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The contribution of corporate social responsibility to internal employee motivation

Vida Skudiene and Vilte Auruskeviciene
ISM University of Management and Economics, Kaunas, Lithuania
Abstract
Purpose The purpose of this paper is to examine the impact of corporate social responsibility (CSR) on internal employee motivation. Design/methodology/approach A survey was conducted among 274 employees from medium and large enterprises engaged in CSR activities in Lithuania. The research hypotheses were tested using correlation and regression analysis using factor scores from a principal component factor analysis. Findings The ndings suggest that internal and external CSR activities positively correlate with internal employee motivation. Internal CSR was found to be stronger related to internal employee motivation than all the external CSR dimensions. Regarding the external CSR, customer-related activities indicated stronger correlation with internal employee motivation than local communities and business partners related CSR activities. The weakest relation was found between internal employee motivation and business partners related CSR activities. Research limitations/implications This study is limited to one country under investigation, therefore further research needs to be extended to other countries. The survey is conducted in the period of economical recession. In order to assess the generality of the ndings, it is suggested to repeat the research in a stable economy situation. Practical implications Executives could use the results of the research to resolve practical dilemmas by giving priority to the areas of CSR which facilitate employee internal motivation enhancement. Originality/value By revealing the importance of CSR activities to employee internal motivation enhancement, this study contributes to the CSR investigation arena. Keywords Lithuania, Corporate governance, Employees behaviour, Motivation (psychology), Social responsibility, Internal corporate social responsibility, External corporate social responsibility, Internal employee motivation Paper type Research paper

Internal employee motivation 49

Received 8 September 2009 Revised 4 May 2010 Accepted 13 July 2010

Introduction The recent research on the subject of motivation showed that one of the incentives used to motivate employees is corporate social responsibility (CSR) activities undertaken by companies. It was found that CSR positively impacts employee turnover, recruitment, satisfaction, retention, loyalty and commitment (Heslin and Ochoa, 2008; Aguilera et al., 2007), and, therefore, employers may be able to use the rms CSR prole as a device to enhance employee motivation. CSR is quite a new management idea which has received the bigger attention from the theorists as well as practitioners only in the last few decades. It is still theoretically and empirically explored very poorly (Eweje and Bentley, 2006). The prior research examining the relationship between CSR and employee motivation have few concerns that should be taken into consideration and require a more detailed examination. First of all, even though it is proposed that employee satisfaction, loyalty, retention and commitment are strongly related to their motivation (Meyer et al., 2004; Locke and Latham, 1990), it is not clear what type of motivation is inuenced

Baltic Journal of Management Vol. 7 No. 1, 2012 pp. 49-67 q Emerald Group Publishing Limited 1746-5265 DOI 10.1108/17465261211197421

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by CSR activities. Moreover, there has not been clear distinction made between internal and external CSR while examining employee motivation. The self-determination theory proposes that there are two types of incentives inuencing employee motivation: external and internal. External rewards which dene the external motivation are associated with the compensation system encompassing various rewards such as competitive salary, fringe benets and bonuses. Even though this type of motivation is seen as important one, many scholars argue that external motivation is not enough. According to Minbaeva (2008), external motivation helps only to keep a person on job, meanwhile in order to motivate a person to perform more effectively, internal motivation is indispensable. Internal motivation is related to the satisfaction, enjoying the task, meeting challenges, feeling accomplishment, receiving appreciation and positive recognition, being treated in a caring and considerate manner, receiving feedback, being involved into decision making (Mosley et al., 2005; Greenberg and Baron, 2008; Mullins, 2006). There are several reasons explaining the importance of internal motivation. First of all, it is proposed that intrinsically motivated people have more interest, excitement and condence (Ryan and Deci, 2000) which lead them to enhanced performance, persistence, self-esteem and general well-being (Deci and Ryan, 2008b, 2000). Second, internal motivation leads companies to a long-term success (James, 2004). Even though internal motivation is considered to be more important, to motivate people intrinsically is a difcult task for the management because it can be done only indirectly. Literature suggests several ways to facilitate internal motivation such as design interesting tasks, make job more challenging, or create favorable social climate (Deci, 1973; Minbaeva, 2008; Deci and Ryan, 2008a). Borger and Kruglianskas (2006) found a strong relationship between the adoption of CSR strategy in the company and an effective environmental performance. Thus, the creation of favorable social climate relates to a companys values and CSR culture. The attention toward CSR is fast growing phenomenon among theorists and practitioners. Several approaches to understand CSR have been proposed so far. Schwartz and Carroll (2003) proposed a distinction between economic, legal, ethical and discretionary CSR responsibilities. Cochius (2006) suggests to view CSR from the various (employees, customers, suppliers, community and shareholders) stakeholders perspective. Longo et al. (2005) offered the integrated approach with the reference to the creation of moral value for all the organization stakeholders. Ligeti and Oravecz (2009), Smith (2007), European Commission (2001) and Aguilera et al. (2007) group CSR practices into internal and external social roles. The present study focuses entirely on the moral values adopting the integrated approach of the external and internal CSR. Despite the increased interest into CSR initiatives, little is known about the effects of internal and external moral CSR activities on employee internal motivation. Employee attribution toward an internal motivation caused by the companys CSR activity is seldom discussed. The evaluations of CSR activities often infer that the real motive for the companys CSR activities is only to attract more customers and sell more products rather than create social value to its stakeholders. However, a growing number of empirical research report that CSR activities lead to stakeholders satisfaction enhancement. Thus, the purpose of this study is to examine how internal and external CSR activities effect internal employee motivation. The paper is structured as follows. First, the review of the literature on key issues related to internal and external CSR and internal employee motivation as well as research

hypotheses will be presented. Subsequently follow the research method description and discussion of the study conducted with nationally representative sample of 11 companies to demonstrate the impact of CSR dimensions on employee internal motivation. Finally, the conclusion, managerial implications, research limitations and implications for further studies are provided. 1. Theoretical framework and hypotheses 1.1 CSR concept It was mentioned that CSR is relatively new management idea. Therefore, the denition of CSR is not yet well developed and still remains vague and unclear (Eweje and Bentley, 2006; Lantos, 2001). Academics and practitioners have been trying to set up a common comprehensive denition of CSR concept for more than 30 years however until now there is no one agreed-upon denition (Carroll, 1991). Moreover, ORiordan and Fairbrass (2008) underline that currently there appears to be more and more disagreements about what the term of CSR actually means. Davis (1973, p. 312) claims that CSR refers to the rms consideration of, and response to, issues beyond the narrow economic, technical, and legal requirements of the rm. By this denition, it is meant that a rm has to evaluate its decisions considering the effects on the society. It is essential not only to get an economic gain but also benet to the society. Werther and Chandler (2006) in their denition underline not only the business obligations to the society but also the strategic importance and the long-term benet that business gains by involving in corporate social initiatives. It is proposed that:
CSR is a broad concept that businesses are more than just prot-seeking entities and, therefore, have an obligation to benet society. CSR should be integrated into a rms strategic perspective and operations because it brings a long-term benet to the organization (p. 7).

Internal employee motivation 51

Sacconi (2004) dening CSR emphasizes business responsibility to various rms stakeholders. According to Sacconi (2004, p. 6):
CSR is a model of extended corporate governance who run a rm (entrepreneurs, directors, managers) and have responsibilities that range from fulllment of their duciary duties towards the owners to fulllment of analogous duciary duties towards all the rms stakeholders.

The authors of this paper having considered the works of Ligeti and Oravecz (2009), Smith (2007), Aguilera et al. (2007), Werther and Chandler (2006), Sacconi (2004), Carroll (2004), Longo et al. (2005) and others, view CSR concept as the integrated phenomenon of moral commitments undertaken toward stakeholders by the management of a company. 1.2 Internal and external CSR This study considers CSR as a multidimensional concept related to different stakeholders of a company. Aguilera et al. (2007), European Commission (2001), Brammer et al. (2007), Ligeti and Oravecz (2009) and Smith (2007) developed the internal and external CSR approach. It was found that these two groups in academic and non-academic literature are called differently: internal and external dimensions (European Commission, 2001), internal and external social roles (Ligeti and Oravecz, 2009), actions within and outside the rm (Aguilera et al., 2007). Moreover, Longo et al. (2005) suggest more detailed classication of the CSR activities. According to them, the CSR should be considered as an integrated approach related to every CSR stakeholder.

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Internal CSR activities are related to all the internal operations of the company (Brammer et al., 2007). This type of CSR is more elaborated in the European Commission (2001) Green Paper Promoting a European framework for corporate social responsibility. Employees are considered very important internal stakeholder group and academic literature provides a range of CSR practices for meeting employees expectations and needs. According to Longo et al. (2005), employee-related CSR practices are classied into four groups, named value classes which create the value for the companys stakeholders and thus, satisfy their various expectations. Employee value classes relate to development of workers skills, social equity, health and safety at work, well-being and satisfaction of the workers, and quality of work. External CSR activities involve responsible behavior related to the company external operations related with external stakeholders such as customers, local communities and business partners. External CSR (customer related ). Socially responsible companies are expected to provide products and services in an efcient, ethical and environmentally friendly manner (European Commission, 2001). Customers require quality of the products and services not only related with the product itself but also to the relationship with the company that facilitates a process of complaints, suggestions and proposals. Moreover, customers prefer the products that are produced in compliance with socially responsible criteria (Longo et al., 2005). Thus, CSR activities have a signicant impact on customer-related outcomes and attitudes toward that company activities and its products. External CSR (business partners related ). Being socially responsible company rst means to be a good partner to its business partners. The company should stimulate their business partners to improve their products and services by sharing quality goals according to standards adopted and agreeing on quality control procedures (Longo et al., 2005). Controlling of the labour standards of suppliers and other business partners in compliance with legal requirements as well as implementing complaints procedure for them is seen as part of CSR practices within the companies (Graaand and van de Van, 2006). In other words, companies engaged in CSR actions rely increasingly on fair trade transactions with their suppliers and other business partners. External CSR (local communities related ). The literature analysis demonstrates that CSR practices toward local communities encompass philanthropic initiatives such as sponsorship activities, for instance supporting local sports, culture or arts events. Companies are seen as socially responsible if they make infrastructure investments in roads, water systems, schools or hospitals (Aguilera et al., 2007); launch community development activities and encourage their employees to participate in community projects (Papasolomou-Doukakis et al., 2005); help children, diseased or the handicapped or the ethnic minorities, for example recruit socially excluded people (European Commission, 2001; Ligeti and Oravecz, 2009); provide nancial support to social and other non-commercial community projects (Graaand and van de Van, 2006). All these CSR initiatives lead to creation of added value not only to the community but to the company as well. 1.3 Employee internal motivation According to Meyer et al. (2004), there have been approximately 140 attempts found in the literature in order to dene the work motivation. This fact shows that there

is no generally accepted denition identied and according to Locke and Latham (2004), the term of motivation is not always used correctly. Latham and Pinder (2005, p. 486) propose that:
[. . .] work motivation is a set of energetic forces that originate both within as well as beyond an individuals being, to initiate work-related behaviour and to determine its form, direction, intensity, and duration.

Internal employee motivation 53

This denition will be applied in this paper because of three main reasons. First of all, it is a comprehensive denition which encompasses both parts of denitions discussed above. Second, it clearly emphasizes types of motivation origin (internal and external) which are the main focus of the paper. Third, it is well known and recognised denition which is used by many other authors in their studies. The literature review of the work motivation shows that a person is intrinsically motivated in the work when s/he seeks self-expression, enjoyment, interest, personal challenge, or satisfaction of curiosity (Amabile, 1993). Deci (1973) proposed that peoples need to feel competent and self-determined is the basis for the intrinsically motivated behaviors. Two strands to the denition of internal motivation were identied. According to one strand, the intrinsically motivated behaviors do not depend on reinforcements because by engaging in the interesting activity is itself rewarding (Deci and Ryan, 2000). This idea was broadly developed in the later research by various scholars. It is argued that the feeling of satisfaction with the activity, work itself and accomplishment derives from the doing what an individual likes, meeting the challenge and Deci, or nding an activity interesting (Deci, 1973; Deci and Ryan, 2008a; Gagne 2005; Ryan and Deci, 2000). The factors that inuence certain behavior also include the feeling that the work is important, having control over ones own resources, freedom to act, scope to use and develop skills and abilities, as well as having the opportunities for advancement (Armstrong, 2006). Owing to such positive feelings, intrinsically motivated people can become ego-involved with their jobs, emotionally committed for doing well and take pride from evidence that they are effective in furthering the objectives of the company (Minbaeva, 2008, p. 8). Another strand of the research into internal motivation emphasizes that intrinsically motivated behaviors are a function of three basic psychological needs: autonomy, competence and relatedness (Deci and Ryan, 2000). Although autonomy and competence are seen as essential needs and the most powerful on internal motivation relatedness is considered a fundamental social need (Reis et al., 2000). It is argued that relatedness plays a vital role in the maintenance and enhancement of employee internal motivation. Vansteenkiste et al. (2006) support the view claiming that employee internal motivation might be enhanced by satisfying the need for relatedness, which is highly connected with values and beliefs of the group. Consequently, internally motivated employees are doing activity not because they are expecting to get extrinsic rewards but because they feel close relationship with and trust the company they work for. Moreover, internally motivated employees are more emotionally engaged with the organization they work and tend to relate their personal advancement to their work and organizations advancements. Thus, a positive attribution towards a companys CSR activities leads to the positive evaluation and response of employees.

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1.4 Links between CSR and employee internal motivation CSR literature suggests that many factors embedded in the companys CSR initiatives inuence employees responses (Table I). Companys socially responsible behavior is proven to effect positively employee commitment, satisfaction, trust, loyalty, company image and motivates people to choose that company as the employer, strengthens employees self-image, helps to identify themselves with the certain group (organization), fullls the need for belonging and membership, encourages employees to receive lower salaries, positively effects employee retention, impacts employees willingness to initiate, participate and contribute social change initiatives, inspires the team work, and boosts employee morale (Aguilera et al., 2007; Heslin and Ochoa, 2008; Melynyte and Ruzevicius, 2008; Turban and Greening, 1997; Werther and Chandler, 2006; Viswesvaran et al., 2004; Brammer et al., 2007; Turban and Cable, 2003). It was found that CSR activities that a particular company is engaged in are the factors motivating people to choose that company as the employer (Aguilera et al., 2007; Melynyte and Ruzevicius, 2008; Strautmanis, 2008; Turban and Greening, 1997). It was also found that majority of students will seek for such a company which pays much attention to CSR (Heslin and Ochoa, 2008). The ndings of the empirical research done in Latvia showed that the appeal of the company as prospective employer is inuenced by the labor relations, relations with the society, environment protection and quality of the production (Strautmanis, 2008, p. 348). These CSR aspects were found as the most important priorities of jobs seekers and dened as the main criteria choosing a company. According to the signaling theory explaining the importance of good companys image, applicants use social reputation in order to judge the working conditions in the company (Aguilera et al., 2007; Turban and Greening, 1997; Viswesvaran et al., 2004). Employees care about socially responsible actions because they nd that they are sharing the same socially conscious values with the company (Aguilera et al., 2007). This is important for most people because according to social identity theory, working for a socially responsible company strengthen employees self-image, helps to identify themselves with the certain group (organization) and in such a way fulll the need for belonging and membership (Turban and Greening, 1997). It was also found that some of employees are willing to get low pay salaries for a chance to work for a socially responsible company (Heslin and Ochoa, 2008). Furthermore, a favorable company reputation has been identied as raising employee morale, increasing productivity, improving recruitment and retention (Turban and Cable, 2003). Empirical research show that CSR can also enhance employees satisfaction, commitment and loyalty (Aguilera et al., 2007; Brammer et al., 2007; Heslin and Ochoa, 2008; Viswesvaran et al., 2004). The survey conducted in 25 countries by the Environics International demonstrated that 80 percent of employees are more loyal to their organization and better motivated in case of companys engagement into socially responsible actions (Melynyte and Ruzevicius, 2008). CSR impact on organizational commitment was examined by several scholars. Brammer et al. (2007, p. 1701) suggest that the contribution of CSR to organizational commitment is at least as great as job satisfaction. The results of the empirical research demonstrate that the organizational commitment is especially positively inuenced by the external CSR (Brammer et al., 2007).

Authors Aguilera et al. (2007), Melynyte and Ruzevicius (2008), Strautmanis (2008), Turban and Greening (1997) and Heslin and Ochoa (2008) Turban and Greening (1997)

Findings CSR initiatives were found as the most important priorities of jobs seekers. Socially responsible companies were successful in attracting valuable employees Working for socially responsible companies strengthen employees self-image, helps to identify themselves with the certain group (organization) and in such a way fulll the need for belonging and membership It was also found that some of employees are willing to get low pay salaries for a chance to work for a socially responsible company Empirical research shows that CSR can also enhance employees satisfaction, commitment and loyalty The contribution of CSR to organizational commitment is at least as great as job satisfaction Socially responsible companies impact employees willingness to initiate, participate and contribute social change initiatives CSR activities inspire the team work When employees see the positive impact of their work on society, they put more effort and demonstrate more persistence toward their job which leads to a better performance and productivity CSR helps employees to satisfy their psychological need of belongingness Socially responsible organizations are usually perceived as fair organizations. As a consequence employees are more likely to trust their company A favorable company reputation has been identied as raising employee morale, increasing productivity, improving recruitment and retention

Factors Employee attraction

Internal employee motivation 55

Employee self-image

Heslin and Ochoa (2008)

Employee salaries

Aguilera et al. (2007), Brammer et al. (2007), Heslin and Ochoa (2008) and Viswesvaran et al. (2004) Brammer et al. (2007)

Employee satisfaction, commitment, loyalty

Employee commitment

Aguilera et al. (2007)

Melynyte and Ruzevicius (2008) Heslin and Ochoa (2008)

Employees willingness to initiate, participate and contribute social change initiatives Team work Performance and productivity

Aguilera et al. (2007)

Psychological need of belongingness Trust

Aguilera et al. (2007) and Turban and Cable (2003)

Turban and Cable (2003)

Employee morale

Table I. The relationship between CSR initiatives and employee responses factors

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Research also species that socially responsible companies impact employees willingness to initiate, participate and contribute social change initiatives (Aguilera et al., 2007). Moreover, Melynyte and Ruzevicius (2008) claim that employee initiatives are used as a strategic tool in order to encourage and strengthen the cooperation and team work as well as improve the interrelations between employees and create better working environment. This idea is based on the survey conducted within 50 biggest Turkish companies. The ndings showed that CSR activities inspire the team work (Melynyte and Ruzevicius, 2008). CSR helps employees to satisfy their psychological need of belongingness because it encourages the social relationships both within the organization and between the organizations (Aguilera et al., 2007). According to Aguilera et al. (2007), socially responsible organizations are usually perceived as fair organizations. As a consequence employees are more likely to trust their company, feel the support, perceive high quality exchange relationships with the company and its management, feel pride and afliation, and, thus, behave in a similar way which is benecial for the company. The overview of the prior research into the CSR initiatives demonstrated a positive impact on employee satisfaction, self-image, team work, loyalty, retention, trust, psychological need of belongingness, employee morale and commitment. All these concepts are also found related to employee internal motivation (Meyer et al., 2004; Locke and Latham, 1990; Mosley et al., 2005; Greenberg and Baron, 2008; Mullins, 2006). It is proposed that a person is intrinsically motivated if he does not get any apparent rewards but seeks the feeling of enjoyment and satisfaction, interest, personal challenge or self-expression in the work. This paper suggests that CSR could impact these feelings and that there is a positive relationship between both, internal and external CSR and internal employee motivation. Therefore, it is hypothesized: H1. Internal CSR positively correlates with internal employee motivation. It was proposed that people are more intrinsically motivated if they have a feeling that their work is important (Armstrong, 2006) and see the positive impact of their work on external environment (Heslin and Ochoa, 2008). Moreover, people are more willing to work for the companies whose strategies and policies are consistent with their ethical and moral standpoint (Aguilera et al., 2007). Since external CSR is associated with socially responsible practices related mainly to the external stakeholders group of customers, local communities and business partners (Brammer et al., 2007; European Commission, 2001), it can be stated that socially responsible attitude toward external companys environment enhances employee internal motivation. Therefore, it is hypothesized: H2a. External CSR (customers related) positively correlates with internal employee motivation. H2b. External CSR (local communities related) positively correlates with internal employee motivation. H2c. External CSR (busines partners-related partners) positively correlates with internal employee motivation.

2. Method 2.1 Sample and data collection Since the aim of the research was to investigate CSR impact on internal employee motivation, the surveys respondents were the employees working in the companies which are implementing CSR policies and engaging into CSR activities. Therefore, rst of all the socially responsible companies were identied. The analysis of the prior research on CSR issues demonstrated that the most active companies in CSR were medium and big companies (Graaand and van de Van, 2006). Based on this nding, the population of the research was dened as medium and large companies established in Lithuania. The sample was depicted from the list Top 1000 and included 1,000 Lithuanian companies rated by the annual revenues of the year 2007 (Top 1000: s, 2007). A total of 11 companies agreed to participate. iausios Lietuvos bendrove Didz In total, 274 questionnaires were analyzed. The questionnaire was developed in English language. Later the parallel translation into Lithuanian language was designed to meet the requirements of content validity (McGorry, 2000). After the questionnaire was developed, the pilot study was conducted with ten people who t the criteria of the study. It was done for couple of reasons (Bryman, 2008): to check if people do not respond in the same way, so that respondents data would form a variable; to check if the questions are clear to respondents, in this way skipping of the questions could be avoided. After piloting survey questions, some questions were improved simplied, so that the respondents could easily get the meaning of them. The nal questionnaires were delivered electronically to the companies that complied with the sample requirements and agreed to take part in the survey. The self-administered surveys were chosen. 2.2 Measures and reliability of scale The questionnaire incorporated three groups of questions: demographic, introductory and main questions. Demographic questions were designed in order to gather information about respondents characteristics, such as age, gender, industry that a company operates in, period of time worked for a company and department that a respondent is working in. The aim of introductory questions was to nd out how respondents understand CSR and reasons for companies to engage in CSR activities. In order to receive the information how the respondents understand CSR the eight denitions based on CSR activities were given: ethical conduct, environmental protection, social inequalities correction, public relations, compliance with regulations, transparency in operations, addressing stakeholders concerns and stakeholder partnerships. The second question asked respondents opinion about the reasons for companies to engage in CSR activities. The main body of the questionnaire has been adapted from Cochius (2006), Eweje and Bentley (2006), Melynyte and Ruzevicius (2008), Papasolomou-Doukakis et al. (2005), Vansteenkiste et al. (2006), Deci and Ryan (2000) and Amabile (1993) researches and consisted of two subsections: CSR activities (internal and external) and internal employee motivation (Table II). The four CSR-related factors were analyzed in the research: (1) internal CSR; (2) external CSR (customers related); (3) external CSR (local communities related); and (4) external CSR (business partners related).

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Construct/items Internal CSR (employee) 1. Providing equitable wage system 2. Improving psychological climate at work 3. Engaging in open, honest and exible communication with employees 4. Involving employees into decisions-making process 5. Contributing to the personal and career development of the employees External CSR (customers) 1. Implementing a procedure to handle consumers complaints 2. Providing truthful and honest information to the consumers 3. Avoiding false and misleading advertising or sales promotions that use deception or manipulation External CSR (local communities) 1. Supporting local sport, cultural or other community activities and projects 2. Donating money to local charities 3. Investing in the communitys development (i.e. investments in roads, schools or hospitals) 4. Involving into partnership with community-based organizations External CSR (business partners) 1. Engaging in fair trading transactions with suppliers 2. Implementing complaints procedure for the suppliers 3. Avoiding business partners that do not behave according to the law Internal employee motivation 1. The more difcult the problem, the more I enjoy trying to solve it 2. No matter what the outcome of a project, I am satised if my company provides truthful information to the society 3. In good psychological climate I enjoy doing work 4. I want my work to provide me with opportunities to develop my career 5. I am more comfortable when I am involved in decision-making process 6. I prefer to work for the company which is involved in communitys development

Composite reliability 0.68

58

0.91

0.94

0.73

0.69

Table II. Measures

The main survey items were designed as statements and measured in seven-point scale, where 1 represented strongly disagree and 7 strongly agree. Reliability of scales was calculated using Cronbachs a. The Cronbachs a values of all items are shown in Table II. According to DeVellis (2003), if Cronbachs a value is 0.6 it is acceptable, whereas if Cronbachs a value is 0.7 it is respectable. Nunnally (1978) suggests that reliability coefcients (Cronbachs a) around 0.90 are considered as excellent, values around 0.80 for basic research and values between 0.5 and 0.60 for exploratory research. Thus, it means that internal CSR scale value (0.68) and internal employee motivation scale value (0.69) are between acceptable and respectable, and higher than exploratory research value. 2.3 Analysis Data were analyzed with SPSS 17.0. The scales (Table II) were reduced to single metric measures using by computing the factor scores from principle component exploratory factor analysis. The factor scores were then subjected to further analysis. The hypotheses were tested using correlation and univariate regression analysis.

Correlation analysis (Table III) is used to holistically inspect the overall pattern of relationships between the variables. More formal hypothesis testing was conducted using univariate regression analysis (Table IV). It was necessary to conduct four univariate regressions to test the hypotheses due to the very high level of multicollinearity, as can be seen from the correlation analysis. Overall, the results of the regression analysis indicate a very strong linkage between the exogenous and endogenous variables as indicated by the high R 2 values.
External CSR (business partners related) 0.817 * * 0.000 274 0.623 0.000 274 0.822 0.000 274 1

Internal employee motivation 59

External External Internal CSR (local CSR CSR (employees (customers communities related) related) related) Internal CSR Pearson correlation (employees related) Sig. (two-tailed) n Pearson External correlation CSR (customers Sig. (two-tailed) related) n Pearson External correlation CSR (local communities Sig. (two-tailed) related) n Pearson External correlation CSR (business partners Sig. (two-tailed) related) n Pearson Intrinsic motivation correlation Sig. (two-tailed) n 1 274 0.664 0.000 274 0.820 0.000 274 0.817 0.664 0.000 274 1 0.820 0.000 274 0.627 0.000 274 1

Intrinsic motivation 0.814 0.000 274 0.633 0.000 274 0.791 0.000 274 0.792

274 0.627 0.000 274 0.623

* *

274 0.822

* *

0.000 274 0.814 0.000 274

* *

0.000 274 0.633 0.000 274

* *

0.000 274 0.791 0.000 274

* *

274 0.792 0.000 274

* *

0.000 274 1 274 Table III. Correlation analysis

Note: Correlation is signicant at: *0.05 and * *0.01 level (two-tailed)

ANOVAa Sig. Internal CSR (employees related) External CSR (customers related) External CSR (local communities related) External CSR (business partners related)
a

Coefcientsa B t Sig.

Constant t Sig.

Adjusted R2 0.883 0.514 0.855 0.856 Table IV. Regression analysis

0.001b 0.042c 0.002d 0.002e

0.947 6.793 0.001 0.026 0.238 0.821 0.790 2.709 0.042 0.206 0.980 0.372 0.933 6.024 0.002 0.044 0.364 0.731 0.933 6.051 0.002 0.045 0.370 0.726
b

Notes: Dependent variable: internal motivation; predictors: (constant), internal CSR (employee related); cpredictors: (constant), external CSR (customers related); dpredictors: (constant), external CSR (local communities related); epredictors: (constant), external CSR (business partners related)

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3. Results 3.1 Descriptive statistics of the sample A review of the respondents demographic prole reveals that most of the respondents were from marketing (28.8 percent), sales (27.4 percent), accounting and nance departments (19 percent). The biggest part of the responses was received from the employees from nance and insurance sectors (27 percent), consultancy (23.4 percent) and communication and publishing (19.3 percent). These sectors composed almost 70 percent of the responses. Table V summarizes the prole of the respondents. Regarding respondents age, 34.7 percent of employees were between 25 and 29 years old, 28.1 percent of employees were between 40 and 49 years and 21.9 percent of respondents between 30 and 39 years old. The results also revealed that almost 11 percent of respondents are less than 25 years old and only 4.4 percent (12 employees) of employees are 50 years and older. Most of respondents, that is, almost 63 percent indicated working one to two years in the company. About 23 percent of respondents have been working three to four years, meanwhile 7.3 percent less than one year, and only 6.9 percent ve and more years. The data regarding respondents gender shows that 65 percent of all respondents are females; meanwhile males make 35 percent. 3.2 Respondents CSR comprehension The ndings (Figure 1) indicated that CSR is mostly associated with ethical conduct (78.1 percent), environmental protection (59.9 percent) and social inequalities
Measure Gender Age (years) Value Female Male Less than 25 25-29 30-39 40-49 50 and older Finance and insurance Retail and wholesale Consultancy Tourism and entertainment Manufacturing Transportation Communication and publishing Construction and real estate Less than 1 1-2 3-4 5 and more General administration Marketing Sales HR IT Accounting and nance Other Frequency 179 95 30 95 60 77 12 74 32 64 8 4 5 53 34 20 172 63 19 30 79 75 19 10 52 9 % 65.3 34.7 10.9 34.7 21.9 28.1 4.4 27.0 11.7 23.4 2.9 1.5 1.8 19.3 12.4 7.3 62.8 23.0 6.9 10.9 28.8 27.4 6.9 3.6 19.0 3.3

Sector

Years in company

Department Table V. Descriptive statistics of the respondents characteristics

0 Ethical conduct Environmental protection Social inequalities correction Public relations Compliance with regulations Transparency in operations Addressing stakeholders concerns Stakeholder partnerships Other

10

20

30

40

50

60

70

80 78.1

90

59.9 48.9 28.5 20.8 11.7 8.0 5.5 5.1

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Figure 1. Respondents CSR comprehension

correction (48.9 percent). Slightly less respondents CSR associate with public relations (28.5 percent), compliance with regulations (20.8 percent) and transparency in operations (11.7 percent). Addressing stakeholders concerns and stakeholder partnerships are understood as CSR, respectively, by 8.0 and 5.5 percent. How employees understand the reason for companies to engage in CSR activities survey data is shown in Figure 2. According to the respondents, the most common reason is seen to be the companys aim to improve its image and reputation. This response was proposed by even 82.8 percent of respondents. The results show that other important reasons for motivating companies to engage in CRS activities are moral obligation to society (59.1 percent), gaining a competitive advantage (50.7 percent) and keeping employees satised, loyal and motivated (44.2 percent). Keeping customers loyal and gaining nancial benet are seen as a reason to engage in CSR activities, respectively, by respondents 29.6 and 28.8 percent, and only 6.2 percent of employees think that pressure from one or more stakeholders stimulates companies to undertake CRS activities. 3.3 Test of hypotheses By performing correlation analysis the authors seek to access the strength of the variables concerned, namely correlations between different CSR types (customers, local communities and business partners) and internal employee motivation. Correlation matrix provided in Table III shows that there are signicant correlations between factors. Internal CSR is found positively related to internal employee motivation (r 0.814). External customers-related CSR is also found positively related to internal employee motivation (r 0.633), external local communities-related CSR is correlated with internal
0 It helps to improve company's image and reputation It has a moral obligation to society It helps to gain a competitive advantage It helps to keep employees satisfied, loyal and motivated It helps to keep the customers loyal It is financial beneficial to the company It is caused by direct pressure from one or more stakeholders other 0.0 6.2 29.6 28.8 50.7 44.2 59.1 20 40 60 80 82.8 100

Figure 2. Reason for companies to engage in CSR activities

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employee motivation (r 0.791), and external business partners-related CSR is correlated with internal employee motivation (r 0.792). The correlation analysis results indicated support for the hypotheses. As it is indicated in Table III, different factors highly correlate with each other which mean that there is substantial multicollinearity of the data therefore multivriate regression analysis could not be applied. Thus, the univariate regression was calculated (Table IV). Overall, the t of the four regressions is rather large given the univariate nature of the regressions (i.e. R 2 of 0.81, 0.63, 0.79, and 0.79). The ANOVA shows that the endogenous variables are signicant to variance of internal employee motivation ( p , 0.05). Each of the coefcients (B) is large (B . 0.70) and signicant ( p , 0.05). Each of the four hypotheses is supported as indicated in Table VI. Thus, internal CSR and all types of external CSR affect internal employee motivation. Conclusion This paper has been motivated by the prevailing gap in understanding if CSR activities inuence internal employee motivation. The review of the previous research on the relationship between CSR and employee internal motivation showed that there is a positive association between CSR initiatives undertaken by the company and its employee satisfaction, self-image, team work, loyalty, retention, trust, psychological need of belongingness, employee morale and commitment (Aguilera et al., 2007; Melynyte and Ruzevicius, 2008; Strautmanis, 2008; Turban and Greening, 1997; Heslin and Ochoa, 2008; Brammer et al., 2007; Viswesvaran et al., 2004; Turban and Cable, 2003). However, socially responsible corporate behavior may mean different things to different people at different times, so we must be careful in how we use the concept and how we dene it (Campbell, 2007). Therefore, Webb (1999) concludes that understanding how different elements of CSR affect employee internal motivation is important. Moreover, employees evaluate companys CSR activities and make responses related to their behavior. As outlined in the beginning of the paper, the main aim of the paper is to study CSR impact on internal employee motivation. The analysis of the academic literature and research demonstrated that there exist two types of CSR orientations: internal and external. Internal CSR includes socially responsible activities related with employees issues, meanwhile external CSR is dened by customer related, as well as community and business partners related socially responsible activities. The ndings suggest that internal and external CSR activities positively correlate with internal employee motivation. Internal CSR was found stronger related to internal employee motivation than all the external CSR dimensions. Regarding the external CSR, customer-related activities had stronger correlation with internal employee motivation than local communities and business partners-related CSR activities. The weakest relation was found between internal employee motivation and business partners-related CSR activities. To sum up,
Hypothesis/path H1. Internal CSR (employee related) ! internal employee motivation H2a. External CSR (customers related) ! internal employee motivation H2b. External CSR (local communities related) ! internal employee motivation H2c. External CSR (suppliers/business partners related) ! internal employee motivation Results Supported Supported Supported Supported

Table VI. Hypotheses results

the CSR initiatives undertaken towards employees, customers, local communities and business partners will lead to the enhanced employee internal motivation. The research ndings showed a very strong correlation between the CSR factors (internal and external). The assumption could be made that CSR is not a multidimensional construct. This nding does not accord with the observations of Aguilera et al. (2007), Brammer et al. (2007), Ligeti and Oravecz (2009) and Smith (2007). Managerial implications On the ground of research results, several recommendations for management practices can be provided. First, the research results revealed that both, internal and external CSR positively inuence internal employee motivation. Although internal companies CSR initiatives affect internal employee motivation more than external CSR activities undertaken by companies. Thus, executives could use this information in order to resolve practical dilemma by giving the priority to the areas of CSR, namely ensure equitable wage system, create favorable psychological climate at work, engage employees in open, honest and exible communication, involve more often employees into decisions-making processes, and foster personal and career development culture in the organization, which facilitate more employee internal motivation enhancement. Second, as ndings of the survey show that employees associate companies CSR activities more with its ethical conduct and relate the reasons for companies to engage in CSR activities to improve companies image and reputation, the socially responsible behavior of a company management may contribute to the corporate reputation enhancement, bring positive effects related to its stakeholders and gain competitive advantage. Furthermore, employees should be more actively involved in CSR activities undertaken by the company. This would not only facilitate the ow of information but would let the employees to feel like a part of their company and more emotionally engaged into CSR initiatives and feel stronger afliation with the company. It is also important to take into consideration todays economic situation. One of the consequences of the global economic downturn, which has not bypassed Lithuania, is related to human resource issues, specically layoffs and cut of wages. Indeed, the latter factor is closely linked to employees motivation. Since, external motivation reduces due to the cut of employee wages, it is even more important to apply internal motivators. As research ndings showed, internal motivation (which is considered to be even more important than external motivation) can be strengthened by CSR activities undertaken by the company. One might argue that in the time of economic crisis, companies should save money and not invest in CSR activities. The research ndings indicate that CSR is a very important tool that create benets to organizations and go in accord with Hopkins (2008) observations that CSR leads to positive long-term affects and is a competitive strategic approach to managing a company. Research limitations and implications for further research This study is limited to one country under investigation, therefore, further research needs to be extended to other countries. Moreover, the survey was conducted in the period of economical recession. In order to assess the generality of the ndings, it is suggested to repeat the research in a stable economy situation. Since the aim of the research was to examine the CSR impact on employee internal motivation, quantitative data survey was the best choice. However, it would be

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interesting to interview head managers and nd out their attitude and experience with CSR and its impact on employee motivation. Such qualitative research could provide the additional insights into the question under investigation.

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Further reading McGivern, Y. (2006), The Practice of Market and Social Research: An Introduction, 2nd ed., Financial Times Prentice-Hall, Harlow.

About the authors Vida Skudiene is a Professor and Chair of General University Education Subject Group at ISM University of Management and Economics. Her research interests include management education, organizational psychology, social responsibility, leadership, and team management. Vida Skudiene is the corresponding author and can be contacted at: vida.skudiene@ism.lt Vilte Auruskeviciene is a Professor and Vice Dean for Academic Affairs at ISM University of Management and Economics, Undergraduate School. Her interests include relationship marketing and marketing strategy. She has articles published in, for example, Baltic Journal of Management, and Transformations in Business and Economics.

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