Intergenerational differences of CSR activities in family-run businesses in eastern Thailand

Laysiriroj, Sapanna; Wehrmeyer, Walter Article Intergenerational differences of CSR activities in familyrun businesses in eastern Thailand Asian Journal of Sustainability and Social Responsibility (AJSSR) Provided in Cooperation with: Sustainability Management Research Institute (SMRI), Inha University Suggested Citation: Laysiriroj, Sapanna; Wehrmeyer, Walter (2020) : Intergenerational differences of CSR activities in family-run businesses in eastern Thailand, Asian Journal of Sustainability and Social Responsibility (AJSSR), ISSN 2365-6417, Springer, Cham, Vol. 5, Iss. 2, pp. 1-15, https://doi.org/10.1186/s41180-019-0031-9 This Version is available at: https://hdl.handle.net/10419/298738 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ RESEARCH Open Access Intergenerational differences of CSR activities in family-run businesses in eastern Thailand Sapanna Laysiriroj and Walter Wehrmeyer * * Correspondence: w.wehrmeyer@ surrey.ac.uk Centre for Environment and Sustainability, University of Surrey, Arthur C Clarke building, Floor 2, Guildford, UK Abstract This paper looks at differences and similarities in CSR between generations of familyrun businesses in Thailand, especially their motivation, behaviour, targets, activities, and expectations towards CSR. It will be argued that family-run businesses in Thailand practise CSR informally, driven by a mentality of “giving back to society”and mostly influenced by religion and culture. Family-run businesses generally approach CSR differently from larger corporations. This paper also discusses differences of priorities between 1st and 2nd generation owners, with 1st generation FRBs tend to focus on survival and growth, while the 2nd generation on profit. Despite struggling to survive, 1st generation family-run businesses are typically engaged in CSR activities which influences the 2nd generation to follow suit. Keywords: Family-run businesses, Intrinsic CSR, CSR activities, Intergenerational, CSR differences Background Corporate social responsibility (CSR) and family-run business (FRB) research have been, separately, studied academically for many decades. This research intends to bridge these 2 topics together by looking at CSR in perspectives of FRBs, here defined as “A business where the owner and/or top-manager is a descendant of, and is supported by, commitment from founder and other family members, fully manage and control the company’s operation and vision with sense of psychological ownership”.This definition shares the properties of some existing definitions by other scholars (Ward, 1987; Astrachan & Shanker, 2003; Chua et al., 1999; Astrachan, 2002; Chrisman et al., 2005) and it is suitable to describe the type of FRBs this research is focusing on. Many companies in Asia do not understand CSR in the Western way but recognise corporate philanthropy and developing the local community as activities commensurate with CSR (Uriarte, 2008). In Asian countries, CSR is closely related to matters of the local community, historical events, and countrywide cultural traditions which forms diverse CSR activities around Asia (Chapple & Moon, 2005). They also state that CSR in forms of socially responsible products and processes, and socially responsible employee engagement can be seen across Asia although the most established form of CSR involves traditional community involvement. Therefore, in Asia, a growing number of companies describe CSR as social and environmental effectiveness of their firms. © The Author(s). 2020 Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made. Asian Journal o f Sustainabilit y and Social Res p onsibilit y Laysiriroj and Wehrmeyer Asian Journal of Sustainability and Social Responsibility (2020) 5:2 https://doi.org/10.1186/s41180-019-0031-9 Nevertheless, very few FRBs, especially in Thailand, have used the term CSR when describing such activities (Onozawa, 2013; Laysiriroj et al., 2017). This research will discover and define what CSR activities are being carried out by Thai FRBs and how CSR practices may differ between 1st and 2nd generation FRBs. Before that, the origin of CSR values needs to be explored which could help identify and understand motives behind CSR activities in family business. COPERATE social responsibility concept The concept of CSR has developed over time depending on its purpose so there is no singular definition that is universally accepted (Dahlsrud, 2008; Brammer et al., 2007). Initially, CSR was said to have economic value to companies where it fits with profit maximisation (Friedman, 2009). Jenkins (2004) stated that businesses’social responsibility began by basing on philanthropic donations and activities of large companies so actions such as endowing universities and establishing worker model communities are generally results of these large and wealthy companies. Subsequently, CSR has been applied to address ethical standards for society and a company’s stakeholders. Carroll (1979) mentioned that CSR has expanded to cover economic, legal, ethical, and philanthropic aspects. Ever since, scholars started to relate CSR to the stakeholder concept (Carroll, 1991; Freeman, 2010 p. 38) which takes employees, suppliers, the community and the surrounding society into account (Sims and Keon, 1997; Zaharia, 2011; Euaanant et al., 2011; Lee et al., 2013). Broadly, an organisation culture is often defined as the shared values in an organisation. Jamali & Mirshak (2007) mentioned that differences in culture affects CSR dynamics within companies. This was supported by Perrini & Minoja (2008) who studied CSR in Italian medium-sized FRBs and found out that owner’s beliefs and moral values, and past experiences, influence CSR strategies of the company. In addition, Lantos (2001) suggested that businesses may engage in activities that are expected by local communities and may not necessarily be limited to legal standards such as respecting people, avoiding social danger, and preventing injuries to surrounding people which often coincide with religious values. Carroll (1979) added that identifying these activities may be difficult because they are not formally documented, and they are generally difficult to measure. Evidently, differences in culture affect CSR dynamics within companies (Jamali & Mirshak, 2007). It appears that local corporations primarily emphasise on the importance of meeting their responsibilities and obligations towards their employees and customers. Many researchers are focused on government policies of developing countries which includes environmental matters, corruptions issues, employment issues, regulation issues, and poverty education etc. (Visser, 2008; Dobers & Halme, 2009). However, there is research on CSR practices adopting firm level (MNCs, Large enterprises, SMEs, Family business) in many fields such as employee relations and retention, commitment on CSR, community involvement, and stakeholder relationship (Carroll, 1979; Chapple & Moon, 2005; Jamali et al., 2009; Jenkins, 2004; Looser & Wehrmeyer, 2016). However, CSR practices vary substantially between different sizes of organisation. Jamali et al. (2009) illustrates clear differences in orientations between CSR of SMEs and MNCs and concluded that SMEs are typically flexible and prosper through the Laysiriroj and Wehrmeyer Asian Journal of Sustainability and Social Responsibility (2020) 5:2 Page 2 of 15 motivation driven by their founders and some forms of innovation from being flexible. It should be noted that most FRBs are SMEs, but not every SMEs are FRBs. However, given the overlap in the absence of papers discussing specifically about FRBs and CSR, information on SMEs may be used as a proxy to represent FRBs. Therefore, it is valuable to investigate CSR in FRB perspective since this area is still limited. This paper will contribute the basis of empirical results that identify similarities and differences between CSR of 1st and 2nd generation FRBs in Thailand in four aspects: (1) CSR Drivers (2) CSR Behaviour (3) CSR Target and Activities (4) Expectations from CSR. Methodology The purpose of this research is to examine how the perspective of CSR activities differ across different generations of FRB owners in Thailand. Since CSR in Thai FRBs research is very narrow, there is limited comparable resources for further development in the area. Therefore, this research is exploratory and extends different findings of previous research which were more focused on FRBs in general such as FRB succession and relationship between founders and successors. Data collection and analysis The data gathering method had to be semi-structured interview because it provides indepth observation and provide wider perspective from FRB owners’experience. Since this research is not explanatory and normative or confirmatory, hypothesis testing is not suitable for this research because of the nature of the research and the nature of the knowledge sought (Mackey & Gass, 2005). Pilots had been conducted with two FRB owners to test the reliability and suitability of the interview questions. To address ethical concerns, the researcher followed ethical principles of the University of Surrey including the assurance of full confidentiality of the results and the participating companies. Using snowball sampling, a total of 28 FRBs in Eastern Thailand of various sizes had been selected and were owned by 17 FRB owners comprising of 7 founders (1st generation) and 10 (2nd generation) successors in Eastern Thailand, from 3 different business sectors; hotel, fruit processing, and jewellery. The interviews contained five sections namely (1) Demographic and historical information (2) Exploring the idea of CSR or main drivers of CSR activities (3) Determining the views and aspect of CSR activities of the FRB owners (4) Determining the receiver of CSR activities (5) Determining owners’expectations from CSR activities in FRBs. In this case, interviews are less formal and can grasp answers with higher depth and sincerity. Moran (2006) suggested that spontaneous answers of respondents in a conversation can allow a more truthful responses than formal interviews. Each interview session lasted between 1 to 2 h and was recorded (permitted by the interviewees). All recorded conversations were transcribed for better evaluation and understanding (Saunders et al. 2009). After which, 2D and 3D, Thematic Analysis had been used to organise, analyse and to produce themes and subsequent main-themes and sub-themes, in line with previous efforts (Aronson, 1995; Vaismoradi et al., 2013). These themes were then evaluated into new homogeneous groups. Laysiriroj and Wehrmeyer Asian Journal of Sustainability and Social Responsibility (2020) 5:2 Page 3 of 15 Results: FRB owners information This section discusses differences in CSR perceptions between the 1st and 2nd generations of Thai FRB owners. Table 1shows the broad distribution of comapnies by 1st or 2nd generation and size. There are 11 female owners and 6 male owners. All, except for 2 female interviewees, are Buddhists. In general, 1st generation most owners have significantly lower education level (up to elementary school and high school in Thailand) while 2nd generation owners often have higher education level (bachelor and postgraduate degrees abroad). 1st generation owners are also generally a lot older than 2nd generation owners. From the 17 interviewees, 4 owners are from the jewellery sector, 4 are from fruit-processing sector, and 9 are from the hotel sector. Company sizes in the hotel sector are mixed and some owners run more than 1 hotels. The hotel sector includes 1 micro-small size hotel which is run by a 2nd generation owner, 6 small hotels, 5 owned by the 1st generation owners and 5 owned by the 2nd generation. Out of 12, 10 medium sized hotels are owned by 1st generation themselves and 2 are owned by the 2nd generation. The only large company in the sample is in the hotel sector, currently run by both generations. There are 4 small companies in the fruit processing sector in the sample, 2 of which are run by 1st generation owners and 2 by the 2nd generation. Lastly, the sample includes 1 owner from microsmall company and 3 owners from small sized companies in the jewellery sector. Intergenerational differences in CSR in THAI family-run business From the interviewed data, founders and successors show both similarities and differences in CSR motivation and practices and CSR target and expectation from FRB owners’perspective. The results can be divided into four parts (1) The motives for conducting CSR activities (2) CSR Behaviour (3) CSR targets and activities (4) Expectations from CSR activities practiced: CSR motives among Thai FRB owners According to Table 2, the interviewees suggested that the origin of CSR values in FRB owner’s perspective are religion, family-culture, and owner’s ethical values. Both founders and successors have similar motives to conduct CSR which are internal and intrinsic. Furthermore, Table 2shows that the 1st generation tend to have a much more limited conceptualisation of CSR and refer to CSR activities as TV commercial that large Table 1 FRB Owners Information FRB Owners Information Total 1st Generation (person) 2nd Generation (person) Number of FRB owners 17 7 10 Company Size Total Number of Firms owned by 1st Generation (firms) Number of Firms owned by 2nd Generation (firms) Large 1 0 1 Medium 12 2 10 Small 13 6 7 Micro Small 2 1 1 Total 28 9 19 Laysiriroj and Wehrmeyer Asian Journal of Sustainability and Social Responsibility (2020) 5:2 Page 4 of 15 companies and MNCs promote themselves. All 1st generation FRB owners stated that once their businesses are stable in the market, they want to return the benefits to their society because it is the society’s support that have made them successful. 1st generation owners also believe in thanking their employees for their hard work. Therefore, employees are often treated like family members under the ownership of 1st generation owners. Table 2 CSR in Thai family-run business between 1st and 2nd generation CSR Dimension 1st Generation 2nd Generation Part 1: CSR Driver Origin of Values Religion Very high Low Family-Culture No High Personal Ethical Values High High Part 2: CSR Behaviour Dimensions Formalisation Very Little Quite High Link to Business Very Little High Management Style Paternalistic Business Model Motivation Ethics Profit Consistency One-offs Systematic System Informal Procedural Reason Personal Satisfaction Business Purpose Part 3: Target and Activities Employees Concern Income Employee Productive Reward System Money Commissions Communication Person-person Agenda Meeting Rules Flexible Procedural Basic Needs High High Social Concern Personally Justified Economically Justified Branding Family’s Name Business reputation Religious Activities High Low Social Sponsorship Lower High Government needs High High Join Social Organisation Yes Yes Environment Concern No mention Yes Waste No mention Reuse, Reduce and Recycle Natural concern No mention Sponsorship Part 4: FRB Owners Expectations Employees Employee Capability Work Hard Work Smart Trust Family Trust Commitment Trust Loyalty To Owners To Company Employee’s Satisfaction Yes Yes Society Connections Personal Business Social Benefits Access to Resources Brand Recognition Be Part of Society Yes Yes Business Customer’s Trust Focus Trust the Owners Trust the Brand Brand Image and Reputations No mention Yes Competitive Advantage No mention Yes Laysiriroj and Wehrmeyer Asian Journal of Sustainability and Social Responsibility (2020) 5:2 Page 5 of 15 “I grew from almost nothing. Everything I have here was earned through hard work and endurance. I build my business like building a family because I want everyone to be close and help with one another, especially during hard times. So, I love and treat my employees like family. When I get to prosper, my family will also be better off –that includes everyone in the business as well.” On the other hand, 2nd generation owners appear to have better idea of CSR, due to higher education levels. Nonetheless, 2nd generation owners engage in intrinsic CSR because it provides personal satisfaction. They even chose to refer to these actions as “providing social benefits”rather than CSR because they believe that companies deliberately get involved in CSR to boost their brand image. Most of these owners feel that CSR imposes a hidden agenda towards marketing purposes and does not illustrate their willingness to give to society well enough. “I think I understand how Westerners apply CSR in their business. It seems commercial to me and I do not really like it. I get involved with CSR to help people around me so that I feel good doing so. I think this is how I was brought up by my family since they are very caring for everyone.” This fundamental idea suggests that the roots of their CSR values are rather similar and that these roots are not based on extrinsic “Western”CSR, but on culture, ethics and attitudes. In general, both generations appear to be highly influenced by personal ethical values with regards to their CSR driver. This is evident in their honest belief in doing good for their employees and surrounding society. However, 1st generation owners are highly influenced by values they draw from their religion, while values of the 2nd generation originated from their family upbringing and culture. For instance, 1st generation owners stated that Buddhist practices have strong influence to the ethical activities that they have implemented to their surrounding people. They believe in the Buddhist “Law of Karma”. Inferences are made that good deeds will reap good results for the present and the future. In this manner, Buddhist teachings influence 1st generation owners to provide betterment to society so that they can have positive effects in return. However, results also show that family culture is the main factor for the 2nd generation to engage in CSR. The 2nd generation are exposed to the practices initiated by the 1st generations so they absorb the culture of giving to society. This kind of exposure is more meaningful and relevant for them than religious teachings. On top of that, most 2nd generation owners are able to point out managerial errors of their parents, including CSR choices. Thus, the differences in CSR behaviours are what the 2nd generation believe are improvements over the 1st generations. Therefore, for FRB owners in Thailand, ethics is shaped by religion and culture, and less likely by the difference of their generation or age. It is also less likely that education levels affect how ethics are shaped by the owners. CSR Behaviours in Thai FRBs According to Table 2, CSR behaviours either differ when it comes to formalisation of CSR, linking of CSR to business, CSR management styles, CSR motivation, consistency of CSR practices, CSR system, or reasons for CSR engagement between 1st and 2nd generation. Laysiriroj and Wehrmeyer Asian Journal of Sustainability and Social Responsibility (2020) 5:2 Page 6 of 15 The results suggest that 1st generation FRB owners’management style is typically paternalistic, meaning that the owners act as parents to their employees and they work within closer proximity with their employees. For instance, training and personal development is done personally by them and when employees have personal problems such as shortage of money, health problems, and family member issues, the owner often help their employees financially or in kind. This is evident in the quote below: “I am usually with my staff members on working days. It has always been this way. I have to look at how my people work, what they are doing wrong and how I can help them in their lives. When they have problems, I usually let them solve the problems by themselves but most of the time they are short of cash so I would lend them some money for them to fix their problems but most of the time I don’t really expect the money to be returned.” In addition, 1st generation owners are much more informal because they do not really know what formal CSR is. In contrast, 2nd generation owners run their businesses much more as a mainstream business. They act as boss and friend to their employees yet introduce hierarchy systems into the business. Job descriptions are clearer under the governance of 2nd generation owners. Moreover, they treat employees differently according to their ranks: With managers, 2nd generation owners act more like friends while they make clear distinction as a boss to shop-floor staff. This is usually due to the job description where the managers are responsible for managing their subordinates. This, however, does not mean that they are not also humble owners. The quote explains why 2nd generation owners take this approach. “As my company grows, it is impossible to take care of all my employees personally. So I spend more time with the heads of department and press on that they are to look after their people. I even give them the power to fire or hire particular people as they see fit.” Under 1st generation owners, employees follow orders of the owner while 2nd generation owners expect their employees to follow the rules and to be able to work without the owners being near. This created distance between 2nd generation owners and their staff but also shows more formalised business and CSR structure. 1st generation owners engage in CSR solely for personal ethical reasons while 2nd generation owners incorporate some business purposes into CSR engagement. These intrinsic CSR activities are done by 1st generation owners because they genuinely want to give back to society because the belief in “Law of Karma”allowed them to be happy when these activities take place. However, 2nd generation owners have multiple motivations when engaging in CSR. They are both willing to help others but accept that these activities can benefit their businesses as well. 2nd generation owners mentioned that these ethical practices are good tools to motivate staff and improve employee productivity because they help to build strong relationships within the company. Intrinsic CSR activities also create good impressions of the company in the neighbourhood and so the company’s image can be enhanced, although this may not be the dominant rationale. “I see my parents give back to society, so I do it too. However, I will do these charitable events under the name of the company. A lot of the time, doing so creates business connections and also give us a good image in the neighbourhood.” Overall, CSR between the 1st and 2nd generation have clear distinctions. The 1st generation have a more paternalistic management style and informal CSR system. They Laysiriroj and Wehrmeyer Asian Journal of Sustainability and Social Responsibility (2020) 5:2 Page 7 of 15 also conduct CSR in simple often one-off ways which satisfy this personal ethics and some of community responsibility. In contrast, 2nd generation FRBs are more systematic in CSR practices and management. Their CSR activities are not only personal but are conducted to generate business benefits as well. From 1st to 2nd generation, the organisation structure changes (Greiner 1997) from flat-management to hierarchymanagement resulting in changes in CSR behaviours which affects the style and frequency of staff interaction. Differences and similarities in CSR target and activities Both generations’main targets are their employees and their surrounding society, in that order. The main difference is that 1st generation owners typically do not concern themselves with environmental issues while 2nd generation owners do to a small extent. Apart from the environment, other CSR targets, employees and society, are similar but their CSR practices differ. Employees All owners gave priority to their employees when considering CSR activities. However, both generations have different concerns for their employees and this has resulted in different CSR practices in terms of reward systems, communications, rules, and company events. There are also some aspects of the 1st generation that was adopted by the 2nd generation such as providing basic needs (food and shelter) for their employees. Because 1st generation owners think that money is the main motivation for their workers, they focus on providing financial aid to their employees at important times. “It is very natural and quite often that my staff are facing financial problems. They could be in debt, or whether their family members are ill, and they cannot cover these expenses since many of them don’t have savings. I can’t turn a blind eye on these situations and so I would help them by lending them the money without expecting it to be returned.” When employees need extra cash, 1st generation owners lend a helping hand which creates the sense of being looked after to employees. This instills loyalty that grew from gratitude. In contrast, 2nd generation owners focus on activities that help to train their employees because they believe in personal development and productivity. Their reward system revolves around commission payment in order to motivate their staff to work more effectively. These commitments can help to reduce staff turnover rate for the companies. Under 1st generation owners’governance, rules and regulations are more flexible because the companies are often less formalised, and they work more closely with their employees. When working within close proximity, flexibility is needed to help smoothen the relationship and workflow. Moreover, when issues arise, the owner themselves are able to make instant decision. However, being flexible can also play a part in causing bias in judgements because there is no standardised policy for decision making. 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