1. Corporate Social Responsibility
and Institutional Theory; Evidence from a
Developing Islamic Nation
S. Amir Hossein Ghazinoori
Manjit Singh Sandhu
Chew Yin Teng
Faculty of Business
Sunway Campus Malaysia

2. Background
 Until the late 1970s, CSR was derided as a joke, an oxymoron & a
contradiction in terms of the investment and by the business
community. (Lydenberg 2005; Lee 2008)
 However, CSR has become an increasingly salient feature of business
and its environment, to which managers are expected to respond. (Lockett
et al. 2006)
 CSR have moved from ethics-oriented arguments to
performance-oriented managerial studies.
 CSR: explored area of research, but still a ‘contestable’ concept at the
‘embryonic’ stage. (Windsor , 2006)
 Scholars have struggled to achieve a clear paradigm, let alone a
common language to guide the conversation. (Godfrey & Hatch 2007)

3. Background
 Current situation of CSR reflects the influence of various theories:
Corporate Performance / Sustainability / Stakeholder Model / Agency theory / Resource Base View /
Competitive Advantage / Institutional Theory
 Majority of the theoretically oriented research on CSR have focused on the
connections of CSR and business performance and lately on strategic view of CSR.
 The argument that corporations engage in CSR just as one of the other ways to
improve their business performance seems clearly unfit to explain the reasons of
their engagement. (Brammer et al. 2012)
 If profit maximization or performance improvement were the only reasons for
corporations to engage in CSR, why would CSR vary in different countries and
regions? (Brammer et al. 2012)
 “Given the incentives for maximizing profit and shareholder value, let alone
acting opportunistically, why would a corporation ever act in a socially
responsible way, even at the most minimal level?” (Campbell, 2007, p.947)

4. Research Gap
There is call for more comparative
perspective in understanding CSR
as a managerial concept through
the institutional lens
• Although there is growing literature on the role of
institutions in enhancing CSR, however its still very
fragmented & tend to be confined to studies from the
Anglo Saxon Western perspectives
• There is paucity of research that compares how
institutions from developing nations play a role in
enhancing CSR practices
• We really don’t know “what does CSR mean in a non-
Western, non-democratic capitalist institutional
framework?”
The way corporations approach
CSR differs across countries & is
very much influenced by different
institutional arrangements
(Kang & Moon,2012)
• their contribution has so far only added conceptual
understanding of the general dynamics of institutional
influences.
• Role of formal & Informal institutions are rarely
explored separately
Although CSR research through
institutional lenses across
national studies is gaining
momentum, But
•The formal and informal institutions in a country
such as Iran are extremely distinct due to different
political arrangements, diverse cultural system,
complex business relations, dissimilar traditional
norms and unique political- religious arrangements.
•Some countries are not covered in the CSR
literature and experimental studies.
Role of
Institutions in
Shaping CSR
Concept in
Developing
Countries
IRAN
Institutional structures vary
according to regions & countries,
their influences on CSR may also
be different.

5. How Institutions Play a Role in Shaping
the CSR Concept, Policies & Practices in
IRAN?

6. Why Institutional Lens
Highly applicable to the CSR debate
Corporations are social structures consisting of individuals.
Corporations operate within socially constructed limits.
Development of CSR notion is completely involved in the historical, socio-economic, political, and
organizational characters of the society.
National institutional arrangements influence the CSR and therefore the way that corporations
approach the CSR, differ across countries.
Since formal & informal institutional structures vary according to regions & countries, their
influences on CSR may also be different. In fact the impact of informal institutions (such as
religious norms, customary practices or traditions) on CSR may be far greater than formal
institutions in developing countries (Brammer et al. 2012).
Conducting cross national investigations into the impact of institutions will further shed light
on how different national institutions in different countries influence CSR practices.
“Institutional Theory considers the processes by which structures, including schemas,
rules, norms, and routines, become established as authoritative guidelines for social
behaviour and it inquires into how these elements are created, diffused, adopted, and
adapted over space and time; and how they fall into decline and disuse” (Scott, 2004)

7. Conceptual Framework
Iranian Specific Context
FORMAL INSTITUTIONS
Laws
Regulations
Rules
Industry self-Regulatory System
INFORMAL INSTITUTIONS
Culture
Traditions & Social Norms
Religion
Personal Values & Ethics
Independent NGOs
Corporate Social
Responsibility
Companies
Adapted by combining Campbell’s perspective (2007) & Peng et al. (2009) framework

8. Research Methodology
 Exploratory Qualitative : In-depth understanding of the current CSR condition and the
role of institutions in shaping CSR in a developing nation such as Iran.
 Unit of Analysis are firms and institutions playing a role in promoting CSR in Iran
 Case study Approach
Standardized Open Ended
Questionnaire
In-depth Semi Structured
Interviews
Institutional Theory Perspective
Content Analysis
Transcripts
Thematic Analysis
Pattern Matching
Qualitative Approach
Designed Conceptual Framework
Translation
Literature Review
Design Data Collection Data Analysis

9. Data Collection
 Multiple Sources of Data
 Semi-structured interviews with key informants in companies,
using open ended questionnaires.
 Semi-Structured interviews with Key Informants in institutions
 Semi-Structured interviews with Key Informants in Media
organizations.
 Secondary sources of information
o Letters, memoranda, email correspondence
o Agendas, announcements, written reports
o Administrative documents, progress reports
o Formal studies or evaluations of the same cases of study
o News clippings and other articles appearing in the mass media or community newspapers

10. Data Collection; Interviewed Companies
COMPANIES
Cas
e
Industry
Sector
Business
Nature
Found
ation
Year
No. of
Employees
Ownership
Operation
Scope
Key Activities
Specific Unit
for CSR
C1 Automobile Manufacturing 1966 30’000
Public-
Private
Local-
International
Producing full range of vehicles; namely, passenger cars,
pick-ups, 4WDs, light & heavy commercial vehicles,
minibuses and buses
NO
C2 Natural Gas
Manufacturing
+
Service
1953 7’000 Private Local
Providing LPG to 2.5 million consumers in the domestic
industrial, commercial & service sectors of Iran.
NO
C3 Power Manufacturing 2002 3’000
Public-
Private
Local-Regional
Provider of turbine solutions to industrial sector. Offering
power Gas and Steam Turbines to power projects
CSR
Committee
C4 Construction EPC Contractor 1977 15’000 Private
Local-
International
EPC company providing design, management,
procurement and construction services
YES
C5
Tele-
Communicati
on
Service 1994 5’000
Public-
Private
Local Mobile phone network operator. NO
C6
Automobile
Parts
Manufacturing
+
Service
1994 5’000
Public-
Private
Local
Manufacturing and procurement of vehicle equipment to
automobile manufacturers.
CSR
Committee
C7
Food
Industry
Manufacturing 1998 350
Private-
Family
Owned
Local-Regional-
International
Producing full kinds Spaghetti, Pasta, Flour, Cornflakes,
Cake Powder, Oil & Tomato Paste.
NO
C8
Medical
Equipment
Manufacturing 1981 200
Private-
Family
Owned
Local
Producer of various standard light medical material &
equipment as Bandage, Gauze & Cotton.
Cultural
Committee
To capture the holistic and integrated picture, it was logical to select cases among different
industrial sectors through selective sampling strategy.

11. Data Collection; Interviewed Institutions
INSTITUTION
Case Name Type Interviewee Position
Foundation
Year
CSR Role
I1 Iran CSR Development Center NGO Founder/CEO 2004
Promotion,
Education,
Consultation
I2 Iran Chamber of Commerce
Non-
Governmental
Head of Ethics
Commission
1883 Promotion
I3 Tehran Chamber of Commerce
Non-
Governmental
Head of Imports &
Secretary of Chamber
1926 Promotion
I4
National Iranian Productivity
Organization
Governmental Head of NIPO 1964 Education
MEDIA
Case Media Classification Type Foundation Year No. Of Employees CSR Role
M1 Newspaper Non-Governmental 2002 100 > X > 300 Informative
M2 News Agency Non-Governmental 2003 300 > X > 500 Informative
Besides focusing on companies, the research also covered some
main Iranian institutional bodies which had some degree of
influence on the development of CSR practices in Iran.

12. Research Findings (Formal Institutions)
Our findings identified the extremely weak role of formal institutions in Iran.
It has been revealed that industry-specific conditions can affect the institutional surroundings
of companies and consequently their social policies. On the other hand views from
institutional bodies supported our findings on the corporate side.
Formal institutions like laws and regulations are the backbones of the development processes
in each society. Since these formal institutions are not well-developed in social related areas in
countries like Iran, subsequently their effects are extremely weak.
Only two companies in the automobile industry were under the influence of some laws and
regulations regarding their CSR practices.
Industry self regulations have limited impact on some CSR practices of companies, based on
the nature of their industry.
Except two automobile companies, rest of the companies defined that there is no pressure or
expectation from government side for responsible business practice
There is no defined incentive for CSR practices in Iran and only giant automobile companies
can have some limited incentives through their lobby management.

13. Role of Formal Institutions
Case Industry
Affected by
Formal
Institutions
Affecting Formal Institution
Pressure or expectation
by the government
Incentive for CSR
practices?
C1 Automobile Yes
Laws & Regulations
Standard Organization
Traffic Police
Industry Self Regulations
Pressure
Expectation
Yes (Limited)
C2 Natural Gas Yes Industry Self Regulations No No
C3 Power No NA No No
C4 Construction No NA No No
C5
Tele-
Communication
No NA No No
C6 Automobile Parts Yes
Laws & Regulations
Standard Organization
Traffic Police
Ministry of Industries for NGV project
Pressure
Expectation
Yes (Limited)
C7 Food No
Industry Self Regulations
(Extremely Limited)
No No
C8
Medical
Equipment
No NA No No

14. Informal Institutions had higher impact on CSR policies and practices in Iran compared to
formal institutions.
As Iran is an Islamic country, we expected to find ‘institution of religion’ as the most effective
informal institution affecting CSR policies and practices. However, our findings indicate that
personal values and beliefs were ‘more influential in Iran and religion was considered as a
secondary factor.
Most of the companies believed that culture, traditions and social norms are integrated into
their day-to-day life and they also affect all their decisions indirectly.
Most of the interviewees had some degree of resistance in accepting religion as an affecting
institution which can be rooted in the historical path of religion and its alignment with politics
within the last thirty years after the Islamic revolution.
It has been noted that the effect of NGOs is extremely weak in Iran and there is a missing link
between companies and NGOs. It seems NGOs are not aware of the capabilities and actual
needs of these organizations.
Media as informal institutions have a minimal role in promoting CSR in Iran and their role is
mostly informative and it’s confined to creating awareness within the society and business
environment.
Managerial structure in SMEs enables them to experience better and more effective CSR
practices compare to large firms as.
Research Findings (Informal Institutions)

15. Role of Informal Institutions
Informal
Institution
C1 C2 C3 C4 C5 C6 C7 C8
Culture
Effective
institution on
any decision &
practice
Effective
institution on any
decision &
practice
Weak effect
on CSR
decisions &
Practices
Strong
effective
institution on
CSR policies
and practices
Effective
institution on
CSR policies &
practices
Effective
institution on
any decision
& practice
Effective
institution on
any decision &
practice
Effective
institution on
any decision
& practice
Norms &
Tradition
Effective
institutions on
any decision &
practice
Effective
institutions on
any decision &
practice
Weak effect on
CSR decisions &
Practices
Strong
effective
institutions on
CSR policies
and practices
Effective
institution on
CSR policies &
practices
Effective
institution on
any decision
& practice
Effective
institution on
any decision &
practice
Effective
institution on
any decision
& practice
Religion
Strong effective
institution on
CSR policies
and practices
Effective
institution on
CSR policies &
practices
Not effective
institution on
CSR policies &
practices
Not effective
institution on
CSR policies &
practices
Effective
institution on
CSR policies &
practices
Not effective
institution on
CSR policies
& practices
Strong
effective
institution on
CSR policies
and practices
Not effective
institution on
CSR policies
& practices
Ethics &
Values
Effective
institution on
CSR policies &
practices
Strong effective
institutions on
CSR policies
and practices
Strong effective
institutions on
CSR policies
and practices
Strong
effective
institutions on
CSR policies
and practices
Strong effective
institutions on
CSR policies
and practices
Strong
effective
institution on
CSR policies
and practices
Effective
institution on
CSR policies &
practices
Strong
effective
institution on
CSR policies
and practices
NGOs
(Weak Effect)
There are only
some
expectations
(No Effect)
There is no
pressure or
expectation
(No Effect)
There is no
pressure or
expectation
(Weak Effect)
There are only
some
expectations
(No Effect)
There is no
pressure or
expectation
(Weak Effect)
There are only
some
expectations
(No Effect)
There is no
pressure or
expectation
(No Effect)
There is no
pressure or
expectation

16. Concluding Remarks
There is a general lack of knowledge regarding CSR concept among Iranian companies and
firms are not aware of the potential positive outcomes that can be reaped from effective CSR
practices and policies.
Weak formal institutional structure in Iran has resulted in unhealthy governance system and
this unfavourable governance structure resulted in reluctance by some firms to adopt CSR
practices since its value is not clear.
Research findings revealed that institutional changes (mostly formal) are necessary for further
improvement and development of CSR practices in Iran.
The empirical findings reinforce the notion that CSR is significantly influenced by the specific
social, cultural, economic and political conditions of a particular country (Visser 2008; Matten and
Moon, 2008; Kang and Moon 2012).
This research has significant contribution for future policy development in the field of CSR in Iran.
There were some serious limitation for this study, however ….

17. References
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Godfrey, P.C., Hatch, N.W. 2007. Researching Corporate Social Responsibility: An Agenda for the 21st Century. Journal of Business Ethics,
70: 87–98.
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Influence. Journal of Management Studies, 43: 115–136.
Peng, M.W., Sun, S.L. & Chen, H. 2009. The Institutional-Based View as a Third Leg for a Strategy Tripod. Academy of Management
Perspectives, 23(3): 63-81.
Scott, W. R. 2004. Institutional Theory: Contributing to a Theoretical Research Program. In K. G. Smith, & M. A. Hit, (Eds.), Great Minds in
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(Eds.), The Oxford Handbook of Corporate Social Responsibility: 473-479, Oxford: Oxford University Press.
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18. Thank You
Questions ?