the implementation of indonesia’s millennium …
TRANSCRIPT
THE IMPLEMENTATION OF INDONESIA’S MILLENNIUM DEVELOPMENT GOALS (MDGs) ON
ENVIRONMENTAL FIELD
CASE STUDY: THE SOCIETIES PERCEPTION TO PT. PUPUK SRIWIDJAJA PALEMBANG’S CORPORATE SOCIAL
RESPONSIBILITY (CSR) PROGRAM IN 2012
By
EZRA NUGRAHA
016200900015
A thesis presented to the
Faculty of Business and International Relations
President University
In partial fulfillment of the requirements for
Bachelor Degree in International Relations
President University
Cikarang – Bekasi
Indonesia
May 2013
i
THESIS ADVISER
RECOMMENDATION LETTER
This thesis entitled “THE IMPLEMENTATION OF
INDONESIA’S MILLENNIUM DEVELOPMENT GOALS
(MDGs) ON ENVIRONMENTAL FIELD, CASE STUDY: THE
SOCIETIES PERCEPTION TO PT. PUPUK SRIWIDJAJA
PALEMBANG’S CORPORATE SOCIAL RESPONSIBILITY (CSR)
PROGRAM IN 2012” prepared and submitted by Ezra Nugraha in
partial fulfillment of requirements for the degree of Bachelor in the
Faculty of Business and International Relations has been reviewed
and found to have satisfied the requirements for a thesis fit to be
examined. I therefore recommend this thesis for oral Defense.
Cikarang, Indonesia, May 30th 2013
Acknowledged by, Recommended by,
Prof. Anak Agung Banyu Perwita, Ph.D Dr. Munawar Fuad, M.Ag.
Head of IR Study Program Thesis Adviser
ii
PANEL OF EXAMINERS
APPROVAL SHEET
The Panel of Examiners declares that the thesis entitled “THE
IMPLEMENTATION OF INDONESIA’S MILLENNIUM
DEVELOPMENT GOALS (MDGs) ON ENVIRONMENTAL
FIELD, CASE STUDY: THE SOCIETIES PERCEPTION TO PT. PUPUK
SRIWIDJAJA PALEMBANG’S CORPORATE SOCIAL
RESPONSIBILITY (CSR) PROGRAM IN 2012” that was submitted by
Ezra Nugraha majoring in International Relations from the faculty of
Business and International Relations was assessed and approved to
have passed the Oral Examination on June 13rd 2013.
Prof. Anak Agung Banyu Perwita, Ph.D Chair – Panel of Examiners
Teuku Rezasyah, Ph.D. Examiner
Dr. Munawar Fuad, M.Ag. Adviser
iii
DECLARATION OF ORIGINALITY
I declare that this thesis, “THE IMPLEMENTATION OF
INDONESIA’S MILLENNIUM DEVELOPMENT GOALS
(MDGs) ON ENVIRONMENTAL FIELD, CASE STUDY: THE
SOCIETIES PERCEPTION TO PT. PUPUK SRIWIDJAJA
PALEMBANG’S CORPORATE SOCIAL RESPONSIBILITY (CSR)
PROGRAM IN 2012” is, to the best of my knowledge and belief, an
original piece of work that has not been submitted, either in whole or
in part, to another university to obtain a degree.
Cikarang, Indonesia, June 13rd 2013
Ezra Nugraha
iv
ABSTRACT
This research is about to analyze the societies perception to company
corporate social responsibility (CSR) program. The researcher found that it is
important to find out what societies perception is toward company social
responsibility (CSR) program. It is also important to be understood by the
company as the knowledge and information to improve their management and
create better quality of corporate social responsibility program that results the
benefit to all stakeholders not just waste fund on a useless program.
This research used the quantitative method with questionnaire as its
research instrument. The researcher used the linear regression analysis as the
model to analyze the variables in this research. Meanwhile, there are two kind
variables used in the research which are independent variable: society’s
perception (X) and dependent variable which is corporate social responsibility
program quality (Y). The writer used Statistical Program for Social Science
(SPSS) version 16.0 and Microsoft Excel 2007 to process the data, because SPSS
is the most popular and easiest program to process the statistic data. Microsoft
excel 2007 is used to support the SPSS as data provider. The research is
conducted in PT. Pupuk Sriwidjaja, Palembang.
The result of this research shows that societies have positive perception to
Corporate Social Responsibility Program in PT. Pupuk Sriwidjaja Palembang
which determined that the company has good quality of Corporate Society
Program (CSR) program which is proven by the Fvalue (3.858) is greater than Ftable
(2.775) with sig 0.053 less than alpha 0.1.
The next researchers who want to do further research related to this matter,
it is important to recognize and consider many others perceptions which give
influence to CSR program quality and manage the questionnaire distribution in
order to get good feedback on time.
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ABSTRAK
Riset ini menganalisa mengenai persepsi masyarakat terhadap program
corporate social responsibility (CSR) perusahaan. Peneliti menemukan
pentingnya mengetahui persepsi masyarakat terhadap program CSR sebuah
perusahaan. Penulisan ini juga penting untuk dimengerti oleh perusahaan sebagai
pengetahuan dan informasi untuk mengembangkan manajemen dan membentuk
kualitas program CSR yang lebih baik guna menghasilkan keuntungan bagi
seluruh stakeholders, tidak hanya menghabiskan dana untuk program tak berguna.
Riset ini menggunakan metode kuantitatif dengan kuesioner sebagai
instrumen pendukung riset ini. Peneliti menggunakan analisa linear regression
sebagai model untuk menganalisa berbagai variable pada riset ini. Sementara itu
ada dua macam variabel yang digunakan pada riset ini yang merupakan variabel
terpisah: persepsi masyarakat (X) dan variabel pendukung yaitu kualitas program
CSR (Y). Penulis menggunakan Statistical Program for Social Science (SPSS)
versi 16.0 dan Microsoft Excel 2007 dalam memproses data yang ada, karena
SPSS merupakan program yang paling popular dan mudah digunakan untuk
memproses data statistic. Microsoft Excel 2007 digunakan untuk mendukung
SPSS sebagai penyedia data. Riset ini dilakukan pada PT. Pupuk Sriwijaya
Palembang.
Hasil dari riset ini menunjukkan bahwa masyarakat memiliki persepsi
positif terhadap program CSR PT. Pupuk Sriwidjaja Palembang yang
menunjukkan bahwa perusahaan memiliki kualitas yang baik CSR program yang
dibuktikan oleh Fvalue (3.858) lebih besar dari Ftable (2.775) dengan sig 0.053
lebih kecil daripada alpha 0.1.
Peneliti selanjutnya yang ingin melakukan riset lebih lanjut terkait hal ini,
penting untuk mengetahui dan memperhitungkan persepsi-persepsi lainnya yang
memberikan pengaruh terhadap kualitas program CSR dan melakukan distribusi
kuesioner guna mendapatkan tanggapan yang baik tepat waktu.
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ACKNOWLEDGEMENT
I would like to thanks to Allah SWT who gives life to me so that I able to
finish this thesis, give me health and help in finishing this research. I also thanks
to my parents, Bastari Noviar and Mahlinar who pray, encourage, and support me
in finishing this research. I also not forget to thanks to my sisters and brother,
Fenny Oktavina, Puspita Merdekawati, and Bintang Tri Putra who also pray and
encourage me.
Then, I thank to my head of International Relations, Mr. Banyu and of
course to my advisor Mr. Munawar Fuad who help me by giving their knowledge
to finish my research. I also thank to all my lectures who have taught me much
knowledge in President University.
Thanks to my love, my best friends, at Palembang and also in university
who give me strength, encourage and support me in finishing this research.
Thanks to PT. Pupuk Sriwidjaja Palembang that gives permission and
support in doing this research, societies who lives around the company who
helped me by giving positive respond in fulfilling the questionnaires I gave.
Thanks to the pray and support.
Without their pray and support, I believe that it is impossible to finish this
research. I hope this research will give benefit to the readers.
Jakarta, May 30rd 2013
Ezra Nugraha
Researcher
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TABLE OF CONTENTS
THESIS ADVISER RECOMMENDATION LETTER .............. ....................... i
PANEL OF EXAMINERS APPROVAL SHEET .............................................. ii
DECLARATION OF ORIGINALITY ........................ ...................................... iii
ABSTRACT .......................................................................................................... iv
ABSTRAK .............................................................................................................. v
ACKNOWLEDGEMENT ................................................................................... vi
TABLES OF CONTENT .................................................................................... vii
LIST OF TABLES ................................................................................................. x
LIST OF FIGURES ............................................................................................. xi
LIST OF FORMULA ......................................................................................... xii
CHAPTERS
I. INTRODUCTION ........................................................................ 1-14
1.1. Background of Study .......................................................................... 1 1.2. Problem Identified .............................................................................. 7 1.3. Statement of Problem ......................................................................... 7 1.4. Research Objective ............................................................................. 8 1.5. Significance of Study .......................................................................... 8 1.6. Theoretical Framework ................................................................... 10 1.7. Scope and Limitation........................................................................ 11 1.8. Hypothesis ......................................................................................... 12 1.9. Definition of Terms ........................................................................... 12
II. LITERATURE REVIEW .......................................................... 15-47
2.1. Multi Track Diplomacy .................................................................... 15 2.1.1. Theory of Multi Track Diplomacy .................................................. 16 2.2. Economic Diplomacy ........................................................................ 19 2.2.1. The Dimensions of Economic Diplomacy ....................................... 21 2.2.2. Positive and Negative Economic Diplomacy .................................. 21 2.2.3. Cycle of Economic Diplomacy ......................................................... 22 2.2.4. Economic Diplomacy in International Relations ........................... 24 2.2.5. Economics’ Perspective on Economic Diplomacy ......................... 25
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2.3. National Company ............................................................................ 26 2.3.1. Definition of National Company ..................................................... 26 2.4. The Multi National Company .......................................................... 26 2.4.1. Definition of Multi National Company ........................................... 27 2.4.2. Multi National Corporations Come of Age .................................... 29 2.4.3. A Look At Present-Day Multi Nationals ........................................ 30 2.5. Millennium Development Goals (MDGs) ...................................... 31 2.6. Corporate Development ................................................................... 32 2.7. Corporate Social Responsibility ...................................................... 33 2.7.1. Definition of Corporate Social Responsibility ................................ 33 2.7.2. Company Perception toward Corporate Social Responsibility .... 35 2.7.3. Corporate Social Responsibility Theory......................................... 37 2.7.4. Benefits of Corporate Social Responsibility ................................... 39 2.7.4.1. Government ....................................................................................... 40 2.7.4.2. Local Community and Society ......................................................... 40 2.7.4.3. Corporation ....................................................................................... 40 2.7.4.4. The World and Environment .......................................................... 41 2.8. Perception .......................................................................................... 42 2.8.1. Definition of Perception ................................................................... 42 2.8.2. Factors Influence the Perception..................................................... 43 2.9. The Relationship between PT. Pupuk Sriwidjaja Palembang and
International Relations..................................................................... 46
III. RESEARCH METHODOLOGY .............................................. 48-73
3.1. Research Method .............................................................................. 48 3.2. Research Time and Place ................................................................. 60 3.3. Research Instrument ........................................................................ 61 3.3.1. Primary Data Collection .................................................................. 61 3.3.2. Secondary Data ................................................................................. 62 3.3.3. Population.......................................................................................... 62 3.3.4. Sampling ............................................................................................ 62 3.4. Testing the Hypothesis and Data Analysis ..................................... 64 3.4.1. Operational Definition and Variable Measurement ..................... 64 3.4.2. The Technique of Data Analysis...................................................... 66 3.4.2.1. Data Quality Test .............................................................................. 66 3.4.2.1.1. Validity Test ...................................................................................... 66 3.4.2.1.2. Reliability Test .................................................................................. 67 3.4.2.2. Descriptive Statistic .......................................................................... 68 3.4.3. Normality Test .................................................................................. 68 3.4.4. Hypothesis Test ................................................................................. 68 3.4.4.1. Coefficient Simultaneously Correlation Analysis (FTest) ............... 69
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3.5. Data Result of Validity and Reliability Testing ............................. 70 3.5.1. Validity Test Result .......................................................................... 70 3.5.2. Reliability Test Result ...................................................................... 72
IV. ANALYSIS AND INTERPRETATION ................................... 74-82
4.1. Interpretation of Demographic Respondent .................................. 74 4.1.1. Gender ............................................................................................... 75 4.1.2. Age...................................................................................................... 75 4.1.3. Education ........................................................................................... 76 4.2. Descriptive Statistic .......................................................................... 76 4.3. Interpretation of Data Normality Test ........................................... 77 4.4. Interpretation of Hypothesis Test ................................................... 78 4.4.1. Model Evaluation .............................................................................. 78 4.4.2. Regression Model Summary ............................................................ 80 4.4.3. Interpretation of F test ........................................................................ 81
V. CONCLUSIONS AND RECOMMENDATIONS ................... 83-84
5.1. Conclusions........................................................................................ 83 5.2. Recommendations ............................................................................. 84
LIST OF REFERENCES .................................................................................... 85
APPENDICES ...................................................................................................... 93
x
LIST OF TABLES
Table 3.1 6-Point Likert Scales .................................................................... 61
Table 3.2 Independent and Dependent Variable ....................................... 66
Table 3.3 Pearson’s r-table........................................................................... 70
Table 3.4 Validity Test Result ...................................................................... 71
Table 3.5 Reliability Degree Table .............................................................. 72
Table 3.6 Reliability Test Result .................................................................. 72
Table 4.1 Respondents’ Gender Profile ...................................................... 75
Table 4.2 Respondents’ Age Profile ............................................................ 75
Table 4.3 Respondents’ Education Profile.................................................. 76
Table 4.4 Descriptive Statistic Variable ...................................................... 76
Table 4.5 Coefficient Societies Perception to Company Corporate Social Responsibility Program Quality ................................................. 78
Table 4.6 Model Summary ........................................................................... 80
Table 4.7 ANOVA Table Result–Societies Perception (X) to Company Corporate Social Responsibility Program Quality (Y) ............. 81
xi
LIST OF FIGURES
Figure 1.1 Theoretical Frameworks ............................................................. 10
Figure 3.1 Data Table in Microsoft Excel 2007 ........................................... 49
Figure 3.2 Page of Variable View in SPSS Program ................................... 50
Figure 3.3 Page of Data View in SPSS Program ......................................... 51
Figure 3.4 The Result of Creating Variable in Variable View in SPSS Program ........................................................................................ 52
Figure 3.5 Input Data Result in Data View in SPSS Program ................... 52
Figure 3.6 Validity Test Steps in SPSS Program ......................................... 53
Figure 3.7 Bivariate Correlation Dialog Box ............................................... 53
Figure 3.8 Reliability Test Steps in SPSS Program ..................................... 54
Figure 3.9 Reliability Analysis Dialog Box ................................................... 55
Figure 3.10 Descriptive Statistic Analysis Steps in SPSS Program ............. 56
Figure 3.11 Descriptive Dialog Box ................................................................. 56
Figure 3.12 Descriptive Option Setting .......................................................... 57
Figure 3.13 Linear Regression Steps in SPSS Program ................................ 58
Figure 3.14 Linear Regression Dialog Box Setting ........................................ 59
Figure 3.15 Linear Regression Plot Setting .................................................... 59
Figure 3.16 Linear Regression Statistic Setting ............................................. 60
Figure 4.1 Normal P-P Plot Standardized Residual Societies Perception Risk to Company Corporate Social Responsibility Program Quality ........................................................................................... 77
Figure 4.2 Regression Standardized Residual ............................................. 79
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LIST OF FORMULA
Formula 3.1 Slovin Sampling ............................................................................ 63
Formula 3.2 Bivariate Pearson ......................................................................... 66
Formula 3.3 Cronbach’s Alpha ........................................................................ 67
Formula 3.4 Linear Regression ........................................................................ 68
Formula 3.5 FTest ................................................................................................ 69
1
CHAPTER I
INTRODUCTION
`
1.1. Background of the Study
There are many ways in doing diplomacy. People used to call it as multi
track diplomacy. Multi track diplomacy is characterized by a broader approach to
the role of diplomacy, based on the involvement of actors beyond the state,
including civil society.1 The multi track diplomacy is result of the growing number
of internationally active, well connected and increasingly influential non state
actors.2 One of multi track diplomacy, there will be an economic diplomacy that is
defined as Economic diplomacy is a significant part of a much larger set of
international arrangement that breed trust between nations.3 Economic diplomacy
is clearly not just about narrow economic and commercial interest. Rather, it
involves broad national interests that include political and strategic as well as
economic dimensions.4
There are two types of company that run their business which give
influences to social, politic, economy, and culture at Indonesia, there are Multi
National Company (MNC) and National Company (NC). National Company (NC)
is autonomous in its national environment; it acts in the national market with its
own market and production rules. At the same time, it must be able to interact
with others National Company (NC) to exchange materials, personnel,
1 D. Wehrenfennig, ‘Multi Track Diplomacy and Human Security ‘, Human Security Journal 7 (2008), 80. 2 W.Benedek, “The Emerging Global Civil Society: Achievements and Prospects’ in V.Rittberger and M. Nettesheim (eds), Authority in the Global Political Economy (Houndsmills/ New York: Palgrave Macmillan, 2008), pp.170-85. 3 See, for example, A. Rose and M. Spiegel, ‘ International Environmental Arrangements and International Commerce’ in: P.A.G. van Bergejik and S. Brakman (eds.) The Gravity Model in International Trade (New York: Cambridge University Press, 2010), pp. 255-277. 4 A.O. Hirchman , National Power and the Structure of Foreign Trade, expanded edition (Los Angeles, CA: University of California Press, 1980, first published 1945); and D.A. Baldwin, Economic Statecraft (Princeton, NJ: Princeton University Press, 1985).
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knowledge, etc. The National Company (NC) is also governed by the rules and
norms of the Multinational for its international relations (other National
Company) (Paolo Giorgini, Jorg. P. Muller, James Odell, 2004, p.28).
Multi National Company (MNC) is an enterprise (1) that comprises
entities in two or more countries regardless and fields of activity, (2) which
operates under a system of decision making permitting coherent policies and
common strategy through one or more decision making centres, and (3) in which
entities are so linked, by ownership or otherwise, that one or more of them may be
able to exercise a significant influence over activities of the other to share
knowledge, resources, and responsibilities (emphasis added by the author)
(Baumuellir, 2007, p.38).
The multinational corporation (MNC) has become an integral part of
international economic circumstances itself. Since MNC is part of the actor within
economic process throughout worldwide, Dougherty and Pfaltzgraff (2001) stated
that MNC could not be separated from international political economy.5
MNC and NC have growing fast, and most of the Multinational Company
was conducting Corporate Social Responsibility (CSR). Impact caused by the
MNC and NC for the current conditions of the world strengthen by the presence
of CSR which become such a bridge to achieve the MDGs. The roles of MNC and
NC and its CSR not only impact to economic sector but also to another sector
such as human rights, labour, environment.
Synchronized with the Corporate Social Responsibility, in the
international affairs there are terminology called Millennium Development Goals
(MDGs). The Millennium Development Goals (MDGs) is a good will to create a
better world and equal prosperity. The MDGs are a set of internationally agreed,
time-bound goals and targets for improvements in human development by 2015.
As we have seen, the focus is on the following eight goals: (1) eradicate extreme
poverty and hunger, (2) achieve universal primary education, (3) promote gender
5 Dougherty, J. E., & Pfaltzgraff Junior, R. L. (2001). Contending Theories of International Relations- a Comprehensive Survey. New york: Addison Wesley Longman. p. 416.
3
equality and empower women, (4) reduce child mortality, (5) improve maternal
health, (6) combat HIV/AIDS, Malaria, and other diseases, (7) ensure
environmental sustainability, and (8) develop a global partnership for
development.6
UN has supported by many others organizations called UN Partners on
MDGs to monitors the Millennium Development Goals is conducted properly,
they are: United Nations Development Programme (UNDP), Millennium
Campaign, UN Department of Economic &Social Affairs, World Bank
(UNDESA), UN Children’s Fund (UNICEF), UN Environment Programme
(UNEP), UN Population Fund (UNFPA), World Health Organization (WHO),
International Monetary Fund (IMF), UN Human Settlements Programme (UN-
HABITAT), Food & Agriculture Organization (FAO), International Fund for
Agricultural Development (IFAD), International Labour Organization (ILO),
International Telecommunication Unions (ITU), Join UN Programme on
HIV/AIDS (UNAIDS), UN Conference on Trade and Development (UNCTAD),
UN Development Group (UNDG), UN Educational, Scientific and Cultural
Organization (UNESCO), UN Human Commissioner on Refugees (UNHCR), UN
Industrial Development Organization (UNIDO), UN Entity for Gender Equality
and the Empowerment of Women (UN Women), Office of the high Commissioner
of Human Rights (ONHCR), UN Relief on Work Agency for Palestine Refugees
in the Near East (UNRWA), World Food Programme (WFP), World
Meteorological Organizational (WMO), World Trade Organization (WTO),
World Tourism Organization (UNWTO), and UN Office on Sport for
Development and Peace (UNOSDP).7
Corporate Social Responsibility (CSR) is a responsible owned by
company to maintain a good relationship and give contribution to the life quality
improvement, the continuity of society development, and local economic so that
6 Nwonwu, Francis. 2008. The Millennium Developments Goals Achievements and Prospect of Meeting the Targets in Africa. Africa Institute: South Africa 7 Nurfajri, Dendia. 2013. The success of PT. Trakindo Utama Corporate Social Responsibility Program in Supporting Indonesia’s Millennium Development Goals and The Principles of Indonesia Global Compact Network (2010-2012).
4
will give contribution to the continuity of company. Corporate Social
Responsibility (CSR) program is a program done to support the company
responsibility in maintains a good relationship and give contribution to the life
quality improvement, the continuity of society development, and local economic.
Corporate Social Responsibility (CSR) has been implementing in
developed country. As one of developing countries in the world, Indonesia,
especially companies in Indonesia are starting to aware of the importance in
having good Corporate Social Responsibility (CSR). Society demands, democracy
development, and high development of globalization and free market also raise an
awareness of industrial world about the importance in doing the CSR, including
State-Owned Enterprise (SOE). SOE as a corporation have been required to give a
real contribution to the society, ruled in article 88 UU RI No. 19 year 2003 stated
that SOE can save some profit for needs of small businesses and community
development around the location of the company.8
Based on Timotheus Lesmana (2007), Head of Corporate Compliance &
Governance at Asia Pulp & Paper (APP) Group and Managing Partner at PT.
Aicon Global Indonesia, the society and politic condition that keep developing in
Indonesia such as local autonomy, population increasing, and awareness
increasing in environment management, result a new paradigm in construction
from economic growth to continuity growth.9 Industrial sector as one of
Indonesia developmental motivator should contribute in its environment so that
the company becomes good company with Company Social Responsibility (CSR)
formulation and implementation.
Consumer, investor, supplier, society and other stakeholders are proven to
support the company which responsible with social, so increase the market
opportunities and its competitive advantages. Those strength shows that the
company which implement CSR will have better performance and increasing
profit and growth.
8 PT. Pupuk Sriwidjaja. Annual Report. Available at www.pusri.co.id. 2011. 9 Lesmana. T. Program CSR yang Berkelanjutan. Available at: www.csrindonesia.com. 2007
5
Based on Wibisono (2007), the implementations of CSR Programs really
depend on way each company in defining the meaning or company motivation in
fulfil their social responsibility. In fact, there are companies which define the CSR
Program only from economic perspective, so that the programs are done as a
program that just spend company budget. However, there are also companies who
defined the CSR Programs from good perspective which implement the program
with societies orientated as a program that able to interest and build the
sympathetic from investor, societies, and other parties related to the company
business.
PT. Pupuk Sriwidjaja Palembang is a Stated-Owned Enterprises which
runs in fertilizer production and marketing. It is one of the biggest companies in
Palembang even in Indonesia. PT. Pupuk Sriwidjaja is centred in Palembang,
South Sumatera. In Palembang, South Sumatera, besides owning a manufacturing
that is used to produce and as a headquarter to market the product, PT. Pupuk
Sriwidjaja Palembang is also owning houses for employees as one of facilities
given by the company to the employees, which is located around the
manufacturing and main office. As a fertilizer production place, PT. Pupuk
Sriwidjaja not only produces fertilizer but also produce waste which is ammonia.
As a big company, PT. Pupuk Sriwidjaja has Corporate Social Responsibility
(CSR) program to keep and maintain the environment balance around the
manufacturing including employees housing.
Corporate Social Responsibility is a very important part for PT. Pupuk
Sriwidjaja Palembang, which in it there is Community Development Program
which is part of PKBL (Partnership Program and Community Development).
PKBL is under the General Manager of Human Resources which responsible to
Human Resources and General Director. In general, the PKBL program is divided
into two major programs; they are the Partnership Program and Community
Development Program. Partnership program related to micro-economic
development while the Community Development Program includes assistance for
6
natural disasters, education/training, health promotion, infrastructure/public
facilities, religious facilities, and environmental conservation.10
Community Development Program is an empowerment program of
community social conditions in the business area of each subsidiary in the form of
assistance in improving the quality of the environment in surrounding the
company operates. Through the Community Development Program is expected
that the surrounding community to gain positive impact from the Company's
existence. Community Development Program is a fund grant that is channelled
and does not need to be returned by the recipient. This research focused on the
Community Development Program in environmental conservation.
In environmental area for 2012, PT. Pupuk Sriwidjaja Palembang has
involved in a government program named One Billion Indonesia Trees (OBIT)
based on Forestry Ministerial Regulation Republic of Indonesia No: P.
21/Menhut-II/2010 about OBIT guidance.11 PT Pupuk Sriwidjaja Palembang
succeeded in planting 13.400 trees and fruits and planting 2.134 trees and fruits in
the vicinity of the company, collaboration with elementary school, junior high
school, senior high school, university, AJENDAM II Sriwidjaja, guided village,
environmentally friendly village, and other government institutions.12
The researcher would like to evaluate society’s perception of the
Corporate Social Responsibility (CSR) program at PT. Pupuk Sriwidjaja
Palembang especially in Community Development Program, which is
environmental conservation that is implemented in OBIT program. The perception
will indirectly assess the quality of the company’s CSR Program. Based on that
purpose, the researcher decided to do research title “The Implementation of
Indonesia’s Millennium Development Goals (MDGs) on Environmental Field
Case Study: The Societies Perception to PT. Pupuk Sriwidjaja Palembang’s
Corporate Social Responsibility (CSR) Program in 2012”.
10 PT. Pupuk Sriwidjaja. Annual Report. Available at www.pusri.co.id. 2011. 11 www.dephut.go.id. 2009. Accessed on June 19th 2013. 12 PT. Pupuk Sriwidjaja. Annual Report. Available at www.pusri.co.id. 2012.
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1.2. Problems Identified
Companies need to build Corporate Social Responsibility (CSR) program
which have high quality to maintain good social relationship with societies who
life around the company. The succeed of Company Corporate Social
Responsibility (CSR) program can be determined based on the societies are living
around the company and directly feel the impact of the Corporate Social
Responsibility (CSR) program. Knowing the perception from the societies will be
one of the references in assessing the quality of CSR program that has been
implemented. In this case the researcher focuses on environmental because the
company which become the research object is a company that produce waste in its
process of produce its main product. The waste can pollute the environmental and
the societies who lived around company are the one who will feel the impact
most. In addition, the company will more focus on developing CSR program to
overcome the environmental problem.
1.3. Statement of the Problems
This research is about determining one of the point of economic
diplomacy related to implementation of Millennium Development Goals (MDGs)
on environmental field that focus on perception of societies to the Company
Corporate Social Responsibility (CSR) at PT. Pupuk Sriwidjaja Palembang
located in Palembang, South Sumatera because the researcher wants to find out
the succeed of CSR Program at PT. Pupuk Sriwidjaja Palembang based on
societies point of view so that the company can decide to keep continue, improve,
or even discontinue the program.
Thus this research focuses on the matters of:
“Do the societies have positive perception to Corporate Social Responsibility
(CSR) program related to Environmental Field?”
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1.4. Research Objectives
The objectives of this research are to find out the societies perception to
CSR Program of PT. Pupuk Sriwidjaja which is One Billion Indonesia Trees
(OBIT) program.
1.5. Significances of the Study
This research analyzes on the societies perception to Corporate Social
Responsibility (CSR) program. This research expected to give the following
benefits:
1. To Academic Community
This research will give knowledge on Company Corporate Social
Responsibility (CSR) Program, its implementation and the perception
of societies the CSR Program Implementation. It will also contribute to
the literature development related to Corporate Social Responsibility.
2. To the Company
This research will give contribution in assessing the quality of
company’s Corporate Social Responsibility Program based on societies
who life around the company / factory perceptions. The company have
to take care of the quality of their CSR Program so that the program
will success and get good perception from societies so that they are not
wasting their time and cost in a CSR Program which is not giving any
good impact to the program target.
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3. To the Writer
This research will help the researcher to understand more about the
corporate social responsibility, its implementation, and the society’s
perception of it.
4. To the Government
This research will help the government in create good image that is
shown by the company’s (State-Owned Enterprise) awareness to the societies
environment specially who live around it.
5. To the Diplomacy
This research will contribution in building the relationship between
the company, societies, and government that is created by good Corporate Social
Responsibility (CSR).
10
1.6. Theoretical Framework
Figure 1.1 Theoretical Frameworks
Source: Self-constructed by the researcher
11
Based on Figure 1.1 Theoretical Framework, multi track diplomacy that
was introduce by John McDonald and Louise Diamond is characterized by a
broader approach to the role of diplomacy, based on the involvement of actors
beyond the states, including civil society.13 One of multi track diplomacy kind is
economic diplomacy which is a significant part of much larger set of international
arrangement that breed trust between nations.14 Economic diplomacy is
implemented by both Multi National Company and National Company to
approach target. There are eight targets that includes in Millennium Development
Goals (MDGs) for developing countries and not developed countries to achieve
prosperity of world community. One of the targets which are being a research
focus is ensure environment sustainability. As National Company in Indonesia
(developing country), PT. Pupuk Sriwidjaja Palembang has program to in term of
corporate development that related to corporate social responsibility. In order to
know the quality of the program (CSR program), one of factor that should be
considered is a stakeholders perception. The researcher focused on society’s
perception in determined the CSR program quality. It is because the societies is
the one who feel the impact of CSR program directly implemented by the
company, thus societies perception become important in determining the success
of CSR program
1.7. Scope and Limitations of the Study
This research is limited to analyze the society’s perception to corporate
social responsibility program in year 2012 of PT. Pupuk Sriwidjaja Palembang,
South Sumatera which is One Billion Indonesia Trees (OBIT) program.
13 D. Wehrenfennig, ‘Multi Track Diplomacy and Human Security ‘, Human Security Journal 7 (2008), 80. 14 A. Rose and M. Spiegel, ‘ International Environmental Arrangements and International Commerce’ in: P.A.G. van Bergejik and S. Brakman (eds.) The Gravity Model in International Trade (New York: Cambridge University Press, 2010), pp. 255-277.
12
1.8. Hypothesis
Based on the theoretical framework, the hypotheses for the research are
societies have good perception to Corporate Social Responsibility Program in
PT.Pupuk Sriwidjaja Palembang which determined that the company has good
quality of Corporate Society Responsibility (CSR) program in year 2012.
1.9. Definition of Terms
Corporate Development: The management of the corporate portfolio with the
toolsets of strategic management (Grant, 2005, in Bezjak. Frank p.477 ).
Corporate Social Responsibility (CSR): The continuing commitment by
business to behave ethnically and contribute to economic development while
improving the quality of life of the workforce and their families as well as of the
local community and society at large (WBCSD, 2011 cited in Laura Nordmann).
Corporate Social Responsibility (CSR) Program: Company or business world
commitment to contribute in continuity economic development by paying
attention to social responsibility and pressuring on the balance of economic,
social, and environment aspect (Putri in Untung, 2008).
Economic Diplomacy: The specific region of contemporary diplomatic activity,
connected with the use of economic problems as object and means of combating
and collaborating the international relations. Economic diplomacy, as diplomacy
is, generally, the component part of foreign policy, international activity of states;
specifically, foreign policy determines purposes and tasks of economic
diplomacy, which is the totality of measures, forms, means and methods, utilized
for realizing of foreign policy (Brief Foreign Economic Dictionary in
UKessays.co.uk, 2011).
13
Millennium Development Goals (MDGs): Set of eight goals for which 18
numerical targets have been set and over 40 quantifiable indicators have been
identified. The goals are as follows: (1) eradicate extreme poverty and hunger, (2)
achieve universal primary education, (3) promote gender equality and empower
women, (4) reduce child mortality, (5) improve maternal health, (6) combat
HIV/AIDS, Malaria, and other diseases, (7) ensure environmental sustainability,
and (8) develop a global partnership for development (Hopkins, M., 2007).
Multinational Company: One that is structured so that business is conducted or
ownership is held across a number of countries, or one that organized into global
product divisions (Ajami, R.A., Karel, C. G.Jason, G., Dara, K., 2006).
Multi Track Diplomacy: A term for operating on several tracks simultaneously,
including official and unofficial conflict resolution efforts, citizen and scientific
exchanges, international business negotiations, international cultural and athletic
activities, and other cooperative efforts. These efforts could be led by
governments, professional organizations, businesses, churches, media, private
citizens, training and educational institutes, activists, and funders. (Unite State
Institute of Peace, Glossary of Terms for Conflict Management and Peace
Building, 2011).
National Company: Business entity organized under the laws of a country
(Suherman, S.A., 2010) that is at least 51% of capital is owned by the state and/or
national private (Judisseno, R.J., 2005).
Societies: Socially constructed through human interpretation (Berger and
Luckmann 1967; Blummer, 1969, Shibutani, 1961 in Margaret L Andersen &
Howard F Taylor, 2008).
Perception: A cognition which arises from a contact between sense and object,
cannot be designated (by words), is no erroneous, (and) has the nature of
determination (Eli Franco, 1994).
14
State-owned Enterprise: A company which whole or partial of its share owned
by the state through direct participates or state wealth that separated (UU Republic
of Indonesia No. 19 year 2003 related to State-owned Enterprise, available at
www.bumn.go.id).
15
CHAPTER II
LITERATURE REVIEW
2.1. Multi Track Diplomacy
The idea of multi track diplomacy was introduced by John McDonald and
Louise Diamond. It aims to convey the sense that there are many ways to bring
people together in addition to official negotiations. In their definition, nine tracks
are used rather than two or three. The content of the nine tracks are more or less
the same as what is today covered by the terms Track 1, 1.5, 2, and 3 diplomacy
(Diamond and McDonald,1996).
One of the underlying ideas behind track 2 diplomacy is that peace needs
to be built from below and not only from the top down. Another key featured is
that track 2 allows the involved people who often are influential second-level
leaders and civil society actors to interact more freely but, at the same time, be in
position to have influence on their leadership (the track 1 level) as well as in their
own communities. The value of such unofficial and informal contacts between the
parties is that they can potentially de-escalate a conflict before any official
negotiations can do so, or work as a parallel forum where the parties can explore
options without taking an official stand. They can also work in close collaboration
with track 1, working as a support structure and test laboratory for track 1, where
the ability to create new ideas and innovations are often limited. This is something
that is common in East Asia as will be discussed below. Track 2 activities also
have a socializing function in building bridges between people, building
confidence, increasing trust, correcting misperceptions, helping to change the
attitudes to the other, and fostering mutual understanding. It is a way to improve
communication, to open channels of communication in the first place, and to help
change the perception of the conflict. It is also a good way to strengthen the
16
voices of moderation and to develop social networks among the moderates on the
different sides.15
2.1.1. Theory of Multi Track Diplomacy
Multi Track Diplomacy is characterised by a broader approach to the role
of diplomacy, based on the involvement of actors beyond the state, including civil
society.16 The trend towards multi track diplomacy is the result of the growing
number of internationally active, well-connected and increasingly influential non-
state actors.17 It is based on the experience that non-state actors can play an
important role in the resolution of conflicts in different fields, in particular in the
area of human rights.
Where traditional diplomacy is conceived by diplomatic officials and
conducted top-down, multi track diplomacy argues for a bottom-up approach that
first searches to identify the human needs of the population to be targeted by a
diplomatic measure. This focus on people and the bottom-up approach to
diplomacy, which often includes main streaming human rights and gender issues
into traditionally politic-diplomatic spheres,18 has also contributed to the fact that
multi track diplomacy is often called ‘human diplomacy’.19 There are also large
conceptual overlaps with the approach of ‘public diplomacy’ that focuses on the
involvement of non-official actors.20 While space does not permit to enter into a
15Bercovitch, J. Kwei B.H., Chung-Chien.T. 2008. Conflict Management, Security, and Intervention in East Asia – Third Party Mediation in Regional Conflict. Taylor and Francis e-Library: Canada. 16 See D. Wehrenfenning, ‘Multi-Track Diplomacy and Security’, Human Security Journal 7 (2008), 80. 17 See W. Benedek, ‘The Emerging Global Civil Society: Achievements and Prospects’ in V.Rittberger and M. Nettesheim (eds.), Authority in the Global Political Economy (Houndsmills/New York: Palgrave Macmillan, 2008), pp. 170-85. 18 See W. Benedek, M. C. Kettemann and M. Mostl (eds.), mainstreaming Human Security in Peace Operations and Crisis Management. Policies, Problems, Potential (London: Routledge, 2010). 19 Compare C. M. Constantinou, Human Diplomacy and Spirituality, Discussion Papers in Diplomacy, 2006, available at: http://www.clingendael.nl/publications/2006/20060400_cli_paper_dip_issue103.pdf 20 See J. M. Wallner (eds.), The Public Diplomacy Reader (Washington: Institute of World Politics Press, 2007), available online at: http://goo.gl/iHZa2
17
conceptual discussion, all these approaches share a new and broader conception of
democracy and promote a more inclusive approach towards stakeholders. This
allows multi track diplomacy to answer more directly to the diplomatic challenges
faced by a world of changing power differentials and emerging actors.21 Among
these emerging actors that multi track diplomacy seek to involve are academics,
civil society organizations, the media and parliamentarians.
Diplomats have to take the interest of their states into account and, in a
similar way, officials of international organization are also limited by the
mandate, power and purposes of their institutions. In meetings, this is often
reflected in the typical opening sentence of participants: ‘I am speaking in my
personal capacity’. Academics are usually more committed to better
understanding a matter, if not the famous ‘search for the truth’, but they might be
quite ‘undiplomatic’ when it comes to a situation which requires a more careful
approach. Non-governmental organizations (NGOs), on the other hand, usually
have an element of advocacy in their work, which strengthens and limits their role
at the same time. There is strong evidence that including more actors in
diplomatic endeavours leads to more sustainable result;22 their inclusion does not,
however, per se guarantee a self-interest-free diplomacy.
Exclusively relying on non-state actors approaches to diplomacy is
problematic: The results reached in purely academic environments, for instance,
are unofficial and non-binding. States are still needed to implement them. Thus,
academic multi track diplomats have to develop solutions with an eye to the
realities on the ground.
21 See I. Diamond and J.McDonald, Multi-Track Diplomacy: A System Approach to Peace (Sterling, VA: Kumarian Press, 1996). 22 H. Saunders, A Public Peace Process: Sustained Dialogue to Transform Racial and Ethnical Conflicts (New York: St. Martin’s Press, 1999).
18
The media can also play a useful role in informing about and sometimes
amplifying concerns, but there is the problem of generalization and
exaggeration.23 There have been cases where the media has contributed to the
causes of conflict and undermined holistic diplomatic solutions.
What is often missing in traditional approaches to diplomacy is the
involvement of parliamentarians, who, like in the case of the European
Parliament, can play an important role to enhance the democratic legitimacy of
diplomatic solutions to conflicts. There are parliamentary assemblies of the
Council of Europe and even of the North Atlantic Treaty Organization (NATO) or
the Cotonou Agreement, but there is no parliamentary body on the level of the
United Nations (UN). This has to be considered as an important gap. The Inter-
Parliamentary Union in Geneva cannot compensate for this fact.24
A multi track approach has the advantage of involving more public actors,
which can give additional support to human rights diplomacy and increase public
interest. The approach can also ensure a more objective and realistic debate. This
recognition is reflected in the fact that the European Union (EU) has supported the
invitation of NGOs to a number of international conferences in order to take
views from the ground into account, and push the diplomatic process towards
becoming more inclusive. The Vienna World Conference on Human Rights in
1993 exemplified this inclusive approach, which has since become a general
practice.25
Similar to the concept of multi track diplomacy, the multi-stakeholders
approach aims to involve all relevant stakeholder approach has successfully been
used with regard to the governance of the information society, in the context of
post-conflict situations, for the solution of environmental problems and in
particular regarding the promotion and protection of human rights. The inclusivity
23E. Gilboa. ‘Media Diplomacy’ in W. Donsbach (ed.), The International Encyclopedia of Communication (London: Blackwell, 2008). 24On the Inter-Parliamentary Union see: www.ipu.org 25O’Flahery. M., Zdzislaw, K., Amrey M., George U. Human Right Diplomacy: Contempory Perspective. Martinus Nijhoff Publisher: Venice. 2009.
19
of multi-stakeholder approaches generates legitimacy and increases the
effectiveness of the measures taken.26
2.2. Economic Diplomacy
It is time to take stock of new insight at the interface of international
economics, politics, and diplomacy, and that complementary academic
perspective from the disciplines of economics and politics that can enrich the
study of diplomacy. Economic diplomacy is a significant part of a much larger set
of international arrangement that breed trust between nations.27 Moreover,
positive non-economic spillover effects from economic diplomacy may emerge in
the field of high politics. The liberal peace school of thought relates increasing
bilateral trade and investment to a reduced escalation of conflict among states.28
Such external effects are important for economist, since they help them in
providing theoretical justifications for government intervention. These effects are
equally important for political scientist, because of the implication that the ‘low’
politics of economic and commercial diplomacy, which have long been frowned
upon in diplomatic circles, are inseparable from global politics relations.
Historically, economic diplomacy has had a large role to play in the
context of shifting power balances.29 Governments are more likely to employ
economic tools in the pursuit of foreign policy interest when the legitimacy and
power of existing structures of international cooperation decrease. Furthermore,
perceptions of weakening adherence to multilateral rules make bilateral policies
more attractive. The reconfiguration of geo-economic power encourages
26 Ibid, p.254. 27 See, for example, A. Rose and M. Spiegel, ‘ International Environmental Arrangements and International Commerce’ in: P.A.G. van Bergejik and S. Brakman (eds.) The Gravity Model in International Trade (New York: Cambridge University Press, 2010), pp. 255-277. 28 See the review of the literature on the liberal peace model in the article by H. Dorussen, S,M. Murshed and H. Ward. ‘Any Ties That Bind? Economic Diplomacy on the South Asian Subcontinent’, The Hague Journal of Diplomacy, vol.6, nos. 1-2. 2011, 149-169, this issue. 29 See R. Collsaet, ‘Historical Patterns in Economic Diplomacy: The 1990s Renaissance of a Disregarded Aspect of Diplomacy’, paper presented at the conference ‘ Economic Diplomacy Beyond 2010: Geo-Economic Challenges of Globalization and Economic Security’, Clingendael Institute, The Hague, 2009.
20
governments all over the world to reassess the effectiveness and appropriateness
of their national and foreign policies, including those at the interface of
international politics and economics (as has been observed the past decade). This
is particularly true for the instrument of economic diplomacy. The changes spur
new thinking, such as on the role of commercial diplomats who are active in the
field of trade and investment promotion.30 A larger role for the state in
international economics is seen as a necessary condition for success, not least
because the new economic powers are typically characterized by a much stronger
influence of the state in the domestic private sector. This stands in sharp contrast
to (the ideal of) the public-private separations that is seen in most Western
countries. Cultural and/or historic reasons may in turn explain why trade partners
in the emerging economies expect state involvement from the side of their foreign
trade and investment partners. Because of its importance as an emerging
economic, political and military power the example of China nowadays receives
most attention from both scholars and practitioner. China’s policies and strategy
are addressed by several authors in this special issue of The Hague Journal of
Diplomacy.31
Regional integration, especially in Europe, limits the scope and influence
of individual member states in the international institutions, as well as restricting
the policy space for economic policy instrument. This actually leaves much scope.
30 See the article by O. Naray, ‘Commercial Diplomats in the Context of International Business’, The Hague Journal of Diplomacy, vol.6, nos. 1-2, 2011, 121-148. 31 See the articles by A. de Haan, ‘ Development Cooperation as Economic Diplomacy’, The Hague Journal of Diplomacy, vol. 6, nos. 1-2, 2011, 203-217.
21
2.2.1. The Dimensions of Economic Diplomacy
Economic diplomacy is clearly not just about narrow economic and
commercial interest. Rather, it involves broad national interests that include
political and strategic as well as economic dimensions.32 It is true that
conceptualizing economic diplomacy is by no means easy. While some of the
authors deliberately try to narrow down the object of their investigations, this
appears to be for essentially practical purposes, such as when a strict definition is
necessary in order to make the concept measurable. By no means does such
delimitation, however, imply that the authors neglect the multidimensional nature
of the phenomenon, which in our view requires the multidisciplinary approach to
which this special issue testifies. Economic diplomacy is neither limited to the
economic domain nor to that of diplomacy; comparative cultural, historical and
organizational aspects are also drivers of the direction and success of the
economic diplomatic activities. The better that economic diplomacy bridges these
differences between countries, the more effective and successful it appears to be.33
2.2.2. Positive and Negative Economic Diplomacy
Governments design and pursue economic diplomacy with the aim of
promoting national economic welfare and security. Economic diplomacy is thus
part of and at the same time an instrument of foreign policy, concerned with
(decision making) processes and the employment of political-economic
instruments. The body of knowledge about commercial and other strands of
economic diplomacy has a curious but rarely noted aspect, namely its bias with
respect to positive and negative interactions, respectively.34 The empirical
evidence that is produced by economists working on the use and impact of
32 A.O. Hirschman, National Power and the Structure of Foreign Trade, expanded edition (Los Angeles, CA: University of California Press, 1980, first published 1945). 33 Peter A.G. van Bergeijk, Maaike Okano-Heijmans, Jan Melissen. Economic Diplomacy – Economic and Political Perspective. Martinus Nijhoff Publisher: Venice. 2011. 34 P.A.G, van Bergeijk, Economic Diplomacy and the Geography of International Trade (Cheltenham: Edward Elgar, 2009), chapter 8.
22
diplomatic exchange in the post 1990 global trade system is mainly limited to the
trade and investment impacts of positive diplomatic exchanges, and in particular
the diplomatic and commercial in infrasturcutres.35 Interestingly, international
economic exchange in its turn has a beneficial impact in the realm of politics,36
even when these economic exchanges take place indirectly, as is argued for the
relationships between India and Pakistan.37 In contrast, the empirical evidence on
the use of economics relationships as a tool to achieve foreign policy goals is by
and large limited to the use of negative sanctions,38 while we know little about the
determinants of failure and the success of positive sanctions.39 Notwithstanding
the bulk of literature on development aid in the fields of political science and
regional studies, it is said that development aid has a large political component
that is often neglected in the international debate about the economic effectiveness
of financial and technical support to other countries.40
2.2.3. Cycle of Economic Diplomacy
To say that economic diplomacy received little attention in IR studies until
recently is, of course, not to argue that is a new phenomenon. Economic
diplomacy was a tool in foreign relations ling before the establishment of the
institutions that have become part and parcel of foreign policy and diplomacy
practised by states today. Governments’ (relative) attention for economic
diplomacy tends to be cyclical, however, and relates to power shifts domestically
35 See A. Rose, ‘The Foreign Service and Foreign Trade: Embassies as Export Promotion’, The World Economy, vol. 30, no. 1, 2007, pp. 22-38. 36 S.W. Polaachek and C. Seiglie, ‘Trade, Peace and Democracy: An Analysis of Dyadic Dispute’, in T. Sandler and K. Hartley (eds.), Handbook of Defense Economics: Defense in a Globalized World (Amsterdam: Elsevier, 2007), pp. 1017-1074. 37 Dorussen et al., ‘Any Ties That Bind?’, in this issue, pp. 149-169. 38 See N. Ripsman, ‘The Domestic and International Politics of Economic Statecraft’, paper presented at the conference ‘Economic Diplomacy Beyond 2010: Geo-Economic Challenges of Globalization and Economic Security’, Clingendael, The Hague, 2009. 39 M. Mastanduno, ‘The Strategy of Economic Engagement: Theory and Practice’, in E.D. Mansfield and B.M. Pollins (eds.), Economic Interdependence and International Conflict: New Perspective on an Enduring Debate, Michigan Studies in International Political Economy (Ann Arbor MI: University of Michigan Press, 2003), pp. 175-186. 40 De Haan, ‘Development Coorperation as Economic Diplomacy?’.
23
as well as in the world order. At the national level, new governments typically
launch fresh initiatives at an early stage of their time in power.41
The commercial and trade dimensions of economic diplomacy tend to be
prominent in clear-cut and direct policies. At a later stage (heading towards
elections), politics become increasingly prominent and strategic issues a greater
concern. One should be cautious of generalizations, however, as domestic politics
are substantially dependent on macroeconomics conditions and political culture.
This brings us to the global cycle of economic diplomacy, which suggest that
economic diplomacy takes prominence when acceleration in globalization is
accompanied by an absence of agreed rules of conduct.42 That is to say,
government are more likely to employ economic tools in the pursuit of foreign-
policy interest when the legitimacy and power of existing structures of
international cooperation decrease.
Changes at the global level have a significant impact on long-term trends
in economic diplomacy. Three factors are crucial to understand how policy-
makers (and scholars alike) have treated the relationship between economics and
security: the international distribution of material capabilities; the international
strategic environment; and the position of the dominant world power in
international economic competition.43 Applying this to the case of the United
States, for example, Mastanduno argues that when the international economic
position of the United States is strong, foreign economic policy complements
national security policy. When it is weak(er), foreign policy is used for
particularistic or national interest.
The profound reconfiguration of the international order that is currently
under way explains why economics diplomacy is gaining in importance once
again. China is returning to the international stage and poses increased challenges
to the hegemony of the United States and the world order that was built by the
41 Matthew Goodman, ‘When the Twain Meet: US Economic Diplomacy towards Asia’, In Bayne and Woolcock, The New Economic Diplomacy, pp. 190-191. 42 Rik Coolsaet, Historical Patterns in Economic Diplomacy: From Protectionism to Globalization, International Studies Association Convention, 2001, p. 9. 43 Mastanduno, ‘Economic and Security in Statecraft and Scholarship’, pp. 825-854.
24
trans-Atlantic powers after 1945. Barring unforeseen circumstances, Washington
will increasingly have to make room at the negotiating table even if it remains the
most powerful actor on the international stage in the decades to come. Adding to
the growing importance of economics diplomacy is the fact that the largely
dominated by Western countries. These states have fundamentally different ideas
about the relationship between the private and public sectors, and follow an
approach to foreign policy that emphasizes economic tools as well as political
tools for economic purposes. Thus, the shift in the global balance of power
encourages governments all over the world to reassess their national and foreign
policies, including on the politic-economic front and interests in international
institutions. In the newly emerging multi-polar system, which historically has
been more unstable than bipolar or even uni-polar system,44 economic diplomacy
is a useful means by which to pursue national interests through peaceful means.
The upgrading by the Obama administration of the strategic and economic
dialogue with China that was initiated by former US President George W. Bush in
2006 may also be seen in this context. Meanwhile, the European Union has
greater difficulty in successfully employing its economic clout in political
negotiations with powerful third countries, as it largely fails to interconnect
political and economic policy at the Union level.
2.2.4. Economic Diplomacy in International Relations
Economic diplomacy studied through an IR lens is primarily concerned
with high politics and issues related to national security, where national interests
are primarily defined in terms of (inter)national stability. When considered in the
broader field of economy diplomacy, this strand of research is characterized by an
interest in power elements rather than policy and process. Illustrative is Baldwin’s
introduction to his study on economic statecraft, which reads that it ‘is a study of
44 Global Trends 2025: The National Intelligence Council’s 2025 Project, p. 29, available online at http://www.dni.gov/nic/PDF_2025/2025_Global_Trends_Final_Report.pdf.
25
economic as an instrument of politics’.45 The high politics or power-play element
explain why political scientists who study the interrelationship between
international politics and economics regularly employ the term ‘economic
statecraft’, or tend to discuss the subject without linking it to any concept at all. In
the former case, the focus is often on sanctions (negative or positive) while
research of the latter kind tends to address the relationship between foreign policy
on the one hand and trade or investment on the other.
2.2.5. Economists’ Perspective on Economic Diplomacy
The economic approach to economic diplomacy is grounded in an
understanding of national interests as defined in economic terms. It is concerned
with all of the ways by which governments deliberately and directly intervene in
the market, whether the economic (trade and investment) or financial fields. The
focus here is on economic diplomacy as a tool to enhance economic prosperity,
and the leading question is whether specific economic diplomacy tools are cost-
efficient in the sense that they have a welfare-enhancing effect. Political aims may
be considered, but are by and large not (as) explicit let alone the focus of
attention. Most studies in the field employ (a mixture of) the term(s) ‘economic
diplomacy’, ‘commercial diplomacy’ and ‘trade diplomacy’, while ‘economic
statecraft’ is hardly employed.
Economic diplomacy of the primarily economic realm can be divided into
three categories. The first concerns studies on the effects of specific economic
diplomacy activities on international trade. Such analysis employs economic and
econometric models (often the gravity model of trade), but also the social welfare
function, bilateral trade model, elasticity’s and market shares, or a combinations
of these, for cost-benefit analysis of one or more tools of economic diplomacy.
45 Baldwin, Economic Statecraft, p. 3. See also P. Hanson, Western Economic Statecraft in East – West Relations: Embargoes, Sanctions, Linkage, Economic Warfare and Détente
26
2.3. The National Company
2.3.1. Definition of National Company
In this research, a state-owned enterprise (SOE) is included in national
company. The definition of national company which is state-owned enterprises is
a company that all or some of its share owned by the government directly or
country wealth which is separated (article 1 paragraph 1). SOE divided into two
types, as follows (Sugiharto, et al. 2005):
1. Limited Corporation
Limited Corporation is SOE that at least 51% (fifty one percent) of it
shares owned by the government which aim to chase profit.
2. Public Corporation
Public Corporation is SOE that all the equity is owned by the government
and not divided in shares, which aim to public benefit that is a supplier a
goods and/or services supplier with high quality and chasing profit based
on corporate governance principle.
2.4. The Multi National Company
During its early stages, international business was conducted in the form
of enterprises that were owned singly or in partnership. As the size of
organizations grew with industrialization and companies’ needs for capital
increased, corporations began to displace privately held firms. These corporations
had the distinct advantage of being entities with a separate identity, consequently
limiting the liability of the principals or owners. At the same time, by issuing
shares of stock, the corporation could tap an enormous pool of excess funds held
by potential individual investors.
27
With the emergence of the multinational enterprise in the late 1800s and
early part of the twentieth century, the corporation underwent yet another
modification. Some early multinational enterprises sought resources and supplies
abroad, such as oil in Mexico (Standard Oil), precious minerals in South Africa
(Amalgamated Copper, International Nickel, Kennecott), fruit in the Caribbean
(United Fruit), and rubber in Sumatra (U.S. Rubber). Other firms entered the
international business arena in a search for markets to absorb their excess
domestic production or to obtain economics of scale in production. Some of these
early market seekers from the United States were Singer, National Cash Register
Company, International Harvester (now Navistar International), and Remington,
which sought to use their advantages of superior metal production skills against
European producers.
These early entrants were quickly followed by companies with other areas
of expertise, such as Cable Telephone (now Chequamegon Communications),
Eastman Kodak, and Westinghouse. All these U.S. multinational firms marketed
their products primarily in the neighbouring countries of Canada and Mexico and
in European markets (Ajami, R.A., Karel, C. G.Jason, G., Dara, K., 2006).
2.4.1. Definition of a Multi National Company
There is no formal definition of a multinational corporation, although
various definitions have been proposed using different criteria. Some believe that
a multinational firm is one that is structured so that business is conducted or
ownership is held across a number of countries, or one that is organized into
global product divisions. Others look to specific ratios of foreign business
activities or assets to total firm activities or assets. Under these criteria, a
multinational firm is one in which a certain percentage of the earnings, assets,
sales, or personnel of a firm come from or are deployed in foreign locations. A
third definition is based on the perspective of the corporation, that is, its behaviour
and its thinking. This definition holds that if the management of a corporation has
28
the perception and the attitude that the parameters of its sphere of operations and
markets are multinational, then the firm is indeed a multinational corporation.46
In his study of the topic, Howard Perlmutter looks at this attitude held by
the decision makers of an organization and differentiates among ethnocentric,
polycentric, and geocentric organizational types. Ethnocentric organizations are
those that are focused in a home or domestic environment and therefore exclude
MNCs. Polycentric organizations have investment, operations, or markets in
several countries but do not integrate the management of these international
functions. Geocentric organizations are integrated and have a world perspective
regarding the breadth and reach of possible organizational operations. Some
students of international business (and sticklers for linguistic accuracy) dispute the
use of the terms “global” or “world” corporation in reference to MNCs. They
argue that a truly global corporation or enterprise looks to every market in the
world as a potential market and allocates resources without regard for the location
of its country. Under this definition, for example, an international corporation
with subsidiaries and markets in Europe and South America would not be
considered a global enterprise. As the globalization of international markets has
continued, more firms have realized that the key to their future success depends
on increasing their business activities in other parts of the world (including China,
India, and Southeast Asian nations).47
The existence of different definitions for multinational corporations is not
surprising. There are many different types of multinational corporations, and most
definitions characterize only a particular type. Because there are so many possible
ways in which a corporation can be organized and can transact business across
national borders, it is indeed very difficult for any one definition to adequately
describe all forms of multinational corporations.48
46
Ajami, R.A., Karel, C. G.Jason, G., Dara, K. International Business Theory and Practice 2nd Edition. M.E. Sharpe: New York. 2006. P.6. 47 Ibid. p.6. 48 Ibid. p.7.
29
Another problem in standardizing the definition of a multinational
corporation is the gradual evolution of purely domestic companies to
multinational status. In this process, the point cannot be clearly demarcated when
a company becomes a multinational. Such demarcations, if at all possible, also
cannot explain or describe adequately the wide differences that corporations may
have in the extent to which they have gone international.49
The United Nations does not use the terms “multinational corporations” or
“multinational enterprises.” Instead, it calls these organizations “transnational
corporations,” but this term is not used widely. This text will use the term
“multinational corporation” to identify a firm that conducts international business
from a multitude of locations in different countries.50
2.4.2. Multi National Corporations Come of Age
The multinational corporation began to flourish in the decade following
World War II, primarily in the United States. It was spurred by reconstruction
efforts in Europe and inflow of U.S. dollars geared to take advantage of new
opportunities, as countries of the ravaged continent attempted to rebuild their
economics. U.S. corporations, having prospered through wartime demand,
channelled investments into other countries, notably in Europe and Canada.
During the period from 1950 to 1970, the book value of U.S. direct foreign
investments skyrocketed from $11.8 billion to $78.1 billion.51
As the European economy strengthened during this period, the motives of
U.S. companies doing business there switched from an aggressive market-and
profit-seeking stance to a defensive position of protecting European market share
and shielding domestic and U.S. markets from encroachments by increasingly
strong European competitors. In the 1960s, U.S. firms also began to take
advantage of the availability of new capital and debt markets: the Eurodollar and
49 Ibid. p.7. 50 Ibid. p.7. 51 Ibid. p.7.
30
Eurobond markets emerging in that part of the world. During this period, the
orientation of U.S. MNCs also began to change, from seeking raw materials and
being involved in the extractive industries to focusing more on overseas
manufacturing industries.52
By the 1970s the United States had lost its nearly complete dominance of
multinational industry, partially because of the re-emergence of strong European
concerns, but also due to Japan and the other emerging giants of the East (Ajami,
R.A., et al., 2006).
2.4.3. A Look At Present-Day Multi Nationals
To understand the complexities of the operations pursued by multinational
firms, it is helpful to look at the structure and operations of actual multinational
business organizations. In this way, the student of international business can
envision the enormity and complexity of operations for global bank, a
multinational manufacturing company, and an international conglomerate (Ajami,
R.A., et al., 2006). Nowadays multinational company (MNC) is main actor in
doing international business such as international transaction, export and import.
MNC will bring the international process that will influence the national industry
become more modern and effective in technology and management. There are a
lot multinational company in Indonesia and it brings positive and negative impact
for Indonesia. The positive impact that MNC gives to Indonesia are wider the job
opportunity, add the country income, create well trained and knowledge business
resources, and develop the technology. However, MNC bring also negative
impact, which are create pollution as the waste of their production process and
create social gap between Indonesia worker and foreign worker. The country
should maximize the benefit or positive impacts of the MNC without foreign to
come with solution to overcome or minimize the negative impacts. In this current
situation MDGs give many influence to the international community by affecting
52 Ibid. p.7.
31
to the central and local government regulation. The regulation that MDGs affected
create the multinational companies to concern about the condition around their
position or place. One of the MDGs purpose is to ensure environmental
sustainability. Multinational companies today more concern about the
environmental condition because the regulation that already issued by the
government forced the Multinational Companies to concern about the situation
around their position.53
2.5. Millennium Development Goals (MDGs)
The public sector is trying to do something about these problems. A
reinvigorated effort at the turn of the century led the governments of the world to
join together to resolve the problem of poverty and under-development. In
September 2000, 189 countries signed the Millennium Declaration, which led to
the adoption of the Millennium Development Goals (MDGs). The MDGs are a set
of eight which 18 numerical targets have been set and over 40 quantifiable
indicators have been identified. The goals are as follows:
1. Eradicate extreme poverty and hunger
2. Achieve universal primary education
3. Promote gender equality and empower women
4. Reduce child mortality
5. Improve maternal health
6. Combat HIV/AIDS, malaria and other diseases
7. Ensure environmental sustainability
8. Develop a global partnership for development
One measurable goal has been halving the proportion of people living in
extreme poverty and those suffering from hunger between 1990 and 2015.
According to these projections by the World Bank, poverty rates will fall fastest in
East Asia and the Pacific outside China, but the huge reduction in the number of 53 Ibid. p.8.
32
people below the $1 a day are low, a continuation of current trends will cut
poverty rates to half their current levels. South Asia, led by continuing growth in
India, is likely to reach or exceed the target. But growth and poverty reduction are
proceeding more slowly in Latin America and the Caribbean, which will not reach
the target unless growth improves. (Hopkins, Michael, 2007).
There are critical roles that must be played by all in order to achieve real
result in the eradication of poverty. Recipient countries must lead the way by
prioritizing good governance, investing in the well-being of their people, and
devising transparent and accountable development plans alongside civil society.
Develop countries must be supportive of these policy decision and reinforce the
choices and priorities that are made by countries in the best interest of their
people. Developed countries should also lead in ensuring that developing
countries have a sustainable, accountable system for financing development.
(Mullerat, Ramon, 2010).
2.6. Corporate Development
Corporate Development can be defined as the management of the
corporate portfolio with the toolsets of strategic management.54 Corporate
Strategy (CS) is at the heart of corporate development. It has many facets, and
each approach to the topic has its own concepts and intellectual pedigree.55 In
simple terms, it concerns the long-term survival and growth of business
organizations,56 by emphasizing the overall direction in the wider, and the narrow
sense.
54 Grant, 2005, p. 477 in Bezjak. Frank, ‘Global Economic Trends and their Impact to Corporate Development’. 55 Whittington, 2001, p. 9 in Bezjak. Frank, ‘Global Economic Trends and their Impact to Corporate Development’. 56 Sutton, 1980, p. 1 in Bezjak. Frank, ‘Global Economic Trends and their Impact to Corporate Development’.
33
For MNCs, the wider sense is about the question in which businesses the
company should invest. In contrast, the narrower sense refines the business
analysis by asking in what countries/markets is the enterprise in, and in what
countries/markets it should be in.57 Therefore, CD concentrates on CS, which is
the top level strategy of the company, concerned with the overall scope of an
organization and how value is added to the organization.58 The main target for
Corporate Development is to raise the value of the corporation.59
Below the top level of strategy, there are two more mutually exclusive
levels of strategy, business level-strategy, and operational-level strategy, which
have to be in line with the top-level strategy so that the company can gain
competitive advantage.60 Hence, CS lays the foundation for strategic planning
process in MNCs, and builds the connective link between corporate strategy, or
the business targets, and the operational (functional) management. Therefore, it is
about bridging the gap, by identifying the constraints to the business targets and to
juxtapose them to existing company assets and business processes. In this case,
CS can be perceived as a bridge over the divide.
2.7. Corporate Social Responsibility
2.7.1. Definition of Corporate Social Responsibility
CSR is concerned with treating the stakeholders of the firm ethically or in
a responsible manner. ‘Ethically or responsible’ means treating stakeholders in a
manner deemed acceptable in civilized societies. Social includes economic and
environmental responsibility. Stakeholders exist both within a firm and outside.
The wider aim of social responsibility is to create higher and higher standards of
57 Robin, 1996, p. 176 in Bezjak. Frank, ‘Global Economic Trends and their Impact to Corporate Development’. 58 Whittington, 2001, p. 7 in Bezjak. Frank, ‘Global Economic Trends and their Impact to Corporate Development’. 59 Colley, pp. 6 in Bezjak. Frank, ‘Global Economic Trends and their Impact to Corporate Development’. 60 Porter, 1998, p. 39 in Bezjak. Frank, ‘Global Economic Trends and their Impact to Corporate Development’.
34
living, while preserving the profitability of the corporation, for peoples both
within and outside the corporation (Michael Hopkins, 2007)
CSR is one of the ‘umbrella’ labels that have recently gained popularity.
Many of the emerging issues are being addressed under this label. CSR indeed
covers a wide range of issues and topics such as human rights, health, renewable
energy, child labour and eco-efficiency. It is regarded positively, yet is often not
integrated in the core business of an organization. Despite ongoing promising
debates, it is often not deemed urgent enough in the face of competitive pressure,
changing demands or economic recession. As a concept CSR is often viewed as
being too vague and complicated to be put into business practice. In the end,
refuge is often sought in activities like partnership, emission reduction,
stakeholder dialogue, reporting and the application of a new generation of
standards. After a decade of various initiatives, it is time to ask whether these
activities have fundamentally contributed to the demand for new approaches, new
concepts and business strategies. Based on current result in research and practice
in the conclusion is that CSR still mainly remains a promise for the future (Jan
Jonker and Marco de Witte, 2006, p.1).
Based on William B. Werther, Jr and David Chandler (2011, p.xvii), a key
tenet of Corporate Social Responsibility (CSR) is he unspoken contract between
the business and the society within which it operates that called “licence to
operate”. The financial institutions have discovered how painful it can be when
the terms of that license are called into question. The action taken by governments
across the world to penalise those that, having required public money to survive
when the crisis broke, went on to offend public sensitivities with lavish bonus
schemes would have been unthinkable a couple years ago. But the world has
changed.
CSR is about value and standard done related to corporation operation,
which is determined as business world commitment to act ethically, legally
operate and contribute to increase life quality of employees and their family, local
community and societies (Sankat, Clemen K, in Budimanta, dkk, 2004: 72).
35
Definition of CSR that is stated before, beside increase life quality of local
community (external public), it also increase life quality of the employees
(internal public). CSR is about how companies manage the business processes to
produce and overall positive impact to society (Johnson and John, in Ardianto et
al, 2011).
2.7.2. Company Perception toward Corporate Social
Responsibility
Corporate Social Responsibility (CSR) is often defined as commitment and
activities of company which more than just obey the rule. CSR is business
operations which commit not only to increase the company profit financially, but
also to continuity develop the economic social growth. The definition of CSR which
is easier to be understood and implemented is by develop Tripple Bottom Lines
(profit, planet, and People) concept (Elkington, 1998 in Belal, A.R. 2008). Tripple
bottom line concept is well known by John Elkington in 1998. Elkington give a
point of view that company which aim to continuity growth must pay attention to
“3P”. Besides chasing profit, the company should pay attention and participate in
fulfil the society wealthy (people) and actively contribute in keep the environmental
conservation (planet).
Company is not faced to responsibility that based on single bottom line,
which is economic aspect, but it should also pay attention to social environmental
aspect.
1. Profit (money), the most important aspect which becomes major purpose
form the business activity. It is usual that the main focus of company in all
activities is pursuit the profit or increase the stock price as high as possible
both directly and indirectly. Profit is an additional income which can be used
to guarantee the company continuity. Activities that can be done to increase
the profit are by increasing the productivity and cash efficiency, so the
company has competitive strength that can give additional value as
36
maximize as possible. The increase of productivity can be gained by fixing
the working management through simplify the process, reduce the
inefficient activities, save the process time and service, including save the
material and save the cost of it.
2. People (society), is realize that people arround the company is one of the
important stakeholder for the company because their support is needed by
the company to the company continuity and development, so as a part that
cannot be separated with environment people, the company must commit to
give the benefit as much as possible to the people. Beside that, it is need also
to be realized that company operation has potential to give impact to the
people around the company. Based on that reason, the company need to do
some activities for people needed. In this case, form of the social
responsibility is a requirement that need to be based on the own choice not
based on compulsion from the rule or pressure from the people and come as
goodwill. In term of strengthen the commitment in social responsibility,
company need to have view that CSR is an future investation, which mean
that CSR is not seen as cost center but profit center in the future because
through the good relationship and good reputation, people will give good
feedback which is keeping the company existance as the return.
3. Planet (environment) is something related to all of our life aspect. Our
relationship with the environment is the cause-impact relationship, where if
we keep the envronment, so the environment will give benefit to us. On the
other word, if we destroy the environment, we will get the bad impact for
the return. Benefit is the main thing in doing business and it is a natural
thing. So, we see many indrustrial actor who just pay attention in how
making cash as much as possible without doing anything to conserve the
environment. Even though, by conserve the environment, they will gain
more benefit, especially in healthy, comfortable side, and the guarantee of
the availibility of resurces. Otherwise, less care to the environment will be
pay with the expensive price by the insidence of diseases, disaster, and any
37
other nature damage. Increasing the profit and company growth is important
but caring the environment will be never less important.61
2.7.3. Corporate Social Responsibility Theory
Based on Nor Hadi (2011) in Ardianto et al (2011), there is three basic
theory of CSR which are legitimacy theory, stakeholder theory, and social
contract theory.
1. Legitimacy Theory
Society Legitimacy is strategic sector for the company in developing the
company. It can be used as a place in construct the company strategy especially
strategy related to an effort in positioning the company in the middle of the
society who become more modern. Organization legitimacy can be seen as
something given by societies to the company and something wanted or looked by
the company from the societies. Thus, legitimacy is a benefit or potential
resources for the company to survive (going concern) (O’Donovan in Ardianto et
al, 2011).
2. Stakeholder Theory
Stakeholder is a group or an individual who can effect, or be affected by, the
success or failure of an organization (Luk, Yau. Tse, Alan, Sin, Leo, and
Raymond, in Ardianto, 2011). Stakeholder is people and group who owned
legitimacy to made organization to participate in take a decision, because they are
influenced by practice, policy, and organization action (Hummels, in Ardianto,
2011). This definition means to company should take care of their stakeholders,
61 Belal, A.R. Corporate Social Responsibility Reporting in Developing Countries. Ashgate Publishing Limited: Englad. 2008.
38
because stakeholders are party who both directly or indirectly influences and are
influenced by the company activity and decision taken by the company. If the
companies do not take care of their stakeholders, it is possible to result complain
and eliminated the stakeholders (Nor Hadi, 2011: 94).
The Assumption of Stakeholder Theory is (Thomas and Andrew in Ardianto,
2011):
1. Company has relationship with stakeholder who influences and are
influenced by company decision.
2. This theory is pressured on nature characteristic of relationship in process and
result for the company and its stakeholder.
3. The interests of all stakeholders’ legitimacy have intrinsic value and are not
establishing the interest which dominated one another.
4. This theory focused on taking management decision.
3. Social Contract Theory
This theory appears because there is interrelation in societies social life to
build a conformity, harmony, and balance include to environment. Social contract
is built and developed to explain the relationship between company and societies.
Company have an obligation to give benefit to the societies. Company interaction
with society will always try to fulfil and obey the regulation and norms used in the
societies, so the company activity can be seen as legitimacy (Deegan, in Ardianto,
2011).
In contemporary management perspective, social contract theory explain
about individual and group rights, includes societies, who formed based on deals
that give benefit to each member (Rawl In Ardianto, 2011). Legitimacy can be on
if there is correspondence between the existence of the company or in accordance
with community expectation. It is in line with the legitimacy theory concept
39
which state that legitimacy can be owned if there is correspondences between
company existence which not disturb or congruence with the existence of value in
societies and environment (Deegan, Robin, and Tobin, in Ardianto, 2011).
To guarantee the societies life and needed, social contract is based on: (1)
output that socially can be given to the societies, (2) distribution of economic,
social, or politic benefit to group accordance to the strength owned (Shocker and
Sethi, in Ardianto, 2011).
2.7.4. Benefits of Corporate Social Responsibility
Based on Prof. Bryan Horrigan (2010), one of CSR benefit are CSR offers
distinct corporate reputational advantages, especially given the 21st century
significance of corporate reputations and brands as tangible assets, predicated on
numerous bases of shareholder and stakeholder support. This includes improving
corporate reputation and corporate brand identification through cause-related
marketing, social advocacy and other CSR-related promotion.
Collective Corporate Social Responsibility (CSR) activities amongst
various corporations and its stakeholders could contribute to the microeconomic
development of a developing country through sustainable benefit to all. At the
same time, optimum national impact, cooperation, and communication should be
encouraged and socialized (Sri Urip, 2010).
40
2.7.4.1. Government
1. Development and acceleration of microeconomic sustainable growth
through using “ good corporate governance/value change” and “best
local and foreign investors (with the availability of good infrastructure,
good education and health facilities, well trained human resources and
labor, and well-cared-for environment).
2. Encouraging CSR activities giving benefits to the community, with
meeting certain development and sustainability criteria possibly being
considered for tax incentive.
3. Joint CSR budgets possibly representing an additional source of public
revenue (employment and wealth creation to reduce poverty).
2.7.4.2. Local Community and Society
1. Change habit, improved quality of life
2. Capacity building, creates employment and wealth
2.7.4.3. Corporation
1. Growth, profit, image, and competitive edge
CSR is able to support the corporate growth and increase profit.
Corporate with good CSR will have good image among its
stakeholders. Good image built trust and it will give added values that
create good competitive edge.
2. Community acceptance and goodwill
Corporate that has good CSR show that they care to their stakeholders
need by doing their social responsibility to community and
environment. It will make the corporate is accepted by the community
and having good will.
41
3. Pride and spiritual values to employees and their families
Having good CSR also will build the employees pride and giving
spiritual value to them and their family because the corporate teach
them to do their social responsibility by taking care the community and
keep the environmental conservation.
4. Genuine dialog with stakeholders
By doing their social responsibility, the communication to the
stakeholders will be maintained well. It is because the corporate with
good CSR will get positive respond from their stakeholders.62
2.7.4.4. The World and Environment
1. Waste management
Good CSR programs will take a part in waste management. Waste is
including the collection, transportation, and disposal or garbage,
sewage, and other waste products. Waste management encompasses
management of all processes and resources for proper handling of
waste materials, from maintenance of waste transport trucks and
dumping facilities to compliance with health codes and environmental
regulation. (Business Dictionary, 2013).
2. Balanced ecosystem
By having good CSR that taking care of the environment, the
ecosystem will balance. The corporate will not only take the resource
from nature but also do action to conserve the nature.
3. Green and clean environment
The corporate that has good CSR means that they take care their
environment. Their program especially program that related to
environmental will create green and clean environment.63
62
Sri Urip. CSR Strategies for a Competitive Edge in Emerging Markets. John Wiley & Sons: Singapore. 2010.
42
2.8. Perception
2.8.1. Definition of Perception
Based on George Marhter (2006), perception is a process by which
individuals organise and interpret their sensory impression in order to give
meaning to their environment. Our perceptual world constructed in the brain, by a
huge mass of neurons performing complex, but hidden operations. Three
observations hint at the complexity of the brain processes involved in perception.
First, a large proportion of the brain’s most highly developed structure, the
cerebral cortex. Second, despite the complexity and power of modern computer
technology, computer scientists have not yet succeeded in building general-
purpose systems with the perceptual proficiency of even an infant. Relatively
confined problems, such as detecting abnormalities in medical images, or
identifying a face or a voice, have proven to be formidable problems to solve by
computer. Third, as result of brain damage through injury or deseases, a small
number of unfortunate individuals suffer deficit in their perceptual capabilities.
These deficits can be very specific and debilitating, but also dramatic and
perplexing to other people. It seems difficult to believe that someone can fail to
recognize their brain processes serving perceptual abilities that most of us take for
granted.
In general, perception is gathering information through our senses, which
are seeing, hearing, touching, tasting, smelling, and sensing. Through these
senses, we can perceive things, events or relations. But, as there are so many
different stimuli only a small portion of them are noticed and an even smaller
amount can really reach our attention. Perception is the process by which these
stimuli are selected, organized, and intrepreted (Marco Erlenkamp, 2004).
63
Sri Urip. CSR Strategies for a Competitive Edge in Emerging Markets. John Wiley & Sons: Singapore. 2010.
43
2.8.2. Factors Influence the Perception
Based on Hellriegel & Slocum (2009), there are external factors and
internal factors that influence perception. Some external factors thay may effect
perception are:
1. Size
The larger object, the more likely it is to be perceived. The space and new
building to be built where the Twin Towers in New York City were
destroyed by terrorist attacks on September 11, 2001, will get noticed
more than an alleyway on 42nd street.
2. Intensity
The more intense an external factor (bright, lights, loud noises and the
like), the more likely it is to be perceived. The language in an e-mail
message from a manager to an employee can reflect the intensity
principle. For example, an e-mail message that reads “Please stop by my
office at your convenience” would not fill you with the same sense of
urgency as an e-mail message that reads “Report to my office
immediately!”
3. Contrast
External factors that stand out against the background or that are not what
people expect are the most likely to be noticed. In addition, the contrast of
objects with others or with their backgrounds may influence how they are
perceived.64
64
Hellriegel & Slocum. Organizational Behavior 12th edition. South Western-Cengage Learning: USA. 2009.p.71
44
Internal factors that influence perception are:
1. Personality
Personality has an interesting influence on what and how people perceive.
To illustrate how personality can influence perception, let is examine one
of the big five factors, conscientiousness. A conscientious person tends to
pay more attention external environmental cues than does a less
conscientious person. On the one hand, less conscientious people are
impulsive, careless and irresponsible. They see their environment as
hectic and unstable, which affect the way in which damage perceptual
selection. On the other hand, more conscientious people organized their
perception into neat categories, allowing themselves to retrieve data
quickly and in an organized manner. In other words they are careful,
methodical, and disciplined in making perceptual selections.
2. Learning
Among other things, learning determines the development of perceptual
sets. A perceptual set is an expectation of a particular interpretation based
on past experience with the same or similar object. In organizations,
managers’ and employees’ past experience and their functional
backgrounds (e.g., accounting, engineering, marketing, marketing, or
production) when making decisions. Because perceptions influence how
employees and managers behave toward one another, it is important to
understand a manager’s perceptual set.
3. Motivation
Motivation also plays an important role in determining what a person
perceives. A person’s most urgent need and desires at any particular time
can influence perception. For example, imagine that, while taking a
shower, you faintly hear what sounds like that telephone ringing. Do you
get out of taking shower, dripping wet, to answer it? Or do you conclude
that it is only your imagination? Your behavior in this situation may
depend on factors other than the loudness of the ringing. If you are
expecting an important call, you are likely to leap from the shower. If you
45
are not expecting a call, you are more likely to attribute the ringing sound
to shower noises. Your decision, the, has been influenced by your
expectations and motivations.65
Based on Yuwono (2006) in Hasan Slamet Ramdhani (2011), age is an
individual characteristic which describe the experience in an individual. Then,
based on Azahari (1988) in Hasan Slamet Ramdhani (2011), generally, people
with high education have more competencies in communication. Education is a
process which give impact on behavior forming (including perception), because
education put a basic knowledge and moral concept in an individual.
Based on Richard West & Lynn H.Turner (2011), Sex refers to the
biological make-up of an individual (male or female). Gender refers to the learned
behaviors a culture associates with being a male or female. Men and women
frequently look at things differently, depending on what gender schema they bring
to a circumstance (Ivy & Backlund, 2003 in Richard West & Lynn H.Turner,
2011). As people sort out the various stimuli in their environment, gender cannot
be ignored or devaluated. Certainly, men and women can reject gender
prescription and help society expand its perceptual expectations. However, most
people continue to look at their worlds with rigid interpretation of the sexes,
resulting in perception that may be distorted or inaccurate.
65 Ibid. p.74.
46
2.9. The Relationship between PT. Pupuk Sriwidjaja Palembang
and International Relations
PT. Pupuk Sriwidjaja produced urea fertilizer to fulfill the agriculture
sector in domestic, and produce ammonia as the main ingredients of the urea
production. If the fertilizer need in domestic agriculture structures has been
fulfilled, then the excess production will be sold to industrial sector or/and
exported.66
In 2012, PT. Pupuk Sriwidjaja Palembang has target to export the urea
fertilizer to Australia and South East Asia with the market opportunity of the
fertilizer in both country are big enough. Based on PT. Pupuk Sriwidjaja
Palembang President Director, Musthofa, export to South East Asia and Australia
is one of the long terms strategic after the establishment of factory II B that
operates in 2015.67
In April 2013, PT. Pupuk Sriwidjaja Palembang has exported urea
fertilizer to some countries in Asia for 84.233 ton. Based on Manager of
Community Relationship PT. Pupuk Sriwidjaja, Sulfa Ganie, export activity will
be improved continuously to expand the market, anticipate the increase of
production that comes from the establishment one new factory.68
Factories in PT. Pupuk Sriwidjaja have total capacity that achieve 2,262
million ton of urea fertilizer each year and generally able to fulfill the domestic
farmer needed and some are allocated to fulfill the international demand. By
having the contraction of one new factory will increase the production as 457.500
ton each year, thus production total of urea become 2,61 million ton in 2015.69
By expanding the market to international, PT. Pupuk Sriwidjaja
Palembang expect all the production able to accept in market so that in the future
66 Available at www.pusri.co.id.. 67 Irwan Wahyudi, “Pusri Incar Ekspor Urea ke Australia dan Asia Timur”, Indonesia Finance Today, December 26 2012, available at: www.indonesiafinancetoday.com. 68 Nidia Zuraya, “Pusri Ekspor Pupuk Urea 84 Ribu Ton”, Republika Online, April 19 2003, available at: www.republika.co.id. 69 Ibid.
47
the company will able to keep improving and build some new factory. This export
activity that is done by the company is guaranteed not to disturb the domestic
needs, because accordance to the regulations, there will be no export activity
when domestic needs has not fulfilled yet.70
70 Ibid.
48
CHAPTER III
RESEARCH METHODOLOGY
3.1. Research Method: Quantitative
This research use quantitative method. Quantitative research on the other
hand uses number to prove or disapprove a hypothesis. The process of
measurement is central to quantitative research because it provides the
fundamental connection between empirical observation and mathematical
expression of quantitative relationship. Quantitative method has advantages in
term of efficiency. Quantitative method is done using samples to look for the
problems. Besides, for the particular case of quantitative method provides more
precise explanation of what is encountered. Quantitative method may perform
some task as demanded by the researcher such as find the comparison, determined
the relationship, tendency of variable grouping and simplification. Quantitative
research uses data that are structured in the form of numbers or that can be
immediately transported into numbers (Ross, 1999 cited in IR Thesis Guidelines-
Quantitative, 2012).
Quantitative method refers to counts and measures of things and
qualitative method refers to the meanings, concepts, definitions, characteristics,
metaphors, symbols, and descriptions of things (Berg, 2001). In the quantitative
research, the primary aim to determine the relationship between an independent
variable and another set of dependent or outcome variable in a population (Singh,
2007).
Quantitative research is scientific investigation that includes both
experiment and other systematic methods that emphasize control and quantified
measures of performance (Proctor & Capaldi, 2006 in Wayne K.Hoy, 2010).
Measurement and statistics are central to quantitative research because there are
the connection between empirical observation and mathematical expressions of
relations. Quantitative researchers are concerned with the development and testing
of hypotheses and the generation of models and theories
In this research, the researcher use Statistical Program for Social Science
(SPSS) and Microsoft Excel 2007 in processing the statistic data. Thus, the
researcher did not need to use the formula to calculate and process the data
manually. In using SPSS and Microsoft Excel 2007 there are some stages which
are:
1. Summarize the questionnaire result and input the data to the Microsoft Excel
2007 by making tables for each respondent with the answer.
Figure 3.1 Data Table In Microsoft Excel 2007
Number of
Respondents
relations. Quantitative researchers are concerned with the development and testing
of hypotheses and the generation of models and theories that explain behaviour.
In this research, the researcher use Statistical Program for Social Science
(SPSS) and Microsoft Excel 2007 in processing the statistic data. Thus, the
researcher did not need to use the formula to calculate and process the data
ly. In using SPSS and Microsoft Excel 2007 there are some stages which
Summarize the questionnaire result and input the data to the Microsoft Excel
2007 by making tables for each respondent with the answer.
Figure 3.1 Data Table In Microsoft Excel 2007
49
relations. Quantitative researchers are concerned with the development and testing
t explain behaviour.
In this research, the researcher use Statistical Program for Social Science
(SPSS) and Microsoft Excel 2007 in processing the statistic data. Thus, the
researcher did not need to use the formula to calculate and process the data
ly. In using SPSS and Microsoft Excel 2007 there are some stages which
Summarize the questionnaire result and input the data to the Microsoft Excel
Figure 3.1 Data Table In Microsoft Excel 2007
Number of
Questions
Column of
Answers
50
2. Input the data to SPSS program.
There are two kinds of pages required in SPSS which are variable view and
data view. The classification of data view and variable view is used to help the
user in setting the variable and data input.
a. Variable view is used to input and defined the variable, as described as
follow:
Figure 3.2 Page of Variable View In Statistical Program for Social Science
(SPSS) Program
51
b. Data view is used to input the data in the variable column that has been
made, described as follow:
Figure 3.3 Page of Data View In Statistical Program for Social Science
(SPSS) Program
3. Process the data
In this stage, the researcher will process the data that already input to data
view in SPSS program by following some steps for getting the result needed.
a. Validity Test
In validity test, the steps used are:
a) Open the variable view. In the name column type the item 1 until item
5, and then type the total. In decimal column, change into 0 for all
items and total. Let the label column empty and ignore the other
column. The result of creating the variable as follow:
52
Figure 3.4 The Result of Creating Variable In Variable View In Statistical
Program for Social Science (SPSS) Program
b) Open the data view and input the data
Figure 3.5 Input Data Result In Data View In Statistical Program for Social
Science (SPSS) Program
53
c) Click Analyze >> Correlate >> Bivariate. Then, there will be open a
dialog box of Bivariate Correlations as follow:
Figure 3.6 Validity Test Step In Statistical Program for Social
Science (SPSS) Program
Figure 3.7 Bivariate Correlation Dialog Box
54
d) Click OK button to get the result.
b. Reliability Test
In reliability test, the steps used are:
a) The steps of creating variable and input the data are same with the
steps used in validity test (step a) and step b)).
b) Click Analyze >> Scale >> Reliability Analysis and will be open a
reliability analysis dialog box.
Figure 3.8 Reliability Test Steps
55
Figure 3.9 Reliability Analysis Dialog Box
c) Click OK button to get the result.
c. Descriptive Statistic Analysis
Descriptive Statistic Analysis is ways to describe the whole variable
generally that is choose by calculating the data accordance to user need. In
descriptive statistic analysis that are some data analysis given, such as
determine the mean, deviation standard, range, and sum. The steps used
are:
a) The steps of creating variable and input the data are same with the
steps used in validity test (step a) and step b)).
b) Click Analyze >> Descriptive Statistic >> Descriptive
56
Figure 3.10 Descriptive Statistic Analyze Steps
Figure 3.11 Descriptive Dialog Box
57
c) Then, click Option in descriptive dialog box. There will be description
option setting. The researcher can choose the descriptive that will be
resulted.
Figure 3.12 Descriptive Option Setting
d) If the setting in option is done, then click continue. At the end click
OK button to get the result.
58
d. Hypothesis Test
In this research, the researcher used linear regression. There are some steps
used in hypothesis test in SPSS program as follow:
a) Click Analyze >> Regression >> Linear
Figure 3.13 Linear Regression Steps
b) There will be a dialog box that appears after do those steps. Input the
dependent variable and independent variable.
59
Figure 3.14 Linear Regression Dialog Box Setting
c) To Shows the plot in form of histogram and/or linear graphic, from
dialog box can be done setting of the plot by click Plot button
Figure 3.15 Linear Regression Plot Setting
60
d) Click Continue button.
e) To set the analysis method and significant level, click Option button.
Figure 3.16 Linear Regression Statistic Setting
f) Click Continue button.
g) After all the setting is done, click Save and click OK button to get the
result (output).
3.2. Research Time and Place
This researched was conducted at PT. Pupuk Sriwidjaja Palembang, which
is located in South Sumatera, Indonesia. The researcher did the research on the
company start from December 17th, 2012 until January 31st 2013.
61
3.3. Research Instrument
3.3.1. Primary Data Collection
The research used questionnaire as its primary data collection.
Questionnaire is distributed to the employees in PT. Pupuk Sriwidjaja Palembang
and the societies who life around the company. The questionnaire is self-
constructed by the researcher.
In this research, the questionnaire is divided into two parts which are
respondent data and questionnaire items. The respondent data part will include the
information about age, gender, and education. The questionnaire items parts
divided into
In this research, the researcher used the Likert scale, which is developed
by Rensis Likert. The respondent should give the rate to the statement whether
agree or disagree for measuring the statement related to the dependent variable on
a 6-point scale with the following anchors:
Scale Meaning
1 Strongly Disagree
2 Slightly Disagree
3 Disagree
4 Agree
5 Slightly Agree
6 Strongly Agree
Table 3.1 6-Point Likert Scales
62
3.3.2. Secondary Data
Secondary data is needed to simultaneous activity along with the main
survey (Singh, 2007). In this research, the research will also used secondary data
as additional data. The secondary data is related to PT. Pusri Sriwidjaja
Palembang; therefore the researcher will find the data about PT. Pupuk Sriwidjaja
Palembang using internet media, journals, and several related literatures that
support the research.
3.3.3. Population
Population is the generalization of research object, in the other word is
total number of object in one company that will be researched (Priyatno, 2010).
The Population of this research is societies who are living around PT. Pupuk
Sriwidjaja Palembang which located at PT. Pupuk Sriwidjaja housing, Jl. Mayor
Zen. 2 Ilir. Ilir Timur II. Palembang City. Societies who are living around it are
including the company’s employees with their partner and children. The
researcher will choose the sample from this population randomly by coming to
their house than collect the questionnaire until the researcher get the number of
sampling needed. The total number of societies who live around PT. Pupuk
Sriwidjaja Palembang is around 300 families.
3.3.4. Sampling
Research sampling is the specific number or part of the object that is
decided to be researched (Priyatno, 2010). In this research, the researcher will use
Slovin Sampling with error 10%. The researcher used Slovin Sampling because it
is general way in finding out the sample by calculating it using formula with
accuracy level.
63
� = �1 + ���
Formula 3.1 Slovin Sampling
Note:
n = sampling
N = population
e = error = 10%
Thus, in this research sampling used is:
n = 300_______
1 + 300 (0.1)2
n = 300
4 = 75 respondents
Based on the formula 3.1, the researcher needs to input the population
which is 300. The population is divided by 1 (one) plus population multiple by
error square. It will result the sampling needed in this research which is 75
(seventy five) families.
64
3.4. Testing the Hypothesis and Data Analysis
H0: Societies have negative perception to Corporate Social Responsibility Program
in PT. Pupuk Sriwidjaja Palembang which determined that the company has bad
quality of Corporate Society Program (CSR) program.
H1: Societies have positive perception to Corporate Social Responsibility Program
in PT. Pupuk Sriwidjaja Palembang which determined that the company has good
quality of Corporate Society Program (CSR) program.
3.4.1. Operational Definition and Variable Measurement
In this research, there are two kinds of variables used to measure the data,
which are independent variable (X) and dependent variable (Y). Based on
Priyatno (2010), independent variable is variable that influence other variable.
Dependent variable is variable who is influenced by other variables. In other
word, independent variable is variable that influence the dependent variable.
The independent variables and dependent variables of this research are:
No. Variable Indicators
1. X - CSR which is implemented by PT. Pupuk
Sriwidjaja give positive impact to the
environment around the company.
- OBIT Program which is implemented by PT.
Pupuk Sriwidjaja gives positive impact to the
environment around the company.
- The implementation of OBIT Program has
helped the society and government in
environmental conservation.
- The implementation of OBIT Program is one of
way to reduce air pollution, global warming,
and keep Indonesia as world lung.
- The implementation of OBIT Program take a
65
part in maintains the relationship between
company and societies.
- OBIT Program can develop companies’ images
to societies.
- OBIT Program can make the societies realized
about the importance of environmental
conservation.
- OBIT Program can be one of lesson to always
keep the environmental conservation.
2. Y - CSR is company or business world
commitment to contribute in continuity
economic development by paying attention to
social responsibility and pressuring on the
balance of economic, social, and environment
aspect.
- Good CSR will give good images to company.
- Bad CSR will also give bad images to
company.
- Partnership Program is a program to encourage
activity and economic growth through
increasing the ability of small businesses in
order to become strong and independent.
- One of the main programs is a partnership
capital loans to small and medium
entrepreneurs who become assisted partners.
- Community Development Program is an
empowerment program of community social
conditions in the business area of each
subsidiary in the form of assistance in
improving the quality of the environment in
surrounding the company operates.
66
- One Billion Indonesia Trees (OBIT) is one of
community development program which
include in environmental conservation done by
PT. Pupuk Sriwidjaja.
- OBIT Program involve Elementary School,
Junior High School, Senior High School,
University, AJENDAM II Sriwidjaja, Assisted
Partner, Green Village, and others government
institutes.
Table 3.2 Independent and Dependent Variable
3.4.2. The Technique of Data Analysis
3.4.2.1. Data Quality Test
According to Hair et al., (1998), the quality of data resulted from the used
of research instrument should be evaluated through reliability test and validity
test.
3.4.2.1.1.Validity Test
Validity test is used to measure the accuracy of items in the questionnaire
or scale in measure things that will be measured (Priyatno, 2010), which the
correlation of total coefficients can be measured by Bivariate Pearson use the
formula as follow:
� = � ∑ � − �∑ ��∑ ����� ∑ � − �∑ ����� ∑ �� − �∑ ����
Formula 3.2 Bivariate Pearson
67
Note:
rix = Bivariate Pearson
i = Item Score
x = Total Score
n = Amount of Subject
3.4.2.1.2 Reliability Test
Reliability Test is used to make sure the consistency and reliability of
instrument used to measure the research (Priyatno, 2010). In SPSS program,
reliability test will be done by using Cronbach’s Alpha method. Reliability
formula using Alpha (Arikunto, 2002, cited in Priyatno, 2010) as follow:
�� = � �� − 1� �1 − ∑ � ��
��� �
Formula 3.3 Cronbach’s Alpha
Note:
r11 = Instrument Reliability
K = Total amount of questions
∑σb2 = Number of Variable
σ12 = Total of variable
According to Sekaran (1992) cited in Priyatno (2011), if the value
reliability is less than 0.6 means not good, if the value of reliability is 0.7 means
acceptable, and if the value of reliability is greater than 0.8 means good.
68
3.4.2.2. Descriptive Statistic
Descriptive Statistic is research that focuses on data interpretation and
research object by presenting the data systematically (Priyatno, 2010).
Descriptive statistic used to give the general description about the
respondent demography including gender, age, and education. It also describes the
research variables which are society’s perception and corporate social
responsibility program quality. The researcher uses absolute frequency
distribution table which show the mean, median, and deviation standard.
3.4.3. Normality Test
Normality test is used to investigate whether the population is normal or
not (Priyatno, 2010). Normality test can be done using SPSS by analyzing the
graphic viewed, which shows that the points spread around the diagonal line and
in line with the diagonal line (Situmorang et al, 2008).
3.4.4. Hypothesis Test
Hypothesis test is a test aim to investigate the conclusion in the sampling
that could be applied to the population (Priyatno, 2010). In this research, the
researcher tests the hypothesis using regression analysis as a model to predict and
learn the relationship between dependent variable and independent variable.
Here is the equation:
� = � + � � + �
Formula 3.4 Linear Regression
69
Note:
Y = Corporate Social Responsibility Program Quality
a = Constant
X = Societies Perception
β = Regression Coefficient
e = Error
3.4.4.1. Coefficient Simultaneously Correlation Analysis (Ftest)
Ftest is used to find out if the independent variables collectively influence
the dependent variable significantly (Priyatno, 2010). The name of Ftest was coined
by George W. Snedecor, in honour of Sir Ronald A. Fisher. Fisher initially
developed statistic as the variance ratio in the 1920s.71
� !" = #�
�$�1 − #�� �� − � − 1�%
Formula 3.5 Ftest
Note:
R2 = Determination Coefficient
n = Total Data
k = Total Independent Variable
71 A.K. Sharma. Text Book of Chi-Test and Experimental Design. Discovery Publishing House: New Delhi. 2005. P.77.
70
H0: β1 = β2 = β3 = 0, means there is no significant influence between independent
variable (X) and dependent variable (Y).
H1: at least one βi ≠ 0, when i= 1, 2, 3, means there is significant influence
between independent variable (X) and dependent variable (Y).
The researcher uses the significance level (α) = 10% = 0.1, with acceptable criteria
as follow:
The null hypothesis, H0 is accepted when Ftest < Ftable or Pvalue > 0.1
The alternative hypothesis, H1 is accepted when Ftest > Ftable or Pvalue < 0.1
3.5. Data Result of Validity and Reliability Testing
3.5.1. Validity Test Result
The researcher use Pearson’s Correlation coefficient. Pearson’s correlation
method is the most used method in doing validity test. This method is used by
correlate each item score with total score. Validity test will evaluate the score of
R-computing and r-table. R-computing is come from as the result of SPSS
calculation and r-table comes from the Pearson’s r-value product moment. In this
test, the questionnaire stated as valid if R-computation is greater than r-table.
In validity test, the researcher distributed the questionnaire to 30
respondents randomly, with significant level 10%, the coefficient value of
Pearson’s r-table will be = 0.2960.
N Significant of Level
5% 10% 20 0.4227 0.3598 25 0.3809 0.3233 30 0.3494 0.2960
Table 3.3 Pearson’s r-table
Sources: “Statistical Explained”, Hinton (2004)
71
The result of validity test done by the researcher using SPSS can be seen as
followed:
Q R-Computation r-table Remarks
1 0.634 0.296 VALID
2 0.061 0.296 INVALID
3 0.478 0.296 VALID
4 0.655 0.296 VALID
5 -0.009 0.296 INVALID
6 0.612 0.296 VALID
7 0.767 0.296 VALID
8 -0.002 0.296 INVALID
9 0.634 0.296 VALID
10 0.229 0.296 INVALID
11 0.581 0.296 VALID
12 -0.091 0.296 INVALID
13 0.602 0.296 VALID
14 0.513 0.296 VALID
15 0.581 0.296 VALID
16 0.767 0.296 VALID
17 0.655 0.296 VALID
18 0.612 0.296 VALID
19 0.201 0.296 INVALID
20 0.767 0.296 VALID
21 0.266 0.296 INVALID
22 -0.017 0.296 INVALID
23 0.655 0.296 VALID
24 0.581 0.296 VALID
25 0.174 0.296 INVALID
26 0.185 0.296 INVALID Table 3.4 Validity Test Result
Sources: Statistical of Package for Social Science (SPSS) and Primary Data
72
Based on Table 3.3, there are 10 questions which are invalid because the
R-computation is less then r-table (0.296), which are q2 (0.061), q5 (-0,009), q8 (-
0.002), q10 (0.229), q12 (-0.009), q19 (0.201), q21 (0.266), q22 (-0.017), and q25
(0.174). The researcher decides to eliminate the questions and use all the
remaining questions that are valid as many as 16 questions.
3.5.2. Reliability Test Result
Reliability measurement using alpha cronbach method will result alpha
value in scale 0-1, which can be divided in five classes. Each class’s value and its
reliability degree can be seen on table below:
Alpha Reliability Degree
0.00-0.20 Less Reliable
0.201-0.40 Quite Reliable
0.401-0.60 Reliable Enough
0.601-0.80 Reliable
0.801-1.00 Very Reliable
Table 3.5 Reliability Degree Table
Sources: “It’s Easy Olah Data dengan SPSS, Yohanes Anton Nugroho (2011)
Cronbach’s Alpha Cronbach’s Alpha
Based on Standardized
Items
N of Items
0.854 0.869 2
Table 3.6 Reliability Test Result
Sources: Statistical of Package for Social Science (SPSS) and Primary Data
73
Based on Table 3.5, it is showed that the value of Cronbach’s Alpha is
greater than 0.80, which prove that the variable is reliable and strong. It means
that the questions are reliable and acceptable to be used.
74
CHAPTER IV
ANALYSIS OF DATA AND INTERPRETATION OF
RESULTS
4.1. Interpretation of Demographic Respondent
The next step done in this research is processing the data with SPSS 16.0
and Excel Program to get an overview and interpretation on the subject, data, and
research results. Data instruments used in this research is questionnaire, the
composition of the questions is 8 (eight) point statements related to variable X,
and 8 (eight) point statements related to variable Y, the total statements is 16
(sixteen) statements.
Based on the questionnaire related to the society’s perception (X), and
corporate social responsibility program quality (Y), the population of this research
is societies who live around the company, named PT. Pupuk Sriwidjaja
Palembang. Specifically the sample of this research was 75 respondents. To gain
insight about characteristic of societies who live around PT. Pupuk Sriwidjaja, the
researcher classifies the characteristic of respondent by gender, age, and
education.
The following demographic respondent data will show general information
related to the present respondent condition includes gender, age, and education.
75
4.1.1. Gender
Gender Total Number Percentage (%)
Male 39 52%
Female 36 48%
Total 75 100%
Table 4.1 Respondents’ Gender Profile
Based on Table 4.1, most respondents in this research are male, as
many as 39 people with percentage 52%. Female respondent is 36 people
with percentage 48%.
4.1.2. Age
Age (years old) Total Number Percentage (%)
< 25 19 25.3%
23 – 25 11 14.7%
35 – 45 17 22.7%
>45 28 37.3%
Total 75 100%
Table 4.2 Respondents’ Age Profile
Based on table 4.2, most respondents in this research are in the age
above 45 years old, as many as 28 people with percentage 37.3%. The
second largest respondent is in the age below 25 years old as many as 19
people with percentage 25.3% from the total respondents, in the third rank
are aged 35-45 years old as many as 17 people with percentage 22.7%, and
the last rank is aged 23-25 years old as many as 11 people with percentage
14.7%.
76
4.1.3. Education
Education Total Number Persentase (%)
Undergraduate 15 20%
S1 42 56%
S2 12 16%
S3 6 8%
Total 75 100%
Table 4.3 Respondents’ Education Profile
Based on Table 4.3, the respondent mostly had bachelor degree (S1)
as many as 42 people with percentage 56%, 15 people with percentage 20%
who still undergraduate, 12 people with percentage 16%, and only 6 people
with percentage 8% who had master degree. The result shows that the
education level of the respondents is high enough, so that have an ability to
understand about CSR.
4.2. Descriptive Statistic
In a purpose to give the description about the variables used in the research
which are society’s perception (SP) and CSR program quality (CSRPQ), the
researcher use absolute frequency table which will show the range of theoretical,
real range, average, and standard deviation.
Descriptive Statistics
N Minimum Maximum Sum Mean Std. Deviation
CSRPQ 75 3.38 4.75 298.88 3.9850 .29563
SP 75 3.38 4.75 293.00 3.9067 .30694
Valid N (listwise) 75
Table 4.4 Descriptive Statistic Variable
Source: Statistical Package for Social Science (SPSS) and Primary Data
77
Based on Table 4.4 above, it is found that for variable Societies
Perception as X with total N = 75, has value of mean = 3.9067, minimum
value of 3.38, maximum value of 4.75, and the value of standard deviation =
0.30694. Variable CSR Program Quality (CSRPQ) as Y with total N = 75,
has value of mean = 3.9850, minimum value of 3.38, maximal value of 4.75,
and the value of standard deviation = 0.29563.
4.3. Interpretation of Data Normality Test
The figure 4.1 below shows that the data is normally distributed, the points
still along an approximately with the straight line drawn. The figure normal plot
of regression standardizes residual with earnings manipulation risk and corporate
governance risk as independent variable and audit planning as dependent variable
nearly make a straight line. The researcher conclude that the data has followed a
linear relationship model and standardizes deviation has followed the normal
standardized distribution.
Figure 4.1 Normal P-P Plot of Regression Standardized Residual Societies
Perception to Company Corporate Social Responsibility Program Quality
Source: Statistical Package for Social Science (SPSS) and Primary Data
78
4.4. Interpretation of Hypothesis Test
4.4.1. Model Evaluation
This research has purposes to determine “The Societies Perception to
Company Corporate Social Responsibility (CSR) Program, Study Case: PT.
Pupuk Sriwidjaja Palembang, In Environmental Program”. Therefore in this data
interpretation will be shown some models and graphics that describe the
significant and the relationship of independent variables into the dependent
variable.
Coefficientsa
Model
Unstandardized Coefficients
Standardized
Coefficients
t Sig. B Std. Error Beta
1 (Constant) 3.142 .431 7.298 .000
SP .216 .110 .224 1.964 .053
a. Dependent Variable: CSRPQ
Table 4.5 Coefficient Societies Perception to Company Corporate Social
Responsibility Program Quality
Source: Statistical Package for Social Science (SPSS) and Primary Data
The result of the coefficient Table 4.5 shows the significant value (sig) for
every independent variable relation. The value can be stated with standard partial
regression coefficient, based on multiple regression result is:
From the formula above, it explain that independent variable which are
Societies Perception (SP) has positive and significant impact on the extension of
Y = 3.142 + 0.216X + e
79
dependent variable (CSR Program Quality), which is determined by the positive
value of B and the acceptable significant value < 0.1
The result of data processing obtained from the above equation is able to
describe in the histograms of regression standardize residual as follow:
Figure 4.2 Regression Standardized Residual
Source: Statistical Package for Social Science (SPSS) and Primary Data
Based on figure 4.2 shows that the data closely formed curve bell which
means the data are distributed normally.
80
4.4.2. Regression Model Summary
Model Summaryb
Model R R Square Adjusted R Square
Std. Error of the
Estimate
1 .710a .504 .490 .25694
a. Predictors: (Constant), SP
b. Dependent Variable: CSRPQ
Table 4.6 Model Summary
Source: Statistical Package for Social Science (SPSS) and Primary Data
Adjusted R Square is used to measure the proportion or the
percentage contribution of each independent variable which are
Societies Perception (X) toward the dependent variable which is CSR
Program Quality (Y). Based on table 4.6, it is found that Adjusted R
Square is 0.490, which indicates Societies Perception is giving affect
as much as 49% in determined CSR program quality and the
remaining 51% influenced by other factors that are not examined in
this research.
81
4.4.3. Interpretation of FTest
ANOVA b
Model Sum of Squares df Mean Square F Sig.
1 Regression .325 1 .325 3.858 .053a
Residual 6.143 73 .084
Total
6.468 74
a. Predictors: (Constant), SP
b. Dependent Variable: CSRPQ
Table 4.7 ANOVA Table Result -
Societies Perception (X) to Company Corporate Social Responsibility Program Quality
Source: Statistical Package for Social Science (SPSS) and Primary Data
Based on Table 4.7 ANOVA Table, obtained the Fvalue is 3.858 which is
greater than Ftable 2.775 with sig 0.053 less than alpha 0.1, thus the model could be
concluded that societies perception give significant influence on the CSR program
quality in PT. Pupuk Srwidjaja Palembang.
Therefore, this model could answer the research hypothesis, as follow:
H0: Societies have negative perception to Corporate Social Responsibility Program
in PT. Pupuk Sriwidjaja Palembang which determined that the company has bad
quality of Corporate Society Program (CSR) program is rejected because the
value above shows that the contribution and relationship of independent variable
toward the dependent variable is quite strong proven by the significant value
0.053 less than 0.1. Hence H1: Societies have positive perception to Corporate
Social Responsibility Program in PT. Pupuk Sriwidjaja Palembang which
determined that the company has good quality of Corporate Society Program
(CSR) program is accepted.
82
Based on the result, the researcher can conclude that CSR program that is
done by PT. Pupuk Sriwidjaja Palembang, which is One Billion Indonesia Trees
(OBIT) has a good quality. Besides that the program is aligned with company
planning and aligned with Forestry Ministerial program that support the
Indonesia’s Millennium Development Goals (MDGs) in the part of ensure
environmental sustainability.
83
CHAPTER V
CONCLUSION AND RECOMMENDATIONS
5.1. Conclusions
Based on the research and analysis done in the previous chapter, there are
several conclusions, which could be stated for this research:
1. Generally, societies have positive perception to Corporate Social
Responsibility Program in PT. Pupuk Sriwidjaja Palembang which determined
that the company has good quality of Corporate Society Program (CSR)
program at confident level 90%. Therefore the H0 which states societies have
negative perception to Corporate Social Responsibility Program in PT. Pupuk
Sriwidjaja Palembang which determined that the company has bad quality of
Corporate Society Program (CSR) program is rejected. Hence the H1 which
states societies have positive perception to Corporate Social Responsibility
Program in PT. Pupuk Sriwidjaja Palembang which determined that the
company has good quality of Corporate Society Program (CSR) program is
accepted.
2. CSR program that is done by PT. Pupuk Sriwidjaja Palembang, which is One
Billion Indonesia Trees (OBIT) has a good quality. Besides that the program
is aligned with company planning and aligned with Forestry Ministerial
program that support the Indonesia’s Millennium Development Goals (MDGs)
in the part of ensure environmental sustainability.
3. Societies Perception is giving affect as much as 49% in determined CSR
program quality and the remaining 51% influenced by other factors that are
not examined in this research. Such as other stakeholders’ perception
(investor, supplier, distributor, employee, government, and customer).
84
5.2. Recommendations
Based on the research done, there are some recommendations as follow:
1. For the next researchers who want to do further research related to this matter,
it is important to recognize and consider many others perceptions which give
influence to CSR program quality.
2. For the next research, it is better to manage the questionnaire distribution in
order to get good feedback on time.
3. For the company, it is recommended to be more aware to the stakeholders’
perception especially societies’ perception seeing that the societies’ perception
give much influences in determining the success of the CSR program
implemented.
4. For the societies, it is better to give active participation in helping the
company doing the CSR program that will give benefit to both parties.
85
LIST OF REFERENCES
Books:
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93
APPENDICES
1. Questionnaires in English
2. Questionnaires in Bahasa
3. Reliability Test Result from SPSS
4. Validity Test Result from SPSS
5. Data in Microsoft Excel 2007
6. Data in SPSS Program
7. Hypothesis Test Result from SPSS
8. Ftable
9. Ttable
10. Organization Structure of PT.Pupuk Sriwidjaja Palembang
11. Organization Structure of Partnership Program and Community
Development
94
1. QUESTIONNAIRE IN ENGLISH
A. Respondent Data Please answer with bold on the answer available: 1. Gender:
a. Male b. Female
2. Age:
a. < 25 years old b. 25 – 35 years old c. 36 – 45 years old d. > 45 years old
3. Education:
a. Undergraduate b. S1 c. S2 d. S3
B. Questionnaire Items
Part 1 : Understanding of the CSR and its program
To answer it, the respondents consider their understanding to Corporate Social Responsibility (CSR). Cross (x)in the answer column that show: 1 = strongly disagree 2 = disagree 3 = less disagree 4 = less agree 5 = agree 6 = strongly agree
`
95
No Statement Opinion
1 2 3 4 5 6 1 CSR is company or business world commitment to
contribute in continuity economic development by paying attention to social responsibility and pressuring on the balance of economic, social, and environment aspect
2 Good CSR will give good images to company. 3 Bad CSR will give bad images to company. 4 Partnership Program is a program to encourage
activity and economic growth through increasing the ability of small businesses in order to become strong and independent.
5 One of the main programs is a partnership capital loans to small and medium entrepreneurs who become assisted partners.
6 Community Development Program is an empowerment program of community social conditions in the business area of each subsidiary in the form of assistance in improving the quality of the environment in surrounding the company operates.
7 One Billion Indonesia Trees (OBIT) is one of community development program which include in environmental conservation done by PT. Pupuk Sriwidjaja.
8 OBIT Program involve Elementary School, Junior High School, Senior High School, University, AJENDAM II Sriwidjaja, Assisted Partner, Green Village, and others government institutes.
`
96
Part 2: Societies’ perception to CSR Program (OBIT Program).
To answer the questions, respondents consider the societies’ perception to CSR Program which is OBIT Program. Cross (x) in the answer column that show:
1 = strongly disagree 2 = disagree 3 = less disagree 4 = less agree 5 = agree 6 = strongly agree
No Statement Opinion
1 2 3 4 5 6 1 CSR which is implemented by PT. Pupuk
Sriwidjaja give positive impact to the environment around the government.
2 OBIT Program which is implemented by PT. Pupuk Sriwidjaja gives positive impact to the environment around the company.
3 The implementation of OBIT Program has helped the society and government in environmental conservation.
4 The implementation of OBIT program is one of way to reduce air pollution, global warming, and keep Indonesia as world lung.
5 The implementation of OBIT Program take a part in maintains the relationship between company and societies.
6 OBIT Program can develop companies’ images to societies.
7 OBIT Program can make the societies realized about the importance of environmental conservation.
8 OBIT Program can be one of lesson to always keep the environmental conservatuion.
97
2. QUESTIONNAIRE IN BAHASA
A. Data Responden Silang (x) padajawaban yang benar 1. JenisKelamin:
a. Pria b. Wanita
2. Usia:
a. < 25 tahun b. 25 – 35 tahun c. 36 – 45 tahun d. > 45 tahun
3. Pendidikan:
a. SMA b. S1 c. S2 d. S3
B. ProdukKuesioner
Bagian 1: Pemahamanmengenai CSR danprogramnya
Untukmenjawabhal-halberikut, respondenmempertimbangkanpemahamanrespondenterhadap CSR.Beritandasilang (x) padakolomjawaban yang menunjukkan: 1 = Sangattidaksetuju 2 = Tidaksetuju 3 = Agaktidaksetuju 4 = AgakSetuju 5 = Setuju 6 = SangatSetuju
98
No Statement Opinion
1 2 3 4 5 6 1 CSR adalah komitmen perusahaan untuk
berkontribusi dalam pengembangan ekonomi yang berkelanjutan dengan memperhatikan kewajiban sosial dan menekankan kepada aspek ekonomi, sosial, dan lingkungan.
2 CSR yang baik akan memberikan image yang baik juga bagi perusahaan.
3 CSR yang buruk akan memberikan image yang buruk juga bagi perusahaan.
4 Program Kemitraan adalah program untuk mendorong kegiatan dan pertumbuhan ekonomi melalui peningkatan kemampuan usaha kecil dan koperasi agar menjadi tangguh dan mandiri.
5 Salah satu program utama kemitraan adalah pemberian pinjaman modal kepada pengusaha kecil dan yang menjadi mitra binaan.
6 Program Bina Lingkungan adalah program pemberdayaan kondisi sosial ekonomi, budaya masyarakat di wilayah usaha masing-masing perusahaan dalam bentuk pemberian bantuan peningkatan kualitas lingkungan di sekitar Perusahaan tersebut beroperasi.
7 One Billion Indonesia Trees (OBIT) merupakan salah satu program bina lingkungan yang termasuk dalam pelestarian lingkungan yang dilakukan oleh PT. Pupuk Sriwidjaja.
8 Program OBIT melibatkan Sekolah dasar, SLTP, SLTA,Perguruan Tinggi, AJENDAM II Sriwijaja, Desa Binaan,Kampung Ramah Lingkungan dan Instansi Pemerintahlainnya.
99
Bagian 2: Persepsimasyarakatterhadap program CSR (Program OBIT)
Untukmenjawabhal-halberikut, respondenmempertimbangkanpersepsimasyarakatterhadap program CSR perusahaanterutama program OBIT. Beritandasilang (x) padakolomjawaban yang menunjukkan: 1 = Sangattidaksetuju 2 = Tidaksetuju 3 = Agaktidaksetuju 4 = AgakSetuju 5 = Setuju 6 = SangatSetuju
No Statement Opinion
1 2 3 4 5 6 1 CSR yang di implementasikan oleh PT. Pupuk
Sriwidjaja memberikan dampak yang positif bagi lingkungan di sekitar perusahaan.
2 OBIT Program yang telah diimplementasikan oleh PT.Pupuk Sriwidjaja memberikan dampak yang positif bagi lingkungan disekitar perusahaan.
3 Pelaksanaan OBIT Program telah membantu masyarakat dan Pemerintah dalam menjaga kelestarian lingkungan.
4 Pelaksanaan OBIT Program adalah salah satu usaha untuk mengurangi polusi udara Global Warning dan mempertahankan Indonesia sebagai paru-paru Dunia.
5 Pelaksanaan OBIT Program ikut mempererat hubungan antara perusahaan dan masyarakat sekitar.
6 OBIT Program dapat membangun citra baik perusahaan bagi masyarakat
7 OBIT Program dapat membangun kesadaran masyarakat atas pentingnya pelestarian lingkungan
8 OBIT Program dapat dijadikan salah satu pembelajaran untuk selalu menjaga kelestarian lingkungan
100
3. RELIABILITY TEST RESULT FROM SPSS
Reliability Statistics
Cronbach's
Alpha
Cronbach's
Alpha Based on
Standardized
Items N of Items
.854 .869 2
101
4. VALIDITY TEST RESULT FROM SPSS
Total
Q1 Pearson Correlation .634**
Sig. (2-tailed) .000
N 30
Q2 Pearson Correlation .061
Sig. (2-tailed) .749
N 30
Q3 Pearson Correlation .478**
Sig. (2-tailed) .008
N 30
Q4 Pearson Correlation .655**
Sig. (2-tailed) .000
N 30
Q5 Pearson Correlation -.009
Sig. (2-tailed) .963
N 30
Q6 Pearson Correlation .612**
Sig. (2-tailed) .000
N 30
Q7 Pearson Correlation .767**
Sig. (2-tailed) .000
N 30
Q8 Pearson Correlation -.002
Sig. (2-tailed) .990
N 30
Q9 Pearson Correlation .634**
Sig. (2-tailed) .000
N 30
Q10 Pearson Correlation .229
102
Sig. (2-tailed) .224
N 30
Q11 Pearson Correlation .581**
Sig. (2-tailed) .001
N 30
Q12 Pearson Correlation -.091
Sig. (2-tailed) .633
N 30
Q13 Pearson Correlation .602**
Sig. (2-tailed) .000
N 30
Q14 Pearson Correlation .513**
Sig. (2-tailed) .004
N 30
Q15 Pearson Correlation .581**
Sig. (2-tailed) .001
N 30
Q16 Pearson Correlation .767**
Sig. (2-tailed) .000
N 30
Q17 Pearson Correlation .655**
Sig. (2-tailed) .000
N 30
Q18 Pearson Correlation .612**
Sig. (2-tailed) .000
N 30
Q19 Pearson Correlation .201
Sig. (2-tailed) .286
N 30
Q20 Pearson Correlation .767**
Sig. (2-tailed) .000
N 30
103
Q21 Pearson Correlation .266
Sig. (2-tailed) .155
N 30
Q22 Pearson Correlation -.017
Sig. (2-tailed) .931
N 30
Q23 Pearson Correlation .655**
Sig. (2-tailed) .000
N 30
Q24 Pearson Correlation .581**
Sig. (2-tailed) .001
N 30
Q25 Pearson Correlation .174
Sig. (2-tailed) .359
N 30
Q26 Pearson Correlation .185
Sig. (2-tailed) .329
N 30
Total Pearson Correlation 1
Sig. (2-tailed)
N 30
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).
104
5. DATA IN MICROSOFT EXCEL 2007
105
106
107
6. DATA IN SPSS PROGRAM
108
109
7. HYPOTHESIS TEST RESULT FROM SPSS
Descriptive Statistics
N Minimum Maximum Sum Mean Std. Deviation
CSRPQ 75 3.38 4.75 298.88 3.9850 .29563
SP 75 3.38 4.75 293.00 3.9067 .30694
Valid N (listwise) 75
Model Summaryb
Model R R Square
Adjusted R
Square
Std. Error of the
Estimate
1 .710a .504 .490 .25694
a. Predictors: (Constant), SP
b. Dependent Variable: CSRPQ
ANOVAb
Model Sum of Squares df Mean Square F Sig.
1 Regression .325 1 .325 3.858 .053a
Residual 6.143 73 .084
Total
6.468 74
a. Predictors: (Constant), SP
b. Dependent Variable: CSRPQ
110
Coefficientsa
Model
Unstandardized Coefficients
Standardized
Coefficients
t Sig. B Std. Error Beta
1 (Constant) 3.142 .431 7.298 .000
SP .216 .110 .224 1.964 .053
a. Dependent Variable: CSRPQ
111
112
8. FTABLE
113
9. TTABLE
114
10.ORGANIZATION STRUCTURE OF PT. PUPUK SRIWIDJAJA PALEMBANG
115
11. ORGANIZATION STRUCTURE OF PARTNERSHIP PROGRAM AND COMMUNITY DEVELOPMENT