CORPORATE SOCIAL RESPONSIBILITY STRATEGY, MANAGEMENT CONTROL SYSTEMS AND COMPANY PERFORMANCE (EVIDENCE FROM INDONESIAN MANUFACTURING COMPANIES)

Titi Suhartati; Sofjan Assauri; Chaerul D. Djakman; Elvia R. Shauki

Universitas Indonesia Conferences, Asia Pacific Business and Economics Conference

Titi Suhartati, Sofjan Assauri, Chaerul D. Djakman, Elvia R. Shauki

Last modified: 2018-01-15

Abstract

This study aimed to explore the direct effect of the implementation of corporate social responsibility (CSR) strategy (strategic and non-strategic CSR) on firm performance, and the role of the management control system (MCS) as a moderating variable between CSR strategy and firm performance. The samples in the study are the manufacturing companies listed on the Indonesian Stock Exchange (Bursa Efek Indonesia/BE]) in the period 2013–2015. Secondary data, such as financial statements and annual reports, were used to obtain the research data. This study contributes to the current debates related to CSR strategy and the role of MCS as it develops the measurement model for strategic CSR (five strategic CSR dimensions: centrality, specificity, proactivity, visibility, and voluntarism), non-strategic CSR (ethical and altruistic characteristics) and MCS (four elements of levers of control: belief system, boundary system, diagnostics, interactive control system) by using content analysis in the company’s annual report. Our findings were that both strategic and non-strategic CSR have a positive significant influence on the company’s financial performance. CSR strategy is one of the mechanisms for the fulfillment of the obligations of the companies to the government and society, not just the embodiment of the moral or ethical obligations of companies to the social environment and society, but it has an impact on the company’s performance. Furthermore, MCS has a role, as moderating variable, in supporting the relationship between the CSR strategy (strategic and non-strategic) and company performance. These findings indicate that the companies have been carrying out a CSR strategy in line with the objectives of each company and it is supported by MCS.

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