The Effect between UN Global Compact, CSR and Business Performance of Multinational Companies in Taiwan

Abstract

Corporate Social Responsibility (CSR) is nowadays an important issue for multinational companies. Many initiatives have been developed to support and help to nourish CSR, but only few has been successful. The United Nation Global Compact (UNGC) stands out because it is the world’s largest corporate sustainability initiative. The importance of behaving in a corporate socially responsible manner has increased over the years, but the reality has always been a matter of debate. With the inclusion of CSR companies are questioning whether CSR have effect on their performance and how to improve their CSR. There are almost non-existent empirical evaluations of the contribution of UNGC to CSR strategies and to firm’s performance. This study aims to fill this knowledge gap by analyzing the relationship between UNGC and CSR and to examine the relationship between CSR and Business Performance. System Equation Model named GCSR was developed to achieve the objective of this study by using Smart PLS software. 154 samples were obtained from employees working in multinational companies. The findings indicated that UNGC have a positive significant relationship towards CSR; in which CSR also have a significant positive effect on Business Performance. The dominant factor for UNGC is Environmental principle and the first priority for CSR is Vision, values and strategy. For Business performance, the Performance from customer perspective has the highest influence. Practical implications and suggestions were also proposed in order to improve the UNGC and CSR.Corporate Social Responsibility (CSR) is nowadays an important issue for multinational companies. Many initiatives have been developed to support and help to nourish CSR, but only few has been successful. The United Nation Global Compact (UNGC) stands out because it is the world’s largest corporate sustainability initiative. The importance of behaving in a corporate socially responsible manner has increased over the years, but the reality has always been a matter of debate. With the inclusion of CSR companies are questioning whether CSR have effect on their performance and how to improve their CSR. There are almost non-existent empirical evaluations of the contribution of UNGC to CSR strategies and to firm’s performance. This study aims to fill this knowledge gap by analyzing the relationship between UNGC and CSR and to examine the relationship between CSR and Business Performance. System Equation Model named GCSR was developed to achieve the objective of this study by using Smart PLS software. 154 samples were obtained from employees working in multinational companies. The findings indicated that UNGC have a positive significant relationship towards CSR; in which CSR also have a significant positive effect on Business Performance. The dominant factor for UNGC is Environmental principle and the first priority for CSR is Vision, values and strategy. For Business performance, the Performance from customer perspective has the highest influence. Practical implications and suggestions were also proposed in order to improve the UNGC and CSR.