Chapter 1

Background of the Study

Business though is an activity which is carried for

personal benefits but can be also used for the welfare of

the society as a whole. In reality business and society

are inseparable. The reason behind this is that success

of a business depends upon the development of the

society. The success of a business depends upon its

consumers and the consumers are an integral part of the

society. Therefore, business is inseparable from its

society.

The market value of a company these days mainly

derives from “intangibles”—from its “image”, from its

reputation, from the trust it inspires. Its market worth

does not derive from its short-term profit margins but

from public trust. Conversely, if the public loses trust

in the company, the damage to the market value of

the company will be quick and dramatic. And in today’s

Twitter and Facebook world, this loss of trust is very

difficult to “manage” or “spin”. So businesses have

strong incentives to think of corporate social

responsibility in a much broader sense. CSR is not about

dole out or charity or hand out to the society. It is

what corporations do to solve social problems that help

create a sustainable society that in turn increases

business and profits (Konishi, 2014).

Changing environments and social parameters have

compelled business enterprises to account and report

information with regard to discharge of their social

responsibilities. The boundaries of the principles,

practices and skills of conventional accounting have been

extended to such areas for social disclosure and

attestation with regard to the measures of social

programs. The concept of ‘Social Accounting’ has gained

importance as a result of high level industrialization

which has brought prosperity as well as many problems to

the society. It has necessitated the corporate sector,

with huge amounts of funds at their disposal, to invest

substantial amounts in social activities so as to nullify

the adverse effects of industrialization. “In modern

times, accounting efforts have been extended to the

assessment of the state of society and of the social

programs not for the satisfaction of any individual or

group but for the application of evaluative procedures in

the allocation of resources towards better social well

being as a whole.”
 This research aims to determine the quantitative

benefits of Corporate Social Responsibility of JAKA

Equities Corporation.

Objectives of the Study

1. To know the Corporate Social Responsibility (CSR)

initiatives of JAKA Equities Corporation (JEC):

a. Environmental efforts

b. Philanthropy

c. Ethical labor practices

d. Volunteering

2. To quantify the costs of their CSR initiatives.

3. To determine the quantitative benefits from the

spent cost of their CSR initiatives.

Significance of the Study

This study aims to quantitatively review the CSR accounting of JAKA Equities

Corporation.
 The result of the study will benefit the following:

Society. Society is the medium that gives name and fame to a business concern. Hence, it is the main

duty of the business entity to discharge its social obligation. The research study will assist in

identifying the costs and benefits created by the production related activities of Jaka Equities Corp to

the society.

JAKA Equities Corporation. The research study will significantly aid the company in knowing the

effects of the corporate social responsibility practices with respect to the profitability of the business.

Future Researchers. This study is useful for future researchers who want to study the same nature as

they can consider this as part of their review of related literature.

Scope and Limitation of the Study

This research was conducted and focused mainly on the CSR practiced by the JAKA

Equities Corp. The researchers limited the study only on valuing the costs and the benefits of the said

CSR practices and its effects on its profitability.

 Chapter 2

Review of Related Literature

Introduction

This section presents the related literature that

would help enhance the understanding of this study. It

will provide reviewed literature on corporate social

responsibility relating to accounting. The terms social

accounting and corporate social responsibility will be

defined in order to further understand how they are

related to each other and to recognize the impact of its

benefits to the society and environment.

This chapter will be restricted only in exploring

related literature that will coincide with the objective

of the study to backup learning about corporate social

responsibility. The review will cover topic on corporate

social responsibility initiatives about environmental

efforts, philanthropy, ethical labor practices and

volunteering. In addition, the review will include on how

to quantify costs in CSR initiatives and the benefits

earned from the spent cost.

 In essence, there is nothing new about environmental

and social issues. They have, of course, always been with

us and no decent business has been able to ignore them.

What is new is the place they occupy on business and

political agendas. Whether for moral, economic, legal or

pragmatic reasons, every organization is having to make

an increasingly explicit assessment of its environmental

and social impact and to attempt to re-position itself as

the terms of the social contract between business and

society come under increasing scrutiny. It is now well-

established that business success is drawn, in part at

least, from the natural environment and society (Gray et

al.,1997).

Social Accounting

Social accounting has similar terminologies. Social

Accounting, also known as Social Responsibility

Accounting, Socio-Economic Accounting, Social Reporting

and Social Audit, aims to measure and inform the general

public about the social welfare activities undertaken by

the enterprise and their effects on the society

(Mishra,n.d.).
 Social accounting is concerned with the development

of measurement system to monitor social performance.

Sustainability and social responsibility appear to be

occupying a place of increasing importance in the

discourse surrounding business and organization (Gull et

al.,2013). Measuring social performance is complicated

but not impossible. To evaluate social impact, we collect

data on our partners’ outreach, targeting methodology,

employment rates, sustainability, compliance with client

protection principles, care for the environment and

products and services offered (“Measuring Social

Performance,”n.d.). Some maintain that "business is

business." Profits per se measure social performance

(Kreps, 1962).

Social accounting is an expression of a company’s

social responsibilities (Mishra,n.d.). Societal

accounting “is an important tool measure the performance

of any company in view of social responsibility.

Corporate social responsibility of Indian companies:

Corporate Social Practices in India sets a realistic

agenda of grassroots development through alliances and

partnerships with sustainable development approaches

(“Social Accounting Practices in India as a Corporate

Social Responsibility,”n.d.).
 Social accounting emphasize on relationship between

firm and society (Mishra,n.d.). There are many instances

where businesses have along played an important role in

addressing issues of education, health, environment and

livelihood through their social responsibility

interventions in various parts of the country. Some of

these interventions are now available as innovative

practices (“Social Accounting Practices in India as a

Corporate Social Responsibility,”n.d.).

Social accounting is related to the use of social

resources (Mishra,n.d.). Community development is the

combined processes, programs, strategies, and activities

that make a community sustainable as compared to economic

development which is the marketing of its potential for

growth followed by local efforts to act on opportunities.

The entire set of approaches to community development

practice may be considered a specialized form addressing,

coordinating and building the social infrastructure at a

location. CD may be defined as a process of challenging

the undesirable and unacceptable disparity of conditions

and infrastructure that negatively affect the quality of

life in a place where people live and work. It functions

best as process in locations where all strata of society

and citizenry are engaged with sense of community

solidarity (Community Glossary, 2009).

 Social accounting is application of accounting on

social sciences (Mishra,n.d.). The concept has been

further operationalized in different ways in social

science research. The majority of research in the domain

of social capital is at the individual level where the

motive of research is to identify individual social

capital in the society. Management studies have adopted

this conceptualization at the organizational level by

recognizing the benefits of networking, social ties and

resources that are inherent in those relationships (Saeed

and Arshad, 2012).

According to Gurpreet Singh (2011), social

accounting generally refers to the identification and

recording of business activities regarding social

responsibility. Social responsibility concept is one of

the important concept of management. It is the duty of

the enterprise to do some social activities for

completing their social responsibility. Hence, social

acounting is a very important tool to measure the

performance of any company in view of social

responsibility.

K.V. Ramanathan (n.d.) pointed out the following

objectives of social accounting as follows:

 (i) To identify and measure the periodic net social

contribution of an individual firm which must include

both internal and external costs and benefits of the firm

and society as a whole.

(ii) To determine whether an individual firm’s

policies and strategies adversely affect the society or

not and the resources and power status etc., of an

individual are consistent with the social priorities.

(iii) To make available in an optimal manner to all

social constituents, relevant information of a firm’s

goal, policies, programmes, performance and contribution

to social goals. Here, relevant information includes

public accountability along with this allocation of

social resources.

According to Smita Mishra (n.d.), there are six (6)

features of Social Accounting:

(i) Social accounting is an expression of a company’s

social responsibilities.

(ii) Social accounting is related to the use of social

resources.

(iii) Social accounting emphasize on relationship between

firm and society.

(iv) Social accounting determines desirability of the

firm in society.

(v) Social accounting is application of accounting on

social sciences.

(vi) Social accounting emphasizes on social costs as well

as social benefits.

Moreover, the important benefits of social

accounting includes the following:

(1) A firm fulfills its social obligations and informs

its members, the government and the general public to

enables everybody to form correct opinion.

(2) It counters the adverse publicity or criticism

leveled by hostile media and voluntary social

organisations.

(3) It assists management in formulating appropriate

policies and programmes.

(4) Through social accounting the firm proves that it is

not socially unethical in view of moral cultures and

environmental degradation.

(5) It acts as an evidence of social commitment.

(6) It improves employee motivation.

(7) Social accounting is necessary from the view point of

public interest groups, social organisations investors

and government.

(8) It improves the image of the firm.

(9) Through social accounting, the management gets

feedback on its policies aimed at the welfare of the

society.

(10) It helps in marketing through greater customer

support.

(11) It improves the confidence of shareholders of the

firm.

Corporate Social Responsibility

A large number of significant changes have taken place

in social, political, economic and other aspects of

modern culture. These changes make it appropriate to re-

examine the role of modern business. The demand for

greater social awareness from the business organizations

is a move and an important part of the society’s attempt

to make them more responsive to the need of mankind

(Joseph, 2005)
 The construct of corporate social responsibility

(CSR) can be simply and literally interpreted as the

corporation taking responsibility for the effect of its

actions on society. However, CSR may also be described

as corporate behaviour that goes “beyond compliance and

engages in actions that appear to further some social

good, beyond the interests of the firm and that which is

required by law” (McWilliams et al., 2006, p.52

Consequently, within the emerging field of CSR as an area

of academic interest, there is no genuinely consistent

definition of the construct of CSR (Gray, Dey, Owen,

Evans, & Zadek, 1997; Williams & Aguilera, 2008) and

different researchers often use diverse explicit or

implied definitions of the term (McGrath,2009).

Nevertheless, as a business strategy the use of CSR has

grown significantly over the past decade despite the lack

of a consistent definition (Williams & Aguilera, 2008).

The broadest definition of corporate social

responsibility is concerned with what is – or should be –

the relationship between global corporations, governments

of countries and individual citizens. More locally the

definition is concerned with the relationship between a

corporation and the local society in which it resides or

operates (Aras & Crowther, 2008). There are a few broad

categories of social responsibility that many of today's

businesses are practicing (Caramela, 2016):

1.Environmental efforts: One primary focus of corporate

social responsibility is the environment. Businesses

regardless of size have a large carbon footprint. Any

steps they can take to reduce those footprints are

considered both good for the company and society as a

whole.

2.Philanthropy: Businesses also practice social

responsibility by donating to national and local

charities. Businesses have a lot of resources that can

benefit charities and local community programs.

3.Ethical labor practices: By treating employees fairly

and ethically, companies can also demonstrate their

corporate social responsibility. This is especially true

of businesses that operate in international locations

with labor laws that differ from those in the United

States.

4.Volunteering: Attending volunteer events says a lot

about a company's sincerity. By doing good deeds without

expecting anything in return, companies are able to

express their concern for specific issues and support for

certain organization.
 However, some writers have taken the view that a

corporation should not be concerned with social

responsibility and their only purpose was to maximize

shareholder wealth. One of the famous quote on the role

of the organization has come from leading American

economist Milton Friedman in an article in The New York

Times Magazine titled "The Social Responsibility of

Business is to Increase Profit" . He states that, “there

is one and only one social responsibility of business –

to use its resources and engage in activities designed to

increase its profits so long as it stays within the rules

of the game, which is to say, engages in open and free

competition without deception or fraud” (Staib, 2005).

Equally some people are more cynical in their view of

corporate activity. So Drucker (1984) had the opinion

that: “business turns a social problem into economic

opportunity and economic benefit, into productive

capacity, into human competence, into well-paid jobs, and

into wealth". It is apparent of course that any action of

the organization will have an effect to the external

environment. In considering the effect of the

organization upon its external environment it must be

recognized that this environment includes both the

business environment in which the firm is operating, the

local societal environment in which the organization is

located and the wider global environment. This effect of

the organization can take many forms, such as ( Aras &

Crowther, 2008):

● The utilisation of natural resources as a part of its

production processes.

● The effects of competition between itself and other

organizations in the same market.

● The enrichment of a local community through the

creation of employment opportunities.

● Transformation of the landscape due to raw material

extraction or waste product storage.

● The distribution of wealth created within the firm to

the owners of that firm (via dividends) and the

workers of that firm (through wages) and the effect

of this upon the welfare of individuals.

And more recently the greatest concern has been with

climate change and the way in which the emission of

greenhouse gases are exacerbating this. Because of the

uncertainty surrounding the nature of CSR activity it is

difficult to define CSR and to be certain about any such

activity there are three basic principles observed:

● 1.Sustainability. This is concerned with the effect

which action taken in the present has upon the options

available in the future. If resources are utilized in

the present then they are no longer available for use

in the future, and this is of particular concern if

the resources are finite in quantity.

● 2.Accountability. This is concerned with an

organization recognizing that its actions affect the

external environment, and therefore assuming

responsibility for the effects of its actions. This

concept therefore implies a quantification of the

effects of actions taken, both internal to the

organization and externally. More specifically the

concept implies a reporting of those quantification to

all parties affected by those actions. This implies a

reporting to external stakeholders of the effects of

actions taken by the organization and how they are

affecting those stakeholders.

● 3.Transparency. As a principle, means that the

external impact of the actions of the organization can

be ascertained from that organization’s reporting and

pertinent facts are not disguised within that

reporting. Thus all the effects of the actions of the

organization, including external impacts, should be

apparent to all from using the information provided by

the organization’s reporting mechanisms.

Joseph (2005) asserted that Social responsibilities of

management can be studied under two headings: (i)

Internal social responsibilities, and (ii) External

social responsibilities. Internal social responsibilities

are concerned with assuring due process, justice, equity

and morality in employee selection, training, promotion

and hiring, or they may relate to such things as

increasing employee productivity, or improving employee

physical environment. External responsibilities refer to

such actions as stimulating minority entrepreneurship,

improving the balance of payments, or training and hiring

hard-core unemployed. Thus, management owes social

obligations to two major groups, namely, Insider -

shareholders and employees, and Outsiders - customers,

supplier, government, and the society as a whole. There

are three major categories to which organization is

responsible for:

● 1) Ethical Responsibilities: Ethical responsibilities

are responsibilities that a company puts on itself

because its owners believe it is the right thing to

do; not because they have an obligation to do so.

Ethical responsibilities could include being

environmentally friendly, paying fair wages or

refusing to do business with oppressive countries, for

example (Smith, n.d).

● 2) Legal Responsibilities: A company’s legal

responsibilities are the requirements that are placed

on it by the law. Next to ensuring that organization

is profitable, ensuring that it obeys all laws is the

most important responsibility, according to the theory

of corporate social responsibility. Legal

responsibilities can range from securities regulations

to labour law, environmental law and even criminal law

(Smith, n.d, cited in Asemah, et al, 2013b).

● 3) Economic Responsibilities: An organization’s first

responsibility is its economic responsibility; that is

to say, an organization needs to be primarily

concerned with turning a profit. This is for the

simple fact that if a company does not make money, it

will not last, employees will lose jobs and the

company will not even be able to think about taking

care of its social responsibilities. Before a company

thinks about being a good corporate citizen, it first

needs to make sure that it can be profitable (Smith,

n.d).

Quantifying Cost of CSR Initiatives

Environmental, social, and governance programs create

shareholder value, most executives believe, but neither CFOs

nor professional investors fully include that when

evaluating business projects or companies (Bonini et

al.,2009). However, measuring the impact of Corporate

Social Responsibility (CSR) programs can be a daunting

task. In many companies, CSR encompasses a wide range of

metrics and includes data on sustainability, employee

engagement, corporate giving, workplace diversity,

ethical compliance – and the list goes on. Effectively

calculating and communicating your company’s CSR efforts

is one of the most important responsibilities of any CSR

professional. To make reporting even more complex, the

way results are communicated differs depending on the

audience (Emick, 2016).

CSR measurement is complicated for two reasons. First,

as outlined earlier, a consensus is missing on the

theoretical meaning of the CSR concept (Dahlsrud, 2008).

Second, the concept is multidimensional with relatively

heterogeneous dimensions (Carroll,1979). Due to the lack

of consensus and complexity of the concept, it is not

surprising that many different approaches have been used

in the literature to measure CSR (Galant and Cadez,

2017). The 5 R Framework is an effective tool for

measuring and reporting on the ROI of CSR in an organized

and strategic way that will resonate with executives. It

can also be used to identify new opportunities,

prioritize projects and resources, and outline key

tactics that will expand and enhance your social

responsibility program. While there are many tools and

tactics you can use to share your external story, the 5 R

Framework is designed for internal reporting to

demonstrate the strategic relevance of CSR to your

company (Emick, 2016).

Here’s how to use the 5 R Frameworks:

1) Revenue – Strategic Alignment

Achieving bottom-line growth is the holy grail of any CSR

program, and the link between social responsibility and

revenue can often seem tenuous. To show how CSR

contributes to your company’s bottom line, you need to

identify ways that CSR activities drive cost savings, new

customer acquisition, and customer retention. Cost

savings from investments in sustainability initiatives

are often the low-hanging fruit. Have you implemented a

new recycling program that comes with a rebate? Did you

switch to more fuel-efficient vehicles or energy

efficient lighting that save money? Look for ways your

company is investing in cleaner, greener, cheaper

technology – even if it didn’t originate from the CSR

team! CSR should be integrated throughout all areas of

the business, so make sure you are capturing any data

from across departments that relates to your company’s

social and environmental impact.

You can also help to drive revenue through new customer

acquisition. Work with your marketing team to come up

with innovative ways to integrate CSR into promotions,

such as through cause-marketing campaigns, packaging

redesigns that champion a cause, or product enhancements.

For example, you could host a promotion – for every two

items a customer purchases your company will donate a

dollar to the nonprofit of their choice. Measure how many

customers decide to make the additional purchase to

support a cause they care about. CSR can also help

improve customer retention, and consumers are

increasingly become more environmentally and socially

conscious in their buying decisions. Work with your

analytics team to incorporate a CSR-related question into

consumer surveys, which can show the percentage of

consumers that rank your brand’s CSR efforts as an

important factor in their purchase decision. You can also

include customers in your CSR activities, such as

inviting them to volunteer events or encouraging them to

recycle the packaging, which can strengthen their

affinity to your company. Being able to quantify

financial returns and cost savings is imperative for

ensuring that CSR is positioned as a strategic priority

worthy of investment and attention from the C-Suite.

2) Reputation – External Awareness

Reputation is usually what comes to mind when you think

of the benefit of CSR. Giving back to the community,

reducing your environmental footprint, and promoting

employee well-being and diversity are all ways to help to

improve your company’s external image. While the impact

of CSR on reputation and brand awareness may seem

difficult to quantify, there are some simple metrics you

can use to demonstrate how your social responsibility

program is contributing to the company’s growth.

Keep a running list of the number of social media

impressions and media placements your CSR activities

generate. In some cases, these posts may get more

traction and pick-up than more traditional “ad-centric”

communications. Being able to show that in one month your

CSR-related content generated XX number of likes, shares,

and positive comments is a direct metric that should be

calculated and communicated to your leadership team. Not

getting the traction you’re hoping for? Try mixing up

your content, experimenting with new messaging, and using

new delivery techniques. For example, if people aren’t

responding to your blog posts, try creating short videos

instead. Measuring your social media engagement is a

great way to identify what messages are working, what

types of content are most effective, and which audiences

are most receptive. Building up your external awareness

can also land your company some public awards. Ranking

among the most ethical, most admirable, or most

sustainable companies generates direct and indirect

benefits that can be attributed to CSR. Simply counting

the number of media placements, number of engagements, or

number of awards can help you quantify your impact on

reputation.

3) Recruitment – Talent Acquisition

Attracting top talent to work at your company may seem

like the responsibility of the HR team, but CSR is

increasingly become an important factor in prospective

employees’ decisions to join a company. To demonstrate

the linkages between CSR and talent acquisition, you need

to work closely with HR to put metrics in place that

gauge the impact of your CSR activities on recruitment.

Make sure that your company’s CSR program is included in

recruitment materials and communicated to recruits. For

example, include information about CSR in handouts

distributed at recruiting fairs, incorporate a CSR-

related question into the interview process, and make

sure the CSR program is positioned prominently on job

postings and the company’s career website.

Once you have your messaging in place, you can begin

measuring the impact that CSR has on new hires’ decisions

to join your company. How do you measure this? Surveys,

surveys, surveys! Creating effective survey questions can

generate incredible amounts of data and information that

should be included in your CSR reporting to executives.

Questions should be carefully crafted to get accurate,

unbiased data from potential candidates or new hires.

Instead of asking questions such as, “Is our CSR program

an important factor in your decision to work here – Yes;

No,” use questions that result in detailed, quantifiable

answers, such as “How important is our CSR program in

your decision to work here – Not at all important;

Somewhat important; Very important.” Being able to

communicate that XX% of new hires or potential candidates

ranked CSR as ‘very important’ is a compelling metric

that helps highlight the impact of your efforts on the

company’s ability to recruit top talent.

4) Retention – Internal Engagement

CSR can significantly improve employee retention,

engagement, and satisfaction. Participation in corporate

giving campaigns, volunteer opportunities, or community

events gives employees a unique sense of purpose, a new

opportunity to interact, and an enhanced sense of pride

for their employer. It can also lead to new skills,

ideas, or relationships that can help deliver growth for

the company. Consider a volunteering event that brings

together employees from across departments. Members of

the HR team are working alongside the IT team, giving

them the opportunity to get to know fellow employees they

otherwise would not interact with at work. Community

involvement is also a great team-building exercise that

gets employees out of the office and into a new setting

together. This breaks up the day-to-day routine and gives

employees a chance to use different skills and

collaborate with different people to achieve a different

kind of objective than they would in the office.

The best way to measure the impact your CSR program has

on employee engagement and retention is through surveys.

While you don’t want to bombard employees with surveys,

it is important to consistently be collecting data when

you have the opportunity. Be strategic and creative with

your questionnaires. For example, send out a survey in

your “thank you” email after an employee volunteer event.

Instead of only asking questions about the event itself,

include a question that measures the impact that event,

or the CSR program in general, has on the employee.

Incorporate at least one CSR-related question, if not a

whole section, in your company’s annual survey. You can

also work with HR to build CSR-related questions into

performance appraisals and piggyback on other existing

feedback tools. Again, make sure to frame questions in a

way that gives you meaningful, actionable data that you

can use to not only show the linkage between CSR and

employee engagement, but also to show opportunities to

improve your CSR program.

5) Relationships – Partner Collaboration

Partnerships are key to any company’s success, and CSR

can be a great way to build and strengthen meaningful

business relationships. Engaging business partners in

your CSR activities can help to extend the impact your

company is making on the community while also improving

relationships with your partners. For example, when

planning your next holiday gift drive, invite your

partners to join in. Your collective support will benefit

the community, and you will foster a sense of respect and

camaraderie among your partners. You can even incorporate

some friendly competition to add an element of fun to

your joint campaigns. For example, challenge your

partners to a canned food drive and offer a prize for the

one that collects the most. It is also important to

ensure that your CSR efforts extend through your supply

chain. Implementing a Supplier Code of Conduct ensures

that you are sourcing responsibly and upholding ethical

standards across your entire value chain. Educating the

owners of each business relationship about your company’s

CSR policies and priorities is imperative to ensuring

that those values get passed on through the supply chain.

Quantifying Benefits of CSR

Many of the benefits of corporate social responsibility

naturally mirror the reasons firms engage in CSR. We view

these benefits in terms of increased cash inflows to

the company or reduced cash outflows. Next, we list

some of the more salient benefits that firms may wish to

estimate. (Sprinkle and Maines, 2010).

1. First, above and beyond the tax deductions

garnered by cash and product donations, local,

state, and federal agencies frequently provide tax

credits for CSR and sustainability efforts. For

example, RBC Bearings recently received $8.3

million in federal tax credits associated with

the production of wind turbines. In like fashion,

companies can receive tax credits for using

 ‘‘green’’ materials and practices in the

renovation and construction of buildings; for

instance, by obtaining Leadership in Energy

and Environmental Design (LEED) certification.

Addit i o n a l tax incentives can come in

the form of sales tax exemptions and property-

tax abatements. Such credits and incentives are

relatively straightforward to measure in an ex

ante fashion and entail an understanding of

applicable laws and regulations.

2. Second, companies frequently reap ‘‘free’’

advertising as a result of CSR. It is quite

common for organizations’ good deeds to receive

coverage on local and national radio and

television, and be the subject of articles in

newspapers, trade journals, and magazines.

Almost certainly, organizations know what

it costs to place an advertisement in these

various media outlets. By tracking media hits and

tallying the costs associated with ‘‘equivalent’

’ads, companies might reasonably estimate the

benefits of such publicity.

3. Third, and as discussed earlier, CSR frequently is a

means for attracting, motivating, and retaining

talent. Of these, reductions in turnover (retention)

may be the easiest to measure. Organizations

can survey employees’ reasons for staying with, or

 leaving, the firm and map their responses to CSR-

related questions into differential retention rates.

In turn, firms can translate increased retention

rates, if they exist, to the costs of employee

turnover. Research suggests that the costs of

employee turnover can be q u i t e steep, ranging

from 50% of base salary for entry level

positions to 400% of base salar y for highly

skilled specialists(Blake,2006) . T h u s , if CSR

helps retain one highly skilled employee who

earns $100,000, this translates to a $400,000

benefit.

These articles and literatures gave ideas to the

researchers about the relationship of social accounting

and corporate social responsibility. The perceived

importance of corporate environmental, social, and

governance programs has soared in recent years, as

executives, investors, and regulators have grown

increasingly aware that such programs can mitigate

corporate crises and build reputations (Bonini et

al.,2009).

Overall Measurement of CSR Initiatives

 According to the National Association of Accountants

(NAA), social acccounting refers to the identification,

measurement, monitoring and reporting of the social and

economic effects of an institution on society. It is

intended for both internal, managerial and external

accountability purposes and is an out-growth of changing

values that have led society to re-define its notion of a

corporation’s social responsibility. Similarly, K.V.

Ramanathan (n.d.), defines social accounting as the

procedures of selecting firm level, social performance

variables measures and measurement produces,

systematically, developing information useful for

evaluating the firm’s social performance and

communicating such information to concerned society

groups, both within and outside of the firm.

In addition, Prof. Lee Brummet (n.d.), suggests that

the measurement of the total performance of a business

unit is the result of the following:

(i) Net Income Contributions:

It is needless to mention here that fulfilment of

social objectives is only possible by a business unit

when it has sufficient financial surplus, i.e., adequacy

of profits. Thus, no doubt, it is the primary objective

of all business units which is the result of many factors

viz., producing good products at a reasonable price,

creating favourable business environment etc. So, it may

be stated that there is a co-relation between the

business and the society. That is why it may be said that

surplus/income is the result of both business and

society.

(ii) Human Resource Contribution:

We all know that the business activities can never

be performed without human activities. The human

activities consist of recruitment, placement, training

and development of job skills, scale of pay, transfer,

working environment, welfare and safety measures etc.

Thus, the business unit must try to improve the above

prerequisites so that measurement of social benefits and

cost of staff can earlier be determined.

(iii) Contribution to Public:

It includes the organisational ability of individual

(groups) to the business unit. This includes: tax and

duties paid to States, to help the Govt. in various

social priority schemes (e.g. small development, family

welfare programmes etc.), contribution to the religious,

charitable and educational institutions etc.

(iv) Environmental Contribution:

Environmental pollution and ecological imbalance

created by various industries in the country has been

brought to the four front by all quarters. For this

purpose, each and every business require to take

immediate necessary steps to minimise pollution which is

created from the disposition of their various industrial

wastes in an unscientific manner.

(v) Product or Service Contribution:

It includes the product or services supplied as per

standard, ensuring safety, to supply quality goods and

services and also to satisfy the customers not only from

the standpoint of marketing the products, but also from

the standpoint of customers’ satisfaction. There has to

be sincere attempt to supply good products at a

reasonable price to the customers and to the society as a

whole.

Theoretical Framework

One view of the increasing interest in CSR arises from a belief that pressure is placed from

financial markets to send risk management signals. However, an alternative view is that the underlying

motivations are much more complex (Spence, 2007). Attempts to explain the phenomena of increased

voluntary social reporting have been drawn from at least nine theoretical bases, as presented in Table

2.0.
 Theoretical Base Explanation
Stakeholder theory Sees the world from the perspective of the

management of the organisation. Support of

stakeholders critical to the continuity of the

firm. Approval from the stakeholders crucial

and firm seeks to engage stakeholders and the

organisation in dialogue.
Legitimacy theory Survival of the firm requires it to operate

within society‟s values and norms. Requires

the existence of a reputation that must be

retained for longer term profit.

Social Contract Corporations have an obligation to act as

community citizens.
Institutional theory Organisations will have to comply with

society‟s norms, values and cultures.

Organisations are linked by a symbiotic

relationship that can create pressure on

organisations to limit the set of choices firms

can make in demonstrating their legitimacy.

Agency theory  Explains increased disclosure from a

market based perspective. Grounded in

the premise that participants are self-

interested. Reporting strategy chosen by

an organisation would be aimed at

maximising the wealth of the

organisation‟s management (agent), and

not necessarily the wealth of the

shareholder (principal).

Conceptual Framework

The study focuses on the CSR initiatives of JAKA Equities Corporation. The researchers begin

the study by deriving an objectives to be achieved at the end of the study. Such objective is to quantify

the cost and benefit of the determined CSR initiatives of the company. This is done by determining first
the CSR initiatives of the said company and quantifying their cost. After that, the researchers will

gather data again to determine the benefits obtained by the organization.

The Research Paradigm

 Chapter 3

Research Design

This study will use a descriptive type of research method. According to Burns and Grove

(2003), descriptive research “is designed to provide a picture of a situation as it naturally happens”. It

may be used to justify current practice, make judgment and also to develop theories. This study is

descriptive since its common means to generate data includes surveys and personal interviews with the

aid of interview guide questions. It will be a case study which involves an upclose, in-depth, and

detailed examination of JAKA Equities Corporation’s social responsibility accounting.

Research Environment

The study will be conducted at JAKA Equities Corporation (JEC), a maker of fine quality

safety matches that are widely distributed in the Philippines and Asia. Brands like EMI, Guitar, Royal

Red, and Fuego have been part of every Filipino household for generations up to these current

generation, making JEC the pioneer in the disposable lights industry within Southeast Asia, and other

international markets. JEC is located at Cuenca Ave. Street, Brgy. Marcos, Magallanes, Agusan del

Norte and was owned by Mr. Juan Ponce Enrile. It is as an ISO 9002 certified company which supplies

a full range of high-quality, best value lighting products.

Ethical Consideration

The researchers highly valued the ethical considerations in the conduct of the study. The

study will be conducted in an approachable and unenforceable manner towards the respondents. The

researchers understand that there would be a risk of insufficiency of information when the respondents

do not fully cooperate, or when the respondents disclose false information. However, with the aid of

thorough planning, the researchers came up with an ideal approach towards the interview with the

respondents, in order to get the favorable response from the latter without neglecting ethics. The

researchers will ask first the respondents' authorization, and will respect the decision of the latter. The
readings and theory gathered from the various authors are well acknowledged without tearing or adding

some parts of the same.

To uphold professionalism, the researchers also obtained sufficient understanding of the

business prior to research engagement. In situations which arise during the conduct of the study, where

the researchers did not have enough background or understanding, the researchers will sought advice

from professionals who are expert in such situations. These professionals include Certified Public

Accountants, both in academe and public practice.

Confidentiality is also well observed during the conduct of the study. The researchers are

precluded from divulging any information gathered, which may be deemed confidential on the part of

JAKA Equities Corporation. Confidential information includes strategies, market and management

style, secret processes, and the like. However, as to the financial information taken from JAKA

Equities Corporation, the researchers will ask permission from the proprietor or the duly authorized

personnel of the business to use the said informations intended for academic purposes only.

The respondents were not forced to answer all the interview questions that the respondents

may feel uncomfortable to answer. Instead, the researchers will totally understand the respondents'

decision. The interview will also be conducted at the convenience of the respondents. Overall, data

gathering and other procedures used in this study will be done with all the requisites of ethics being

satisfied.

Research Instrument

The research is based on the statement of the problem. The researchers primarily source of factual

data are actual interviews, observations, and evaluation of financial figures relevant in the conduct of

the study. The instrument is used to correspond with the flow of the study.

The instrument aims to determine the CSR initiatives of JAKA Equities Corporation, ,quantify its

cost and identify the quantitative benefits from the spent cost. Interviews are carefully planned, and

areas for inquiries are developed into themes so as to come up with a structured interview. Any follow-

up questions were raised to the attention of the respondents.

Data Gathering Procedures

The study will require the researchers to understand social accounting: its concepts,

objectives and scope. Gathering of relevant information were made through research in books, journals,
websites and other reliable sources. After acquiring sufficient understanding about the identified topic,

the researchers need to understand the nature of JAKA Equities Corporation. Accordingly, information

from the previous research has been utilized for the preliminary understanding of the entity. In order to

compile and arrive at a more complete understanding of the data at hand, the researcher will set a

schedule for an interview with the CSR head and other assigned personnel of JAKA Equities

Corporation. As far as the tools used in data gathering is concerned, the researchers will prepare

interview questionnaires which will be used as a guide by the researchers through their interview,

follow-up questions were then added for the satisfaction of the objectives of the study.

Data Analysis

Based on the research conducted, relevant information were gathered that sets the direction

of the study. The four areas of CSR includes (1) Environmental efforts, (2) Philanthropy, (3) Ethical

labor practices, and (4) Volunteering. The communication of these four areas to the interested users is

called Social Accounting. The researchers will identify, evaluate, and quantify the cost and benefits of

the CSR initiatves of JAKA Equities Corporation. Therefore, this study aims not only to gather

qualitative information but also to quantify the CSR of the entity. Analytical procedures will then be

applied for the interpretation of data and present the relevant information of which conclusions will be

formulated.