally sanctioned
and promoted by all constituents, including the international organi-
zations such as the United Nations and the World Bank (Moura-Leite
and Padgett 2011). There were more and continuous attentions given
to CSR measurement initiatives, diverse themes, and empirical studies
that sought to reconcile CSR theory with practice. The scenarios seem
to continue to the 2000s, as the field has evolved into a highly heteroge-
neous literature.
Following the major corporate debacles and economic crises, happen-
ing in the first decade of the new millennium, there were tighter institu-
tional reforms to make sustainable development in an important source
of institutional legitimacy of firms. CSR becomes an important strategic
16   L. Teck Hui

issue for major firms in the 2000s. It attracts a large number of research
attention in numerous themes and settings (Carroll and Shabana 2010;
Moura-Leite and Padgett 2011). At the same time, it also evolves into
a highly heterogeneous literature with some areas relatively unexplored
and lacking empirical research (Aguinis and Glavas 2012). The quests to
revise, adapt, and find business relevance of the existing CSR literatures
still continue. New perspectives will almost be sure coming up in com-
ing years.
In summary, an organization exists for legitimate causes. To be profit-
able perhaps is the starting point for many firms. The firms make prof-
its when society places demand on their goods and services. Through
the continuous cycle of wealth creation, distribution, and regeneration,
they can afford to offer more jobs to uplift the living standard of the
society. Hence, the long-term financial viability to justify for a going
concern status will be the goal of all the firms. In 2011, the European
Commission (European Commission [EC], 2011, p. 6) makes an
account of the CSR definition as:

The responsibility of enterprises for their impacts on society […]. To fully

meet their CSR, enterprises should have in place a process to integrate
social, environmental, ethical, human rights, and consumer concerns into
their business operations and core strategy in close collaboration with
their stakeholders, with the aim of: maximizing the creation of shared
value for their shareholders and stakeholders at large; and identifying,
preventing, and mitigating their possible adverse impacts.

In this research, the author adopts the definition as the well-encom-

passing explanation on the meaning of CSR. CSR can be seen as an
obligation of the firms to act in accordance with moral, legal, environ-
mental, and social concerns, while finding solutions to address the over-
lap where their economic self-interests and stakeholders’ expectations
intersects.
To date, CSR studies focusing on the Malaysian contexts have received
scant international attention. Some of the published studies cover the
areas on the CSR disclosure process (Andrew et al. 1989; Teoh and
Thong 1984), the increased level of CSR awareness in Malaysia (Ahmad
 2 Theoretical and Managerial Framework    
17

Table 2.1 Corporate social responsibility trend and development in Malaysia

CSR research Finding, trend, and development
At the country level
KPMG International - The rate of corporate social reporting in the larg-
(2013) est 4100 companies in 41 countries was 71% on
average in 2012 (2011: 64%), with the highest rate
found in Denmark (99%) and France (99%). The
rate for Malaysia was 98%
United Nations - The Malaysian government has contributed to
Children’s Fund (2011) a positive CSR environment especially under its
economic development plans, namely the Ninth
and Tenth Malaysia Plans. The GLGs transforma-
tion manual guides the CSR adoption by the GLGs.
Increased investment in CSR from palm oil industry
has also been recorded
Adams (2010) - In Malaysia, the adoptions of voluntary CSR report-
ing and standards, though still nonmandatory, are
strongly supported by the Malaysian government.
The Stock Exchange of Malaysia, Bursa Malaysia,
in September 2006, asked that all the listed issuers
and their subsidiaries to provide a description of
their CSR activities or practices. It also launched a
CSR framework as a guide for public listed compa-
nies in implementing and reporting on CSR
Lu and Castka (2009) - The paper investigates the status of CSR, differ-
ent CSR practices, and future diffusion of CSR in
Malaysia. Several Malaysian legislations, namely
the Environment Quality Act (1974), the Anti-
corruption Act (1977), and the Human Rights
Commission of Malaysia Act (1999), incorporate
CSR elements. But, the confusion over the meaning
of CSR, the prevalent use of CSR as a public rela-
tion tool, and mandatory versus voluntary CSR are
among the issues that impede wider adoption of
CSR in the country
At the industry and firm levels
Anas et al. (2015) - This research analyzes the extent and quality of CSR
information disclosures in the 2008 annual reports
of the Malaysian public listed companies (PLCs),
after Bursa Malaysia launched its CSR Framework
(effective in 2007) that guides the PLCs’ CSR disclo-
sure. The CSR framework seems to have an impact
on the level and systematic CSR reporting practices,
but the quality of CSR disclosure is considered
minimal
(continued)
18   L. Teck Hui

Table 2.1 (continued)

CSR research Finding, trend, and development
Hamid et al. (2014) - A case study on a large GLC’s initiatives in support-
ing the governmental information and communi-
cations technology agendas, in line with the GLGs
transformation manual’s CSR guide
Hazlina and Ramayah - The paper finds that while entrepreneurial ventures
(2012) in Malaysia become quickly aware of the more seri-
ous consequences of not adopting CSR practices,
the concern for social issues may still be lacking
Yam (2013) - The research finds that the majority of the
Malaysian property developers have their corporate
CSR initiatives in place, and there are variations in
their approaches and reporting processes
Ting et al. (2010) - Using a scorecard devised to TGRI framework, this
study provides an insight into the positive influ-
ence of management systems on CSR performance
among firms in Malaysia
Nejati and Amran (2009) - The findings of this research show that Malaysian
small and medium-sized enterprises were mostly
practicing CSR because of their own beliefs and val-
ues, religious thoughts, and pressure and encour-
agement from stakeholders
Amran and Siti-Nabiha - This study uncovers some of the motives for
(2009) the corporate social reporting by companies in
Malaysia through the institutional theory perspec-
tive. It seems that the rising trend in the number of
reporters can only find its explanation in Western
mimicry
Janggu et al. (2007) - Analyzing the corporate annual reports of the
companies from 1998 to 2003, the research finds
that CSR level of industrial companies in Malaysia is
increasing both in terms of amount of the disclo-
sure and the number of participating companies

and Rahim 2003; Rashid and Ibrahim 2002), the corporate social report-
ing (Thompson and Zakaria 2004), the level of awareness and the per-
ceptions of accounting professionals of the meaning of CSR (Zulkifli
and Amran 2006), and the CSR practices and disclosure by government-
linked companies (GLGs) as a result of the introduction of the GLGs
transformation manual or the Silver Book (Atan and Razali 2013;
 2 Theoretical and Managerial Framework    
19

Esa and Ghazali 2012; Ghazali 2007; Rahman et al. 2011). Besides,
other studies focus more widely on the CSR disclosure issues such
as levels of disclosure, types of disclosure, and quantity of informa-
tion disclosed (Ahmad and Sulaiman 2004; Jamil et al. 2002; Janggu
et al. 2007).
Malaysia was ranked among top 20 most competitive economies
2014–2015 by the World Economic Forum, ahead of Australia (no. 22)
(WEF 2014). Paradoxically, it had also unsatisfactory ranking, i.e.,
no. 53 (Australia no. 9) in the Corruption Perceptions Index 2013 by
the Transparency International (Transparency International, 2013).
The state of CSR trends and developments in the country remains an
enigma. Table 2.1 below presents some further research works, which
show mixed pictures on the trends, written in the areas.
A local government like BDA is the level of government at the bot-
tom of a pyramid of governmental institutions, with the national gov-
ernment at the top and the state government at the middle. Being the
closest to the people, its public policies will have direct impact on the
local communities as well as economic and environmental infrastruc-
tures. Thus, this CSR research is reflective of a mainstream perspective
in the areas on the state of practicing CSR in Malaysia that has not
received enough attention in the current literature.

2.2 Stakeholder Theory

A stakeholder is any group or individual who can affect or is affected
by the achievement of a firm’s objectives (Emshoff and Freeman 1978;
Freeman 1984). A central claim of the stakeholder theory is the pur-
pose of business is creating value for various stakeholders (Freeman et al.
2010). The work of Freeman (1984) is widely regarded as the intellec-
tual discourse that popularizes the modern stakeholder management
concept. Rather than being an agent of shareholders only, the stake-
holder management concept conjures up new roles for management in
managing and balancing interests of all stakeholders. This represents a
stakeholder democracy as the stakes of multiple stakeholders are repre-
sented fairly in the governance of modern corporations (Bendell 2007;
Matten and Crane 2005).
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