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CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES IN MOBILE TELECOMMUNICATION INDUSTRY: CASE STUDY OF MALAYSIA Mudzamir Bin Mohamed Faculty of Accountancy Universiti Utara Malaysia 06010 Sintok,Kedah, Malaysia [email protected]

Norfaiezah Binti Sawandi Faculty of Accountancy Universiti Utara Malaysia 06010 Sintok,Kedah, Malaysia [email protected]

Abstract In a very competitive global market, mobile telecommunication companies must strive to portray a picture of themselves as highly socially responsible companies. Active involvement in socially beneficial programs provides extra advantages to the company. This study examines the concentration of CSR activities of mobile telecommunication companies in Malaysia. Furthermore, this study also determines the motives and the most influencing factors in their concentration of involvement in CSR. Generally, involvements in CSR activities are inspired by several construct motivational factors and follow the agency theory assumption. One of the primary motivating factors is the belief that CSR can increase long term profitability and sustainability of the company as well as enhance the reputation of the organization. Companies A, B and C show satisfactory level of involvement in five (5) main categories; environmental concerns, welfare or charity, community involvement, products or services improvement and natural disasters awareness programs. Malaysian Communication and Multimedia Commission (MCMC) as the regulatory body has determined that the mobile telecommunication companies will actively be involved in CSR as the customer-oriented factors in their business operation is of utmost importance. Overall, it can be concluded that all of the three mobile telecommunication companies in Malaysia have high initiative in CSR activities with several constructive motives.

Keyword: CSR, Mobile Company, Management Accountability

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CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES IN MOBILE TELECOMMUNICATION INDUSTRY: CASE STUDY OF MALAYSIA

Introduction Any corporation’s business goal is to provide value and incentive to its shareholders. Therefore, profit-oriented corporations or organizations are not a charitable organization although sometimes it is in their direct interest to support charitable activities. Furthermore, sometimes corporations or organizations carry out certain activities that governments should undertake, although they are not government agencies. It is beneficial for the corporations to carry out such socially responsible activities. Corporate social responsibility (CSR) is defined as categories of economic, legal, ethical and discretionary activities of a business entity as adapted to contribute to the values and expectations of society (Joyner, Payne & Raiborn, 2002; Coldwell, 2000; Grunig, 1979). CSR is also the continuing commitments by any business organization whereby they emphasize the ethical elements in their management and overall organizational structure (Richardson et. al, 1999). At the same time, companies are responsible for national economic development by improving the quality of life of the whole workforce and their families as well (Abbott & Monsen, 1979). In Malaysia, a rapidly developing country, the business environment is typically characterized by powerful business enterprises, a legal environment aimed at ethical behaviors on the part of businesses, and societal expectations that businesses should be more ethical and socially responsible*. Along with that, in developing countries the organizations need to be more competitive, therefore, issues of customer service and satisfaction is of great importance. Thus, in decision making processes, companies try to avoid actions that may breach any regulation or negatively impact their reputation in order to avoid consumer dissatisfaction. Research Question Why are profit-oriented companies interested in corporate social responsibility? Only providing for the needs of a customer is not sufficient. Some truly enlightened companies always ensure that their interest is in line with societal needs and they will take this into consideration in their business planning. This study mainly focuses on the involvement of mobile telecommunication companies in CSR activities. Moreover it is vital to highlight the several unique features of this industry, such as stiff competition between the companies for a strong customer base, various new issues that arise from customer services and satisfaction and the fact that the companies operation is largely based on customers’ needs and technological demands (Wilson, 2000; Kissel & Beauvais, 1994). ________________________________________________________________________ * Utusan Malaysia, (14 February 2003) from Dato’ Seri Dr Mahathir Mohamed’s speech at the Malaysian International Trade Sseminar

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Objectives of the Study In order to study the extent of telecommunication companies’ involvement in CSR activities, the objectives that guided us to get the valuable information to implement this study are: i. To determine the concentration of CSR activities for the mobile operators in Malaysia based on contribution or cost allocation towards such activities. ii. To identify the factors that influence telecommunication companies' involvement in CSR activities.

Motivation of the Study CSR involves various aspects such as economic factors, legal requirements, ethical orders and discretionary demands. In this high-tech era, business environments are susceptible to changes in these factors. In order to be a leading mobile telecommunication provider, each firm must be fully aware and sensitive to the impact of these factors. The effect of these factors may add to the firm’s corporate image and financial performance. CSR actually portrays the image of the firm itself. It shows what the company has done to fulfill its corporate duty to ensure the firm is not only good in providing the service but also plays its roles by contributing something to the community (Tilt, 1994). In order to have a good relationship with the community, the firm should do something beneficial for the community. Within the company itself, there is also a platform for social contribution especially to the employees. For example, in Maxis Communication Berhad, there are a lot of privileges that have been provided to the staff such as medical treatment, advantages in communication services, increment of salary and etc. This telecommunication industry has its own unique features compared to other industries. The distinctiveness of this industry is mainly due to the restriction imposed by Malaysian Communication and Multimedia Commission (MCMC). MCMC has restricted the number of players allowed to operate in this industry. Another interesting aspect of this industry is its contribution, when in 2003 the industry contributed more than one hundred million to the Malaysian Industry (Annual Economic Report Bank Negara, 2003). Another industry feature is the stiff competition amongst each other to attract as many customers as possible. As the customer is their main target, welfare of the customer is of great importance. Thus, all the players in this industry compete on gaining a strong customer basis. They work very hard to attract as many customers by adapting a comprehensive marketing strategy, offering valuable packages or schemes as well as high quality service. As any other service oriented provider, all players need to maintain a high customer satisfaction level in order to ensure their survival in the industry (Dennis et. al, 1998). Thus it is no wonder that Digi.Com for example in 2001 spent more than 15% of its operating expenses on CSR activity. In addition, all of the providers offered places to students in public universities to undergo practical training at their firms. All these activities actually help the companies

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to enhance their corporate image and at the same time fulfill their corporate social responsibility. Thus considering all these factors, we intend to determine the comprehensiveness of mobile telecommunication companies’ involvement in CSR activities. Literature Review The Concept of Corporate Social Responsibility The concept of corporate social responsibility (CSR), calls for a lengthy discussion due to its varied history. In the past, there have been traces of evidence in the business community that showed their concerns for society in general. Although there are many definitions of CSR available, we center our attention on more recent concepts of CSR. According to Richardson, Welker and Hutchinson (1999), CSR behaviors can be defined as discretionary actions undertaken by companies that are intended to advance their social issues. Joyner, Payne & Raiborn (2002) noted that CSR are categories of economic, legal, ethical and discretionary activities of a business entity as adapted to the values and expectations from society. They also added that, CSR are the basic expectations of the company regarding initiatives that take the form of protection to public health, public safety, and the environment. In this concept, they explained that values and ethics influence the extent of a corporation's perceived social responsibility that is influenced by societal activities, norms or standard. In today’s world, CSR can be defined as regards to all aspects of business behavior so that the impacts of these activities are incorporated in every corporate agenda (Orgrizek, 2001; Coldwell, 2001). So, with the literatures definition of CSR, it can be concluded that CSR is the continuing commitment taken by business organizations to strengthen their ethical concepts and social involvement in society, contribute to economic development, sponsor charitable programs, and improve the quality of the workforce and also the increment of services provided. However on the other hand, Freeman & Liedtka (1991) argue that CSR can promote incompetence by leading the managers to get themselves involved in areas beyond their expertise, that is, trying to repair society’s ill. Factors Influencing Involvement in Corporate Social Responsibility The primary role of business is to produce goods and services that society wants and needs. According to Coldwell (2001), a business only contributes fully to a society if it is highly efficient, highly profitable and has socially responsible agendas. Based on the literatures definition of CSR, CSR behaviors are not constant over time or space. Social expectations and pressure for specific types of CSR have varied over time and are contingent on the nature of the company (Richardson, Welker & Hutchinson, 1999). A study by Windsor (2001) showed that social responsibility is achieved when the corporation conforms to the prevailing norms and expectations of social performance in a given society. Since CSR behaviors are charitable and discretionary, the likelihood that a specific company will engage in CSR will also depend on the characteristics of the business and management. According to J. Richardson, Welker and R. Hutchinson (1999), a company may decide to take a proactive attitude on an ethical issue in the absence of specific pressures for that company to act, more specifically it is voluntary. On the other hand, it

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is possible for businesses with publicly known CSR related problems to take no action with regard to these problems. A firm or organizations size might be associated with the level of social involvement. A study by Smith (1991) found that heavy manufacturing companies involved in smelting and chemical production are more closely monitored for environmental performance than companies in other industries. This is due to the fact that heavy manufacturing companies are perceived to be more harmful to the environment and natural habitats. Furthermore, a causal effect exists between business size and industry on the amount of social disclosure (Tilt, 1994). This interaction indicates that the size effect is most obvious in sensitive industries. For example, large firms in the oil and gas industry are more likely to undertake CSR behaviors than small firms in that industry. However, no size effects are apparent in low impact industries such as retailing or financial services. Joyner, Payne and Raiborn (2002) also compared small and larger organizations and the results showed that smaller business seemed to better understand the issues of corporate social responsibility than larger companies. They also identified the different internal and external factors that would cause inconsistency in the ethical behavior of small and large businesses. On the contrary, a study by Thompson and Smith (1991) revealed that small businesses have not been encouraged to overlook social activism and to concentrate instead on avoiding irresponsible behavior. CSR is also influenced by the ethics of the firm or organizations. Ethical motivation can guide the business or organization to do the right thing without any external pressure or governmental constrain. Joyner, Payne & Raiborn (2002) contended that people believe businesses are amoral, when in fact they generally embrace the values of ethics in doing business. They cited several factors that serve to legitimize their position and one of the factors is society, which expects moral behavior of the business when it cries out against immoral labor practices or environmental policies. According to Ogrizek (2001), business leaders are starting to acknowledge some of the market benefits and competitive advantages for companies who put into place a comprehensive CSR policy. This means that a business with a strong stance in corporate responsibility will attract top talent and reputation. However, most of the respondents in a study by Zabid and Saadiatul, (2002), did not agree that business leaders who have too much social power should not engage in social activities that might increase their social power. It shows that the political power that they possess might have a direct relationship with the companies’ social agendas. Profitability or financial performance also has an influence on CSR. A study by Cochran & Wood (1984), found that within industry groups, the financial variable that most strongly correlated with CSR is asset age and that omission of this variable results in a spurious correlation of CSR and financial performance. In other words, firms with older assets have lower CSR ratings. Aupperle, Can-oil and Hatfield (1985), tested the association between social involvement and profitability and reported it as a positive correlation. Meanwhile Abbott and Monsen (1979) stated that there is no conclusive evidence that there is a clear linkage in any direction between corporate social activities

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and profitability which in their research, for example, appears convincing that CSR is inversely linked with profitability in the short run. According to Mcguire, Sundgren and Shneeweis (1988), CSR is a core corporate duty which consists of corporate decision making, the relationship of the firm’s social and ethical concerns with financial performance. The issue that emerges here is the relationship between the firm's social responsibility and their financial performance. A theoretical framework was used in the research based on the stock market results and it did not show any relationship between financial performance and the firm’s social involvement. On the contrary, using the accounting based performance the relationship was established. In order to overcome the weakness of this method, the authors used performance in controlling pollution as a proxy measure. Corporate social responsibility can be achieved if the firm considers the influence prior to its performance and should be stressed theoretically and empirically. Activities in CSR Agendas Abbott and Monsen, (1979) developed a corporate social involvement disclosure scale based on a content analysis of the Annual Reports of the Fortune 500 companies. The purpose of the study was to pursue the use of self-reported disclosures as a means of constructing a quantitative scale, identified as the Social Involvement Disclosure (SID) scale and to obtain it from a content analysis of the Annual Report. In this research, they used a content analysis as a technique for gathering data. However, it is not easy to measure corporate social involvement. There are two basic difficulties in measuring corporate social involvement. The first is the unavailability of detailed information in quantitative terms of the social activities (merely to qualitative). The second is that the methodology used must be devised by researchers to measure the full impact of known corporate activities on society. Based on this research, the CSR activities that are always reported are environmental issues, equal opportunity for employees, personnel welfare, community involvements and product care. These activities reflect the criticisms that companies currently encounter by the set up of the modern corporation and the need to meet the governmental regulations. According to Orgizek (2001), the scope of CSR is much broader than charitable activities, philanthropy and community involvement. It embraces business practices, including environmental management systems, human resource policy and strategic investment for a sustainable future. He also states that CSR is all about competing beyond technology, quality improvement, service reliability and competitive pricing. Meanwhile Joyner, Payne and Raiborn (2002) associate corporate leadership with CSR, citing leadership and support of publicly important issues such as education, resource conservation, community services, improvement of industry and business practice and the sharing of nonproprietary quality-related information. They mentioned that majority of the entrepreneurs felt responsible to their communities, employees, customers, and other stakeholders. These firms may undertake many things such as supporting the arts, helping local schools find funding, contributing to local festivals and providing food and supplies in order to fulfill their CSR.

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Also, to ensure CSR has been fulfilled by a firm, a lot of programs that has been organized by a firm were related to environmental quality and pollution control (Mahapatra, 1984). It was also an opportunity to investigate the ethical issue of investor and rational economic investor. The theoretical framework is organized to details up the effect of pollution control but it seems that it has not contributed anything to the CSR of the firm. The conceptualization of CSR activities offered by Hay and Gray (1974) were characterized into three periods or phases of social responsibility which are profit maximizing, the emergence of trustee management and a shift towards quality of life management. Profit maximizing management emphasizes profits, wealth accumulation, productivity, and stockholder interest, and is less concerned about product quality, job security and social values. While the trustee manager attempts to offer quality products at fair prices but is less tending to support environmental conservation, cultural values, or employee rights. In conclusion, they noted that a high quality of manager should have many of the ethical values ranked high and be concerned with employee rights, social justice and the quality of the environment. Consumer Reaction to CSR Sen, Sankar & Bhattacharya (2001) examined when, how, and for whom specific Corporate Social Responsibility (CSR) initiatives work. These researchers studied consumers' CSR responses and the means underlying these responses. There were two studies in this research. The first focuses on an evaluation of the relationship between CSR and the company. Meanwhile the second study focuses on CSR's direct influence on consumers' product evaluations which depends on CSR domain, CSR and company ability, beliefs and CSR support. The results showed that reactions from customers to CSR initiative for each company was positive when there was a similarity between the company's character and their own CSR activities carried out. The finding of this research can be divided into two, the primary finding is the effect of CSR on company evaluations and the secondary finding is the effect of CSR on product purchase intentions. Using real CSR and product information about a company, the researchers found that the positive effect of CSR initiatives on a consumer's company evaluations were mediated by their perceptions of self company congruence and moderated by their support of the CSR domain. Furthermore, the researchers found that consumers' were more sensitive to negative CSR information than positive CSR information when evaluating the company. More specifically, all consumers reacted negatively to negative CSR information, whereas only those most supportive of the CSR issues reacted positively to positive CSR information. For the effect of CSR on product purchase intentions, the researchers found that CSR influenced consumer's product purchase intentions in a more complex manner than its straightforward positive effect on their company evaluations. Specifically, this suggested that a company’s CSR effort can affect consumers' intentions to purchase its product both directly and indirectly. The researchers stated that people often identify with a company they belong to for their self-consistency and self-enhancement. They also suggest that customers did believe about the trade-offs. A company in such a situation would benefit

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from informing customers that CSR actions do not detract from its ability to produce quality products or improving its product offering. It also can help the company to dodge the wrong perception from the customers about the CSR. Another study by Grunig (1979) used the situational theory to evaluate the public in his study. He assumed that behaviors of different people will be more consistent in the same situation compared to the behavior of a single person in different situations. The answers to his research questions could help corporations determine the areas of social responsibility in which they should be more concerned. Furthermore, this can also be evaluated in a corporate social audit in suggesting strategies for communicating with the public. This study used both the situational perception concepts and the cognitive strategy concepts. Both of these theories can measure only a limited number of variables with a single measurement instrument. So, this study is designed to use the concepts in a survey to identify the public and opinions of the public on an important social aspect of management. The results suggest that corporate managers should be most concerned with social responsibility in carrying out business activities. Respondents in this study generally did not believe businesses should be involved in social problems, such as education, support of charities, or decay of the cities not directly related to the business. The results also suggest a communication strategy for each public. The public want businesses to perform responsibly when its actions have consequences on the public and would be likely to seek information about these business actions from corporate social reports, audits and similar publications. Smith and Alcom (1991) mentioned that the most creative and cost-effective product marketing strategy, if it is implemented through one of the three forms of corporate sponsorship. They stated the purpose of research is to investigate consumer incentives to respond to dual incentive causes marketing programs. Many companies believe that the direct and measurable benefits accrue to the corporation, although they also discuss about the "enlightened self-interest" since the legality of unrestricted corporate giving is resolved. Results suggest CSR is the most effective and attractive mediation of marketing strategies. Research Design Sample Selection MCMC Industry Report 2002 stated the restructuring process among all mobile telecommunication as instructed by the ministry and it created only three main players in the industry, named Company A (with prefix 012 & 017), Company B (with prefix 013 & 019) and Company C (with prefix 016). This research concentrates more on the strategic decision making part of the company after engaging in a conversation with the officers in the companies that were able to give a broad perspective on the companies normal operation. The manager for Corporate Communication Division in Company C and B welcomed us for their interview. They also provided us with the relevant and restricted supporting documents. While for Company A, we only obtained cooperation from the senior

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communication officer and the sponsorship department. Nevertheless, they still were able to provide some information and constructive comments, as they assumed the interview session was only to retrieve some opinions regarding certain issues. Our targeted respondents were Managers of Corporate Communication Division for each company because they could demonstrate the intensiveness of the activity and motivation factor for each CSR activity. Besides, if the interviewee was not part of the management team, the interview session would not provide sufficient information because some questions are on the strategic level of management. This was a concern with Company A when we were unable to get cooperation from the Department Manager. However he already alleged the authority to his officer to represent the company. For the other two companies, interviews were conducted in a very limited time period with the Corporate Communication Manager regarding the management perspective. The detailed information was also supported by the senior officers. Methodology As this study was exploratory in nature, this research was conducted based on the interview session with the targeted respondents. The questionnaire was structured prior to the interview for the Corporate Communication Manager for each of the mobile telecommunication companies. The structured interview was divided into three main parts. Part A was on demographic information of the respondents company. Part B determined the factors that influenced corporate social responsibility (CSR). Lastly, Part C demonstrated the concentration of their involvement in CSR activities. For Part B, a total of 12 statements regarding factors influencing CSR were asked on a five-point scale, which ranged from most agree (5) to least agree (1). But after discussion with the companies, it was concluded that the data could not be analyzed by the mean test because only one person was representing the whole company. Then, they agreed to accept a three-point scale; which was B for strong influence, M for moderate influence and S for small influences on their CSR involvement decision. B was for when the respondents fully agreed that the factors were highly relevant and had a direct influence on their decision in involvement at an early stage and continuously affected the company’s mission in the long term. Then, M was for when the interviewee partly agreed with the factors. They assumed the factors were less important and had partial effects as factors for involvement in CSR activities. These factors did not have a cumulative effect on the company’s mission in the long term. While, S was for when the interviewee did not agree with the factors or it had a very minimal impact on the company’s decision of involvement in CSR activities. Part C determined the intensity of the companies’ efforts in CSR activities, ranked on a five-point scale from null involvement (1) to full involvement (5). All companies only provided the detailed data that was going to be used in the analysis part and they agreed it would be tabulated in ranges. The data provided was the amount of contribution (in Malaysian Ringgit) for each specific activity listed for 5 main categories in the company. Based on the interview session, all company did suggest the relevant range for the

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contribution amount that can be used as a guideline in the research. Besides all of them did agreed on suggested rate. Supporting documents such as the company’s internal budget and funding schemes and any relevant documents on sponsorship also were analyzed to understand the sponsorship allocation cost. All the documents, records and schedules of allocation budget for their CSR activity, were acquired based on an agreement that the information would be treated as confidential. In conclusion, the level of CSR intensiveness of contribution for each activity was as follows: H for high contribution to CSR activity that amounted to more that RM100,000, M for the amount of contribution of between RM10,000 to RM100,000, and L for contribution to CSR activity of amount less than RM10,000. The exact figure analysis was taken into consideration for the CSR intensiveness because the amount was very small compared to the company’s total assets, company operating income and net profit. The opinions from the MCMC were also taken into consideration when determining the relevant range for the company contribution. The research officers at MCMC suggested using the same range as what was determined. On average it showed that all companies used almost the same amount as the cutting point for their intensiveness in the amount of contribution to CSR activities. The analysis was based on the range determined and also the qualitative factor obtained during the interview session. Observation analysis was carried out with the details on the amount of contribution from the companies supporting documents but it could only be represented in a range due to the confidential agreement with the companies. Results and Discussion CSR Concentration of Mobile Operators Overall, from the interviews conducted and several support materials provided by the companies, the concentration on CSR activities can be classified into five main categories as Environmental concerns (E), Welfare (W), Community Involvement (C), Product or Services (G) and Natural Disasters (N). The list of the relevant activities that the companies were involved in for each type of the main category of CSR are listed in Table 1. Table 1: CSR Activities by Category Category of CSR involvement 1. Environmental Concerns (E)

2. Welfare or charity (W)

Activities involved by the telecommunication company 1. Pollution control activity over product 2. Product complies with the environmental condition and the radiation tariff set up by MCMC. 3. Ensures the level of the telecommunication telecast frequency is at the acceptable level. 4. Recycles the unused components of telephone sets that would impact the environment. 5. Collaborates with other government agencies in organizing the ‘green’ campaign. 6. Develops environmental policy in their organization to be used at multiple levels of the operation. 1. Directly contributes some amount of money for the personal welfare, community welfare and also the welfare of the organization. 2. Involves in developing infrastructure such as buildings, schools, libraries or houses for donation to certain families.

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3. Community Involvement (C)

4. Products or services (G)

5. Natural Disasters (N)

3. Sponsors the treatment for certain types of chronic diseases. 4. Contributes to selected individuals for personnel development in certain areas that could contribute to the development of the industry. 5. Provides counseling and material support to increase motivation amongst the employees. 6. Provides a special bonus plan and reward system to the employees to encourage a positive competition amongst employees. 7. Provides a comprehensive insurance coverage for employees to ensure they are covered in the event of an accident. 8. Establishes a sound placement system for the employee who volunteers to move to another company with valid reasons. 1. Contributes certain portions of annually allowable donation for R& D in public health concerning radiation exposure. 2. Contributes to the educational institutions in form of scholarships and research programs in the field of market reaction and customer satisfaction. 3. Supports MCMC with the relevant information on the user coverage and the penetration rate to ensure the country’s communication growth policy is well planned. 4. Donates some amount of money to build infrastructure for public use such as bus stops, shades, public toilets and so forth. 5. Jointly sponsors any continual community programs with other institutions. 6. Takes part in exhibitions that promote Malaysia to other countries and encourages the tourism industry. 7. Contributes to games and sports events that are organized by the ministry. 8. Cooperates with police department to organize anti crime campaigns. 9. Visits some of the private institutions to promote a healthy and good life style to the students. 1. Has arrangements to ensure services provided in certain areas would have no unknown reaction to human health. 2. Ensures the facility used has no effect on the communities’ health and tries to minimize the possibility of distraction to the users in long term. 3. Prepares and provides a hotline, control procedure and responsive system to make sure all the registered complaints would be treated as important. 4. Conducts all necessary tests on the radiation frequency interference to reduce disturbance and increase compatibility with technology advancement. 5. Adopts a reasonable, healthiest, technology with the latest innovation set to increase user compatibility. 6. Guarantees that the services in every territory, minutes and destination would be at a 95% satisfactory level. 7. Forms a special team for product or packages offered to respond to any feedback from the market e.g. subscribers’ complaint, rivals promotion strategy and so on. 1. Provides services that enable the users to donate to a public fund. Company has arrangement with other private companies to provide the relevant services. 2. Takes action effectively in certain situations by immediately contributing in the form of cash to support the victims. 3. Jointly organizes charitable programs to collect funds for victims of natural disasters directly after determining the amount of funds required. 4. Company’s employees also have their own program to make personal contribution for charitable purposes. 5. Keeps on supporting the victims although the charitable program has stopped.

For every CSR activity listed, the level of concentration of a company’s involvement in CRS was rated based on the contribution made. There were three rating levels used; H for high initiative and complete and successful involvement, M for moderate level of involvement and regularly conducts joint effort programs with other organizations or government agencies, and L for minimal involvement and occasionally does not involve

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itself directly. Thus, Table 2 to Table 6 indicates the concentration level of company’s involvement in CRS by category and activity. Table 2: The Concentration Level of Involvement in CSR for Category of Environmental Concerns CSR Activity E1 Pollution control activity over product. E2 Product complies with the environmental conditions and the radiation tariff set up by MCMC.

Company A 2002 2003 H H

2002

Company B 2003 H M

Company C 2002 2003 M M

H

H

H

H

H

H

E3 Ensures the level of the telecommunication telecast frequency would be at an acceptable level.

H

H

H

H

H

H

E4 Recycles the unused components of telephone sets that would impact the environment. E5 Company collaborates with other government agencies in organizing the ‘green campaign’. E6 Develops environmental policy in their organization to be used at multiple levels of the operation.

M

M

M

M

M

M

M

H

M

H

H

H

M

M

M

M

M

M

Table 2 indicates the level of CSR involvement based on contribution made by each company for activities related to the category of environmental concerns. There are six activities under this category. In 2002, Company A and Company B were very actively involved in pollution control activity over their products. They were rated as having high initiative and successful involvement. Meanwhile, Company C was ranked as having moderate level of involvement as its contribution for this activity was less than RM10,000. In 2003, while the rest rated a moderate level of involvement, Company A was still ranked as having high involvement as the amount contributed was more than RM100,000. For the second activity, all of the three companies rated as having high initiative for both years in producing products that were environmentally friendly and complied with the radiation tariff as required by MCMC in order to ensure customer safety is well protected. Again, with no compromise to customer safety, Company A, Company B and Company C were rated as having high initiative and successful involvement as they contributed more than RM100,000 to ensure the level of the telecommunication telecast frequency would be at the acceptable level. The fourth activity was recycling the unused components of telephone sets that would impact the environment. In recycling the unused components of telephone sets that would adversely affect the environment, all of the three companies spent around 12

RM10,000 to RM100,000 thus they were rated as being moderately involved. With respect to the ‘green campaign’ Company C was the only company that rated as having high involvement in 2002 as its contribution to organize the ‘green campaign’ by collaborating with government agencies was more than RM100,000. However in the subsequent year, all of the companies were rated as having high initiative and involvement with regards to the same activity. Finally, every company rated as having moderate level of involvement in developing an environmental policy for their organizations as the money spent for this purpose was around RM10,000 to RM100,000. Table 3: The Concentration Level of Involvement in CSR for Welfare/ Charity Category CSR Activity

Company A 2002 H

2003 H

Company B 2002 2003 H M

Company C 2002 2003 H H

W2 Involves in developing infrastructure such as building schools, library or houses for donation to certain families.

M

M

M

L

M

H

W3 Sponsors the treatment for certain types of chronic diseases. W4 Contributes to selected individuals for personnel development in certain areas that can contribute to the development of the industry.

M

M

M

M

M

M

L

L

L

L

M

L

W5 Provides counseling and material support to increase motivation amongst the employees.

M

M

M

M

M

M

W6 Provides a special bonus plan and rewarding system to the employees to encourage a positive competition amongst them.

H

H

H

H

H

H

W7 Provides a comprehensive insurance coverage for the employees to ensure they are covered in the event of accidents. W8 Establishes a sound placement system for the employee who volunteers to move to another company with valid reasons.

H

H

H

H

H

H

L

L

M

L

L

L

W1 Directly contributes some amount of money for the personal welfare, community welfare, and also the welfare of the organization.

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There are eight activities identified under welfare or charity category as shown in Table 3. In general, all the companies were really concerned and sensitive to the needy parties as they rated as having high initiative and successful involvement with the exception of Company B in 2003. Besides contributing in the form of cash directly to the needy parties, all of the companies also took part and contributed in developing a number of infrastructures such as schools, and libraries. In 2003, the level of involvement differed between the companies as compared to 2002 when all of the companies rated as having moderate level of involvement. For example Company C was the only company that rated as having high initiative and successful involvement. In contrast, Company B rated as having a minimal level of involvement as its contribution for this activity was less than RM10,000. In general for the third type of contribution, which was the contribution to support treatment costs of certain chronic diseases, all companies rated as having moderate levels of involvement for both years as the amount of contribution was around RM10,000 to RM100,000. Meanwhile the contribution to sponsor selected individuals or persons for personnel development in certain areas received less attention from all three companies as they rated as having minimal levels of involvement except for Company C in 2002. Activity five to activity eight pertained to employees’ welfare. In terms of providing counseling and material support to their employees, all of the companies rated as having moderate level of involvement for both years. However for the next two activities, all of the companies rated as having high initiative and successful involvement for both years as the money spent for these activities were more than RM100,000. These two activities were designing special bonus plans and reward systems to encourage positive competition among employees and providing comprehensive insurance coverage for employees in the event of an accident. Finally, on the whole, all of the companies rated as having minimal involvement for establishing a sound placement system for their employees who volunteer to move to another company except for Company B in 2002. Table 4: The Concentration Level of Involvement in CSR for the Category of Community Involvement CSR Activity C1 Contributes certain portions of annually allowable donations for R&D in public health concerning radiation exposure. C2 Contributes to the educational institutions in the form of scholarships and research programs in the field of market reaction and customer satisfaction. C3 Supports MCMC with the relevant information on the user coverage and the penetration rate to ensure the country’s communication growth policy is well planned. C4 Donates some amount of money to build

Company A 2002 2003 H H

Company B 2002 H

2003 M

Company C 2002 2003 H H

H

H

H

H

H

H

H

H

H

H

H

H

M

H

M

M

M

M

14

infrastructure for public use such as bus stop, shades, public toilet and so forth. C5 Jointly sponsors any continual community programs with other institutions. C6 Takes part in exhibitions that would promote Malaysia to other countries and encourages the tourism industry. C7 Contributes on games and sports events that are organized by the ministry. C8 Cooperates with police department to organize anti crime campaigns. C9 Visits some of the private institutions to promote a healthy and good life style to the students.

M

H

M

M

L

H

H

H

M

M

L

L

H

H

M

H

H

M

L

M

M

H

L

L

L

L

L

M

L

L

Table 4 shows the list of activities and the level of involvement for the category of community involvement. As indicated in the table, for the first activity, all of the companies rated as having high initiative and successful involvement for both years except Company B in 2003, as the amount contributed for R&D activity which focused on radiation exposure to the public health was more than RM100,000. For both years, with regards to the second and third activities, all of the companies rated as having high initiative and successful involvement. These activities are the contribution made to an educational institution in the form of scholarship or research funding and providing relevant information about the user coverage and the penetration rate to MCMC. For the fourth activity, all of the companies except for Company A in 2003 rated as having moderate levels of involvement with respect to contribution made to developing some infrastructure for public use such as bus stops, shades and public toilets. Meanwhile, for the fifth activity, in 2002 with the exception of Company C, the rest rated as having moderate levels of involvement as the contribution made for certain community programs that were jointly organized with other institutions was around RM10,000 to RM100,000. However in 2003, Company C was the only company that rated as having high initiative and successful involvement compared to a minimal level of involvement in the previous year. Company A was the most active company to take part in exhibitions to promote Malaysia to other countries and to encourage tourists to come to Malaysia as it rated as having high initiative and successful involvement for both years. In contrast, Company C rated a minimal level of involvement for this activity. Furthermore, for the next activity, once again for both years, Company A was the most active company contributing to tournament or sports organized by the ministry. Thus it rated as having high initiative and successful involvement. Meanwhile, Company B was the most active company that cooperated with the police department to organize anti crime campaigns as it rated a moderate level of involvement in 2002 and high initiative and successful involvement in 2003. Finally, for the last activity under this category, except for Company B in 2003, all companies rated a minimal level of involvement for both years as they contributed or

15

spent less than RM10,000 to visit the private institutions to promote a healthy and good lifestyle to the students. Table 5: The Concentration Level of Involvement in CSR for Product or Services Category CSR Activity G1 Having an arrangement to ensure services provided in certain areas would have no unknown reaction to human health. G2 Ensures the facility used has no effect on the communities’ health and tries to minimize the possibility of distraction to the users in the long term. G3 Prepares and provides a hotline, control procedure and responsive system to make sure all the registered complaints would be treated as important. G4 Conducts all necessary tests on the radiation frequency interference to reduce disturbance and increase compatibility with technology advancement. G5 Adopts the reasonable healthiest technology with the latest innovation set to increase user compatibility. G6 Guarantees that the services in every territory, minutes and destination would be at a 95% satisfactory level. G7 Forms a special team for products or packages offered to respond to any feedback from the market e.g. subscribers’ complaints, rivals promotion strategy and etc.

Company A 2002 H

2003 H

Company B 2002 2003 M H

Company C 2002 2003 H H

M

H

M

M

L

H

H

H

H

H

H

H

H

H

H

H

H

H

H

H

M

M

M

H

H

H

H

H

H

H

H

H

M

M

M

M

There are seven activities all together for products and services category as indicated in Table 5. For the first activity, for both years every company, except for Company B in 2002 rated as having high initiative and successful involvement, as the amount contributed to ensure the services provided by them had no adverse effect on human health was more than RM100,000. For the second activity, Company C was the only company that rated a minimal involvement in 2002 as the amount contributed to ensure the facility in use had no effect on public health and minimizing the possibility of distraction to the users was less than RM10,000. However in 2003, Company C together with Company A rated as having high initiative and successful involvement. In 2002 and 2003, all of the companies rated as having high initiative and successful involvement as the amount contributed to provide a hotline, control procedures and

16

responsive systems to ensure effective response to all complaints made by customers was more than RM100,000. For the fourth activity, all companies rated the same level of involvement as the third activity. In 2002, Company A was the only company that rated as having high initiative and successful involvement as it spent more than RM100,000 in order to adopt the most healthiest technology with the latest innovation set to increase user compatibility. Meanwhile in 2003, besides Company A, Company C also rated as having high initiative and successful involvement. All the companies did not compromise to ensure they provided a high quality service with 95% satisfactory level since all of them spent more than RM100,000 for the sixth activity. Finally, for the last activity under this category, in 2002 and 2003, Company A was the only company that rated as having high initiative and successful involvement as it spent more than RM100,000 for this activity. Meanwhile the rest of the companies rated moderate levels of involvement. Table 6: The Concentration Level of Involvement in CSR for Natural Disaster Category CSR Activity N1 Provides services that enable the users to donate to public funds. Company has arrangement with other private companies to provide the relevant services. N2 Takes action effectively in certain situations by immediately contributing in the form of cash to support the victims. N3 Jointly organizes a charitable program to collect funds for victims of natural disasters directly after determining the amount of funds required. N4 Company’s employees have their own program behind the organization to make personal contributions towards the charity. Company’s employees also have their own program to make personal contribution for charitable purposes. N5 Keeps on supporting the victims although the charitable program has stopped.

Company A 2002 H

2003 H

Company B 2002 2003 H H

Company C 2002 2003 H H

H

H

H

H

M

H

M

M

H

M

H

H

L

M

L

L

M

M

L

L

L

L

L

M

Table 6 shows the list of activities and the levels of involvement for the category of natural disasters. For the first activity, in 2002 and 2003, all of the companies rated as having high initiative and successful involvement as they spent more than RM100,000 to provide services that could help the public or the users give donation via their services. The same result was demonstrated as the previous activity, except for Company C in

17

2002, when all the companies rated as having high initiative and successful involvement as they spent more than RM100,000 for this activity. In 2002, Company C and Company B rated as having high initiative and successful involvement as they contributed more than RM100,000 to organize charitable programs to collect funds for the victims of natural disasters. Meanwhile in 2003 only Company C was still consistent with the previous year’s level of involvement. For the fourth activity, in 2002, only Company C was involved in a moderate level as the others were only involved minimally. In 2003, Company B continued its minimal level of involvement while the rest of the companies rated moderate levels of involvement. Finally, all of the three companies except for Company C in 2003, rated minimal levels of involvement as the amount contributed to the victims of natural disasters from the charitable programs organized was less than RM10,000. Factors that Influence Mobile Operators Involvement in CSR There were several factors that were discussed during the interviews that motivated each company to get involved in CSR activities and to also continue their involvement from year to year. There are 12 factors in the form of structured question that had been asked during the interview that suggested as having influence on the company’s decision to get involved in CSR. In addition, some of the company’s representatives also mentioned other appropriate factors. Factors were rated as; B- strong influence, M- moderate influence and S- minimal influence. Table 7: Factors that Influence the Mobile Telecommunications’ Involvement in CSR Influencing factors 1. The main objective of the company’s involvement in corporate social responsibility is to improve the quality of life of the community. 2. Organizations believe that involvement in corporate social responsibility will increase long term profitability and sustainability of the company. 3. Organizations participation in corporate social responsibility can give good economic return to the company’s shareholders. 4. Involvement in social activities can encourage the company to be more responsible and become a consumer-focused company. 5. In order to have a good reputation with the public, an organization has to show that it is a highly socially responsible organization. 6. Quality of goods and services is no longer the main consideration. 7. Organizations that are more socially responsible will have fewer requirements of additional regulations enforced by the government on them. 8. A company that implements CSR will have additional competitive advantages compared to a company that does not get involved. 9. Involvement in CSR activity is limited due to limited funding and time because CSR deviates from the company’s ordinary activity. 10. A company that already monopolizes the industry does no longer need to be involved in CSR activity intensively because it is already strong. 11. Consumers and the public will bear any additional cost if the company is involved intensively in CSR activity.

Company A B

Company B M

Company C B

B

B

B

M

M

S

M

M

B

B

B

B

S

S

S

M

B

M

S

S

S

S

S

M

S

M

M

M

M

S

18

12. Company is publicly owned, so they must live up to social expectations.

B

M

M

Among all of the factors, Company A and Company C disclosed that their intention on improving the quality of life of the community was one of the major factors that encouraged them to get involved in CSR activity and rated the factor as highly influential. Meanwhile for the government-owned company, Company B, this factor was just of moderate influence. The belief that CSR would improve the profitability and sustainability of the company was demonstrated as being highly influential to all three companies. Furthermore Company A and Company B agreed moderately that CSR can provide a good economic return to the company’s shareholders. In contrast, Company C a Swiss based company justified this factor had only a small influence on them to get involved in CSR activity. However this company did agree that CSR involvement highly influenced them as it encouraged them to be more responsive and consumer-focused. Meanwhile Company A and Company B claimed this factor only had a moderate influence upon them. All the companies gave a high rating to the statement that the company would portray a good reputation to the public as a socially responsible organization when they were involved in CSR. On the contrary, all three companies gave a low rating on the next factor which stated that the quality of their services would be no longer the main concern if they were involved in CSR activity. As a company becomes more involved in CSR activity, at the same time they attract the attention of the government. Only Company B agreed that this was highly influential when the company that had greater CSR activity especially with government agencies would have fewer additional regulations enforced on them by the government. While, Company A and Company C stated that this matter was of moderate influence. In terms of company’s competitive advantages, all three companies agreed that CSR only had minimal influences. This was because CSR was not the main component of competition in this industry as they competed on pricing, product and strategy. Company C claimed moderate influence to the statement that most companies have a constraint in funding and timing to get involved in CSR. While, the other two companies stated that the factor just had a small influence on their involvement. Company C and Company B moderately agreed with the statement that by the time a company becomes a monopoly, most of them will no longer be intensively involved in CSR activity. Whilst, Company A believed that this factor just had a small influence as it purports that the public limited companies need to be consistently involved in CSR activity. Funds that would be used by the company to get involved in CSR activities mainly comes from the company’s operational expenses and funds that have been estimated in preparing the yearly budget. Company A and Company B moderately agreed with the

19

statement that if they were involved in CSR activity the consumers and the public would bear the cost. This is because sometimes the company just organizes the donation system for their customers and the company only provides a small portion of the contribution. While, Company C professed that this factor just had a minimal influence on its involvement in CSR. Again most of the companies agreed that if the publicly owned status is applicable, most of them would try to increase the initiatives to add more value to society. Company A highly agreed with this statement. Meanwhile, for this factor, Company B and Company C moderately supported the statement. Other than the listed influences and motivation here, there were other possible reasons that encourage these three companies involvement. One of the reasons was the ideology of humanism for the organization. The concept of the CSR itself means the responsibility to the country citizens and also for the company. The contribution made to the public trough CSR activities is the rewards for the society who support their business directly or indirectly. Continuous Effort in CSR of the Company based on MCMC Opinions The Communication and Multimedia Act 1998 (CMA) has passed into its fifth year since its implementation on 1st April, 1999 and the changes during this period have been significant. At the same time, 2003 spelled the mid way point for the Framework for Industry Development (FID) 2002-2006, the rolling five year plan of changes, deliverables and tasks for the development of the industry produced by MCMC . In respect of one major challenge, upgrading the country’s network capabilities, the industry was generally on track to reach its key performance targets as enunciated in FID. Mobile penetration reached 43.9 percent as of the end of 2003 thereby giving no doubt that the prediction of 60 percent penetration rate for 2007 could be achieved. Year 2003 also signified a new era when there were some consolidations that took place in the industry. Convergence was preached and painstakingly practiced for five years leading into a more resilient industry where only the fittest survived. The mobile telecommunication sector saw reduction in terms of number of major players from five to three. In terms of interconnection charges, costing studies by MCMC culminated in a significant reduction in interconnection pricing. Affordable and high quality services of mobile operators resulted in a positive reaction in consumer demands as shown by Customer Satisfaction Index (CSI). From the total RM 9.49 billion mobile phone revenue shares in the market in 2003, Company C’s share was only 15 percent; Company A had the largest share of 47 percent while Company B’s share was 38 percent. Overall, the mobile revenue was 48 percent of the communication and multimedia sector’s revenue. (MCMC, 2004) One of the indicators to measure the result of a company’s CSR activity is the market penetration rate. The demand growth for the mobile phones in terms of number of subscribers surpassed fixed line connection demand growth in 2000 and since then, the growth has been spectacular as claimed by MCMC. Malaysian mobile penetration rates or simply put, the number of people out of 100 that subscribe to the services was 43.9 20

percent at the end of 2003. In contrast, the rate was about half of this at 21.8 percent in 2000. As far as prepaid and post paid customers for mobile phone are concerned, the former has gained popularity over the last two years. Out of 11 million mobile phone subscribers in year 2003, 77 percent were prepaid subscribers (8.5 million) and the rest, 23 percent were post paid subscribers (2.5 million). Over the last two years, post paid subscribers growth rate was negative as more users preferred the prepaid scheme due to the attractive packages. MCMC considers the expansion commitment in the companies’ principles strategy as the main CSR for the benefit of this industry. In December 2003, Telekom raised a total of RM2.983 billion redeemable unsecured bonds to finance part of its acquisition over Company B. In 2002, Company C and Company A were accepted to get listed on the Main Board of the Bursa Malaysia (previously KLSE). Funds raised in Company A were equivalent to RM 3 billion and for Company C RM 1 billion. On 17th October, 2003 the Consumer Code was introduced by the MCMC, marking the beginning of a selfregulation regime for the communication and multimedia industry in Malaysia. With this it was expected that social concerns shown by the companies would become mandatory. The Consumer Code deals with the protection and promotion of consumer interests and is not only limited to the matters related to the Communication and Multimedia Act. This code caters to the provision of the protection of consumers’ right. The Consumer Code covers the following areas: 1. Rules of the Code-comprising of Information and Protection of Personal Information 2. Complaints Handling 3. Code Compliance by Service Providers 4. Reporting 5. Monitoring, Review and Amendments In the early stage (end of 2003), the three mobile players did not comply with the code. However by the end of 2004, the three companies complied with the code. Majority of the unresolved cases reported are due to the fixed line services and Telekom Malaysia explained that most of the billing complaints were fraud cases. Overall, based on the data provided by the MCMC, it can be concluded that the activity of continuous CSR was just at a moderately satisfactory level since some constructive comments were included inside the ESAT test comments. Since then, there have been some improvements in the service coverage until recently in 2005. Conclusion In terms of CSR since 2004 there are many challenges that lie ahead for the Malaysian mobile telecommunication companies to develop greater resilience and financial stability in preparing for globalization. In terms of coverage and connectivity, 2002 and 2003 brought greater penetration rates for cellular mobile phones. Cellular mobile businesses also began to see other sources of revenue making a significant impact which included SMS, GPRS, 3G as well as other non-voice related revenue sharing (MCMC, 2003). Overall, the companies strived to portray themselves as highly socially responsible companies to compete with rivals. The image of always supporting social constructive

21

programs has proved that it would be beneficial to the company’s competitive advantages. Like most global, reputable mobile operators, DIGI used this kind of strategy by giving more pages of disclosure on their CSR activity in their Annual Report for four consecutive years from 2000 to 2004. In general, involvement in CSR activities had several construct motives and was inline with the agency theory assumptions. All mobile companies showed satisfactory involvement in five main categories of CSR, namely environmental concerns, welfare or charity, community involvement, products or services improvement and also natural disasters awareness. Specifically, the level of CSR concentration activity was highly rated for all categories. For the category of environmental concerns, high efforts were placed by each company in activity E2 and E3, which was to ensure that the product complied with the environmental conditions and the radiation tariffs setup by MCMC, and to also ensure the level of telecommunication telecast frequency was at the acceptable level respectively. For the categories of charity and welfare, full CSR concentration was placed on W6 and W7. While, almost full concentration of CSR was on activity W1. The W6 and W7 activity were, providing a special bonus plan and rewarding system to the employees to encourage positive competition among employees; and providing a comprehensive insurance coverage for the employees to ensure they are covered in the event of an accident. This showed that the companies were highly concerned about their employees’ welfare. W1 was the amount of money the company directly contributed to personal welfare, community welfare and also the welfare of the organization. For categories of community involvement, the companies are more concentrated in C2 and C3 activities. These activities was contribution to the educational institutions in form of scholarships or research grant to finance study on market reaction and customer satisfaction issues; and provide MCMC with relevant information about user coverage and penetration rate to ensure the country growth policy is well planned respectively. This indicated that all of the company has well planned to contribute towards any programs of regulatory or education institutions. All companies also gave almost full concentration in activity C1; that is contributing some portions of yearly allowable donations for research and development in the public health towards radiation exposure. In terms of products and services improvement category, all companies concentrated more in G3, G4 and G6. Namely the concentration was on the activity of preparing and providing a hotline, control procedures and responsive systems to make sure all the registered complaints would be treated as important; making necessary radiation frequency tests to reduce the disturbance and increasing compatibility with the technology advancement; and also guaranteeing that the services in every territory, minutes and destination would be at a 95% satisfactory level. Most concentration activities in this category followed the guidance of Consumer Code by MCMC, which became mandatory in the year 2004 for all mobile telecommunication companies (Sarah Aziz, 2004).

22

While for the category of natural disasters, CSR concentration was more on activity N1 and N2. These activities were, providing the services that enable the users to be involved in public donation and making arrangements with other private companies to provide that service; and also reacting effectively in certain situations by giving instant money to support the victims. It indicated that the companies are concern and sensitive to the need of victims of unpredictable disaster tragedy. Analyzing the factors that influence each company’s involvement depends on their motivational factors in each of these activities. But all the listed factors had some influence on their CSR activity. The most highly influential factors were F2 and F5 which were that the organizations believed that involvement in corporate social responsibility would increase long term profitability and sustainability of the company; and also an organization that wished to have a good reputation in the eyes of the public had to show that they are highly socially responsible. These two factors illustrated that the factors most influential in contributions are those that are for the benefit of the organization rather than for societal benefits. F1, which almost fully influenced the organizations involvement in CSR was the main objective to improve the quality of life of the community, which benefits the society more. However Company B did not fully agree that this was an influential factor. This may be due to the fact that this company is a government linked company and they already serve society in some way. Less influential factors were F8 and F9 respectively that were; company which implemented CSR would have more competitive advantages compared to the company that did not get involved; and involvement in CSR activity was limited due to limited funding and time because it deviated from the company’s ordinary activities. Both these statements are contradictory in nature and goes to show that at the end of the day the companies are more interested in what is beneficial to them. MCMC, the regulatory body for telecommunication companies, determined that the companies’ involvement in CSR was when companies productively considered the relevant CSR factors in their normal current operations. After reviewing the MCMC Industry Performance Report 2003, all mobile cellular telecommunication companies in Malaysia rated a satisfactory level of continuous sustainable development. However, the MCMC highlighted the fact that the companies had to take action in facing the wave of globalization in the telecommunication industry. Overall it can be concluded that, all mobile telecommunication companies have a high initiative in their CSR activity for all five listed categories since in each categories activities they had minimal levels of involvement. In the year 2002 and 2003, when this survey was conducted, the CSR activity was still considered voluntary and these respondent companies proved that they had their own initiatives for their involvement since then. Most of the companies at this time were making big capital reorganizations where Company B and TmTouch merged to form a new brand under the group of Telekom Malaysia (government linked company). Meanwhile, Company A took over TimeCel, and concurrently Company A and Company C became a publicly-listed

23

company. These circumstances have had an effect on the companies CSR activity during this time. Yet, all these companies played an active role in portraying a positive image of their companies. Limitation And Future Reseach The limitation was not very significant to affect the reliability of the study because the research was descriptive in nature. Financial data that was provided in order to determine the scale of CSR intensiveness was not constructive because the companies just provided an estimate taken from the internal budget schemes even though the period had already ended. Most of the companies’ officers could not provide the exact amount of contribution because some of the programs is annual agenda in which the lump sum provision have been made at the early period and cannot be broken down easily to specific period. To overcome this problem, the companies gave estimated figures. Beside that, the information from the interview also has been amended accordingly to meet the research objectives. Moreover, some companies refused to disclose certain information due to company policies. So, we could only determine the scale based on the interview that was conducted and other publicly known information from sources like Annual Reports. Further research needs to integrate the detailed CSR definition by the MCMC that includes innovations of the product and services, extraordinary promotion packages and rewarding systems. The future research findings may help MCMC to formulate better policies especially for Consumer Code and Governance Guidelines in the telecommunication industry. The time period covered in this research was before the CSR reporting became mandatory. It would provide valuable insight and an interesting study to compare this present study with the period after CSR became mandatory in the year 2004.

24

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