Literature Review Chapter: Corporate Social Responsibility in Saudi Arabia

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Corporate Social Responsibility in Saudi Arabia

In this paper we are examining Corporate Social Responsibility in Saudi Arabia. This is accomplished by conducting a literature review and focusing on why this is taking place. Once this occurs, is when we can see the underlying causes of these trends and how they impacting the Kingdom itself.

Over the last several decades, Saudi Arabia has been experience tremendous amounts of economic growth. Part of the reason for this, is because they have 20% of the world proven oil reserves. Yet, the sale of petroleum-based products is accounting for: 90% of Saudi Arabia's exports, 80% of their revenues and 45% of the nation's GDP growth. This is significant, because the marketing of crude-based products has improved the county's standard of living and it has caused the nation to experience consistent amounts of GDP growth. The below tables are illustrating how this is taking place by looking at the annual per capita income and the GDP rate over the last three years. (CIA World Fact Book 2011)

Table 1: Saudi Arabia's Annual Per Capita Income

Year

Amount

2008

$23,900

2009

$23,700

2010

$24,200

(CIA World Fact Book 2011)

Table 2: Saudi Arabia's GDP Growth Rate

Year

Rate

2008

4.2%

2009

.6%

2010

3.7%

(CIA World Fact Book 2011)

These figures are significant, because they are illustrating how the production and sale of crude-based products has increase the nation's wealth. As a result, a number of: private citizens, nonprofit organizations, governments and businesses have been focusing on social responsibility. To fully understand what has taken place requires conducting a literature reviews on this subject. Once this occurs, it will provide the greatest insights as to: how this is impacting the way that these entities are interacting with the general public and the role they are playing in local communities.

Literature Review

In this section, we are going to be reviewing various pieces of literature on the subject of corporate social responsibility in Saudi Arabia. This will be accomplished by studying numerous books, journals, websites and blogs. During the process, there will be a focus on select areas to include: providing a definition of corporate social responsibility (CSR), understanding the main drivers behind this phenomenon and how these concepts can be applied in a real world context. These different elements are important, because they will help our research to concentrate on select aspects of this area and the impact that it is having on society. Once this occurs, is when we will understand how this is influencing the way that businesses and other organizations are delivering various products to the general public.

A Definition of Corporate Social Responsibility

In the website that is titled Corporate Social Responsibility (2011), it is providing us with a basic definition of this concept. As this is an approach, that businesses are using to reach out to communities in an effort to address various social welfare needs. This is because, corporations are considered to have tremendous amounts of assets and they will hire employees who work in the community. At the same time, many of their managers have: family and friends that are directly tied to what happens in these areas. As a result, a number of businesses and private organizations are engaging in corporate social responsibility. This is significant, because it is providing us with a basic definition of corporate social responsibility and why a host of firms are choosing to become involved in these kinds of activities. (Corporate Social Responsibility, 2011)

Moreover, the literature that was written by Sims (2003) is providing another definition of corporate responsibility. He found that it is a continuing focus of firms, consistently engaging in moral behavior that is supportive of the community itself. The reason why, is because these companies have a stake in the well-being of cities where they have operations. To ensure that everyone is enjoying a better quality of life they will often work in conjunction with nonprofits and government officials to address a number of issues impacting the community. A few of the most notable include: supporting programs that will promote the general welfare, environment, education, quality of life and infrastructure needs. These different elements are important, because they are allowing firms to address the needs of various stakeholders and increase their bottom line result. Once this occurs, is when there are win -- win situations that are created which will benefit everyone. (Sims 2003, pp. 42 -- 46) The information from this source is useful, because it is providing us with a second basic definition of corporate social responsibility and why firms will become involved in these kinds of programs. This is the point that we can understand the impact that this will have on an organization and the various stakeholders that they are working with.

Furthermore, Hopkins (2006) found that CSR was mainly attributed to economic growth and development. This is because the definition of these concepts is continually evolving. What has been happening is since the 1960's, many economists and actuaries considered economic growth to occur when there are prolonged periods of: increases in the standard of living, income and GDP rates. The problem with this basic assumption is that everyone was taking a one size fits all approach when it comes to issues impacting society. This is because the effects of what is happening will have uneven results on different segments. Where, select groups will benefit from what is taking place, while other demographics will receive little to no benefit from what is happening. Over the course of time, this can create vast disparities in society. To deal with the challenges government based: entities, nonprofits and businesses will join together in addressing these lingering societal challenges. A few of the most notable include: unemployment, inequality in society, substance abuse, obesity and the lack of economic opportunity. This is important, because it is providing us with a basic definition of CSR and how it has changed based upon economic growth in comparison with the underlying societal effects. (Hopkins 2006, pp. 2 -- 4)

The Drivers behind Corporate Social Responsibility (Globally)

In the article that is written by Zain (2008), she is discussing how corporate social responsibility has been playing an important part in Saudi Arabia. This is because globalization has been placing pressure on firms to increase productivity as much as possible to remain competitive. One the best ways that firms can maintain a favorable image and help to build goodwill among employees is to have programs that will give something back to the community. (Zain, 2008)

In Saudi Arabia, Abdul Latif Jameel (ALJ) Group has been an example of how firms are becoming more involved in CSR related programs. The reason why they have focused so heavily on these areas is to give them a strategic advantage in local markets. As the company, sells a wide variety of products and services to customers throughout the Kingdom. A few of the most notable include: they are the largest Toyota dealership in the Middle East, the sale of electronics, consumer durables, real estate, logistics and financing. These different elements are important, because they are illustrating how Abdul Latif Jameel Group must be able to effectively reach out to a large demographic of consumers. This is because the products and services that they are selling will face increased amounts of competition from foreign-based firms. The best way that they can maintain these favorable images is to engage in various programs that will address the needs of employees and local communities. Over the course of time, this will help to make the company more responsive to the needs of customers and there will be higher levels of productivity. (Zain, 2008)

Evidence of this can be seen by looking no further than the company's efforts to address the high levels of unemployment in the Middle East and North Africa. Where, they have been using the Human Resources Development Fund to train and educate people about various aspects of marketing. These individuals are then hired by local and international employers to sell a variety of goods / services throughout the region. The basic idea behind this approach is that those who are unemployed can be able to learn a valuable skill and how market different products / services. Over the course of time, this improves the standard of living inside the community and it gives families a way of being able to earn a consistent income. This is important, because it is showing how corporate social responsibility is being utilized to address issues impacting communities and to improve the image of company. Once this occurs, is when they will be seen as a firm that will work with local residents. This is when they will continually utilize their products and services on a regular basis. The information from this source is useful, because it is showing how the drivers behind CSR related programs are the desire to: maintain market share, improve productivity, address the needs of communities and increase profit margins.… [END OF PREVIEW]

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Corporate Social Responsibility in Saudi Arabia.  (2011, November 27).  Retrieved December 9, 2019, from https://www.essaytown.com/subjects/paper/corporate-social-responsibility-saudi/6193000

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