1. crs in kingfisher final
TRANSCRIPT
CORPORATE SOCIAL RESPONSIBILITY IN THE AVIATION SECTOR
WITH SPECIAL REFERENCE OF KINGFISHER AIRLINES
ABSTRACT
The Sanskrit saying, ‘Atithi Devo Bhav’, meaning – ‘the one who comes
to you to be served should be taken to be God’, sets the cord for
services to be rendered with highest order of responsibility, be it to
individuals or to the society. Thus, the tone for Corporate Social
Responsibility (CSR) with highest philosophical ambiance is already set
in Indian context. Corporate Social Responsibility (CSR) is a phrase with
wider meaning and depth. This phrase has long been in use with
growth of industries and corporates. It not only reflects the ‘passage of
time’ in its impact and transformation, but its meaning and
understanding has been affected by the growth of society, nations and
changes in their appreciation of cultural heritage and background.
Thus, for the service sector organization business with the society has
to be predominantly in the highest denominations of social
responsibility. With this backdrop, study of aviation industry, a fast
growing service sector in India, has been undertaken. The study is
based on the analysis of primary data. Managers of airlines industry
were asked to express their perception of CSR in their organizations.
Later data was collected from general public regarding their perception
of CSR orientation of the Airlines. The empirical analysis reveals vast
gap between CSR claims of managers of airlines and the perception of
public, although there is clear inclination of Managers towards CSR.
To the best of the researchers’ knowledge, this is probably the first
time that such a study of ‘CSR in Aviation Industry in India’ has been
undertaken.
CSR has long been debated, over its conceptual-extent, applicability,
viability and issues like, actual implementation etc. inclusive of the
issues like nature and size of the organizations, but not much literature
is available on ‘CSR in service sector organizations’.
In later part of the last century, the service sector has grown and
gained importance, hence, dearth of such literature and need for study
of CSR in service sector organizations is being deeply felt.
Among the Asian countries, India in the last five years has seen the
urge and phenomenal growth in aviation industry. So, the researchers
felt the importance of addressing the issue of CSR in this industry at
initial stages of development, for possible integrated-growth of the
two, together.
In this paper, an attempt has been made by the researchers:
- To develop theoretical construct of CSR in general and India in
particular.
- Review of practices related to CSR in general, in India and Aviation
Industry in particular.
- Gather manager’s perception of CSR orientation of Kingfisher airlines.
- Explore the perception of public about the CSR orientation of airlines
in India, with particular emphasis on Kingfisher Airlines.
To the best of the researchers’ knowledge, this is for the first time that
such a study of ‘CSR in Aviation Industry in India’ has been undertaken.
EXTERNAL SIGNATORY PAGE
THESIS TOPIC APPROVAL LETTER SENT OVER EMAIL
ACKNOWLEDGMENTS
TABLE OF CONTENTS
Title Page
Abstract
External Signatory page
Thesis Topic approval letter sent over email
Acknowledgments
Table of Contents
Synopsis
Introduction
Literature Review
Objective of study
Methodology
Report of Data Collection – Findings & Analysis
Conclusions & Implications
Bibliography
Appendices
Response Sheets
SYNOPSIS
INTRODUCTION
CSR: Theoretical Construct
The section begins with the discussion on concept of CSR and its
understanding among the intellectuals in form of definitions. Also, the
researchers deliberate on the concept of CSR as it has existed in Indian
society and its present understanding, with reference to the legislative
and business environment in the country.
2.1 Concept of CSR
Since, the phrase Corporate Social Responsibility has many dimensions
to it, so its meaning, implementation and implications have various
hues and shades in its explanation. For this reason, several questions
have been raised by the practitioners of management, scholars and
academicians, regarding social responsibility of corporates. For
example, they are asking as to who decides upon the locus of
responsibility and sets the standards of responsibility? How conflicts
shall be resolved (Warton & Clifton, 2002)? Who are going to be the
stakeholders i.e. how are they going to be identified? And as Hartman
(2003) puts it, what would be the nature of the responsibility?
The element of responsibility entails a reference for its correctness and
appropriateness; and this reference is the overall ‘development of
society’, well stated by Mahbub ul Haq (HDR, 2004), that the basic
purpose of development is to enlarge people's choices….and that the
objective of development is to create an enabling environment for
people to enjoy long, healthy and creative lives.
Hence, it is important to understand the point that, whether corporates
appreciate or not, herein lies the gist of CSR, as highlighted above. The
matter is not that of profit earning alone for a corporation, but that of
looking beyond the profit-making mindset. Today corporates and
business enterprises, globally, are slowly realizing that business for
profit only looses the confidence and trust of consumers, workforce,
state and the management. Such a business is destined to doom! This
realization has made corporations recognize the need of CSR and its
implementation along with their respective businesses.
Moreover, as Gillis & Spring (2001) emphasize, consumers, investors,
community members and potential employees are all seeking and
demanding information on a corporation's social performance; thereby
asking corporates to be conscious of their responsibilities towards
society.
Anu Aga (Khandwalla, 2004) voices similar sentiments. She says that
the fundamental idea embedded in CSR is that business corporations
can no longer act as isolated entities, detached from the broader
issues of society. As Cherunilam (1998) puts it, there is a symbiotic
relationship that needs to exist between Business and Society. He
further adds that business survives using resources of society, and has
responsibility to society. Globalisation has thrown yet another
challenge for CSR, by shifting of businesses to the regions of Asia and
Africa, due to lower costs, primarily of labour. Question by Wharton &
Clifton (2002) becomes meaningful here, that can an industry or
organisation have two or more faces to put up - one for the people and
society of their land, and another for the people of different land?
Therefore, it is evident that scale of flourishing business is to be
graduated by the sense of responsibility of corporates to fulfil the
aspirations of society and its holistic development, and should not
remain confined to profit, which is reflected in terms of share value,
dividends and debentures alone.
2.2 Definitions of CSR
According to Dr. Manne (Goralski, 1972), any working definition of
Corporate Social Responsibility requires three aspects: A business
expenditure or activity must be ‘one for which the marginal returns to
the corporation are less than the returns available from some
alternative expenditure’; it must be purely voluntary; and must be an
actual corporate expenditure rather than a conduit for individual
largess. Then Davis (1973) propounded, the much known, ‘Iron Law of
responsibility’, that needs no elaboration here.
According to Mehta (2004) social responsibility is essentially a
subjective term. Some interpret it as no more than the ‘price’ that
needs to be paid to mitigate the possibly adverse implications of a
company’s activities on the local community; and others as a good
proxy for ‘corporate citizenship’ whilst others as the index for
corporate ethics. Other definitions have been given by Wharton &
Clifton (2002), Ray (2004), World Business Council for Sustainable
Development (1998).
The researchers have dealt in detail about concept of CSR, its
importance and the arguments being given in favour and against the
case of CSR, in detail, in their previous work (Saxena & Gupta, 2005)
and define CSR as ‘Part – lying with corporates – of total commitment
required to achieve complete harmony between terms and demands,
even conflicting ones, of three core players – Society, Government and
Corporates – for growth of healthy, meaningful and sustainable
‘Business’’.
2.3 CSR in India
The concept of CSR had always been part of Indian business tradition,
though it had not been highlighted in terms of CSR, as understood or
defined today. People being highly social, the tradition of CSR had
existed even before the industrial revolution in India in 20th Century,
and manifested itself in practice and core philosophical thoughts. The
section also deals about the integration of CSR in policies and
programmes of Independent India, post 1947, and very important
variables that have made CSR an imperative in Indian context.
2.3.1 Philosophical Background
In contention to above, the term, ‘Loksamagrah’, finds mention in
chapter III (20) of ‘Gita’- the sacred Indian scripture expounding Indian
philosophy, defines what should be the ultimate goal of actions and
interactions. In detail, ‘Loksamagraha’ means-binding men together,
and protecting, maintaining & regulating them in such a way that they
might acquire that strength, which results from mutual cooperation,
thereby putting them on the path of acquiring merit, while maintaining
their good conditions (Tilak, 2000). It implies that society shall remain,
if there is mutual cooperation among the serving elements, one of
them being the corporates.
According to Jose, Bandi & Mehra (2003), the concept of ‘Trusteeship’,
as propounded by Mahatma Gandhi, finds echo in the concept of
‘Ttriple Bottom Line’ impact of business. They further opine that,
religion and charity have always been linked in India with business,
and people being nurtured in a social environment founded on the
belief that ‘giving’ is good.
The concept of ‘Enlightened Collective Interest’, coined by Sharma
(1997), is a step beyond the concept of ‘enlightened self interest’ and
can be taken to be synonymous to concept of ‘Loksamagrah’ in today’s
context. His WEPT model (Wealth, Ethics, Pleasure and Transcendence)
sums up the philosophy of ‘Business conductance’ in true sense.
The conceptualization of CSR in Indian traditional sense of business
has always been about corporates going for general good. It can be
concluded here that, the concept of ‘social good as part of business’ is
more deep seated in Indian and other Asian countries for the reason
given by Chua, Nisbett, Leu (2005) and HT (2005), that East Asians are
more holistic than westerners and the evidences suggest that, east
Asians are more attuned to emotions than Americans.
2.3.2 Business Growth: Pre and Post Independent India
Around mid nineteenth century, the energy and material resources
available in India, attracted the attention of West & Europe and
business community in India to go for industrialization and
development to meet the needs and demands of an empire and its
subjects. This initiated evolution of business houses and corporates in
India, with integration of traditional charity and philosophical content
of business, in terms of social responsibility in their ventures.
This subtle entwining of business and social responsibility continued till
independence, and was self-driven without any demands and dictates
from the society, as the society was dormant and also the executive
and legislature of the then Governance didn’t put much emphasis on
the social responsibility aspect in the business, as conceived today.
Post independent era has been markedly different in India. The
democratic setup and the rights enshrined in the Indian Constitution
shaped out a new socio-political order in which, development of society
required ‘Heavy Industrialization’ as mainstay. The government of the
day took upon the responsibility to go in for industrialization in a big
way to ensure growth and development of the country.
The pre-independence governance through the then existing feudal
system fell short to match the aspirations of people and the
development. Hence, post-independence a democratic setup, with
mainstay of development lying with Public Sector organizations was
conceptualized. This was an attempt to address the issues through
CSR.
But, in late 1980s it was realized that with all good intentions of social
responsibility, the policies and programmes led to the ‘Quota Raj’ or
‘Licence Raj’ i.e. Rule of License in India, due to which, social
responsibility concept suffered very badly, and everything turned into
a deadwood and growth actually got stopped.
Then economists, executive and trade & commerce consortiums
together made efforts to come out of the deadlock, and envisaged the
paradigm shift in which, the social responsibility became responsibility
of all players including the government. Floodgates were opened and
private sector role came up in a very big way; And since liberalization
of economy in 1991, the private sector has grown to become an entity
in itself, and has been assigned role to partner developmental
responsibilities with the government.
This laid firm foundation for CSR and the need for its practice. These
observations are corroborated well through the report of TERI called
‘Altered Images: The 2001 State of CSR in India poll’ states 4 Models of
CSR in India: The ‘Ethical model’ as suggested by Mahatama Gandhi,
the ‘Statist model’, by Jawaharlal Nehru, the ‘Liberal model’ by Milton
Friedman and the ‘Stakeholder model’ championed by R. Edward
Freeman and according to the report all the four models co-exist in
India today (Prakash-Mani, 2002). This concept of private partnership
for sharing social responsibility led to opening of many areas to private
sector, previously held by government alone, for example
Communication, Power and Aviation etc., which were badly looking for
growth to match the demands already projected.
Arising out of the social responsibility sharing was the CSR imperative
in Indian Business context. There is vast literature available, and views
of Ambani (Ambani, 2002), Khandwalla (2004), (Bakshi, 2004) can all
be quoted as arguments in favour of CSR, but the gist of all is reflected
in the words of JRD Tata, Doyen of Indian Business as quoted by
Srivastava & Venkatswaran (2000), that the private sector should
realize that they have to replay their part in the spirit of trusteeship
advocated by Mahatma Gandhi and that, no Business is worthwhile,
unless it serves the needs or interests of the country and its people.
LITERATURE REVIEW
In this section literature review is being presented to give an idea of
current CSR practices being taken up by organizations in India, in
general, and dire need of research on ‘CSR in service sector’ in
particular. As a case, the section includes description about the
aviation industry in India, and CSR initiatives being taken up by various
airlines, globally.
3.1 Practices and Studies in ‘CSR in India’
Post Independence era in India had seen CSR practices grow in India.
Although, still a long way to go, various institutions and organizations
show that there is a positive approach towards CSR, and return
through CSR practices and initiative are satisfying. In banking sector,
reported initiatives of ‘Bank of India’ & ‘NABARD’ (National Bank for
Agriculture and Rural Development) by (- , 2006) and ‘Union bank of
India’ by Goswami (2005) show that CSR practices have contributed to
the positive image of the institutions, have brought them closer to the
society, and have resulted in the gainful self-employment of
downtrodden.
The Management institutions such as SP Jain Institute of Management
and Research, IIM Ahmedabad, IIM Bangalore, IIM Calcutta, IIM
Lucknow and IIT Bombay’s School of Management are contributing by
way of sensitizing their management students for corporate citizenship
(- , 2003). Regarding CSR practices, the work of organizations like BILT
(BILT, 2004), Birlas, whose social initiative work straddles across 3,700
village in India (Birla, -), Tata Motors Ltd. investing in curative and
preventive services, education, economic development, ecology
management etc. (Ghokle, -), ITC (PTI, 2004), HLL’s ‘Swasthya Chetna’
(Health Awareness) campaign in 15,000 villages across eight states in
India (Mazumdar, 2002) etc. show the involvement of organizations in
one or the other activity for people, which organizations refer to as
part of their CSR initiatives and practices.
Further in this context, the study of survey report of IndianNGOs.com,
done between 2001-02, shows the extent to which capital and
initiatives are being put for various issues under CSR policies
(IndianNGos.com, 2002). Other studies, like joint study conducted by
UNDP, BC, CII, PwC between September-October, 2002 (CSR Survey,
2002), study for ‘India’s Best Managed Companies’ conducted by
Business Today, a business magazine in India along with global
consulting firm A.T. Kearney (BT-A.T. Kearney Study, 2005), and ‘Third
survey’ undertaken by Partners in Change (PIC, 2002-03) in the period
2002-2003 led the researchers to conclude that, the corporate sector
has grown beyond the size of doing business with limited sections of
society, involving limited resources with limited profits, as it used to do
in late 19th to middle of 20th century. Today, corporate sector and
institutions have grown to such a size, that their hold on world
resources, capital generated out of business and business with all the
sections of society, has become enormous.
This has brought the organizations in an arena, where the element of
responsibility is to be exercised by them as CSR practices, in order to
have sustained development along with growth of business and
survival of self, without straining and burdening the society.
3.2 CSR in Service Sector
The above concluded section alone does not justify the CSR practices
and initiatives because service sector stands out markedly from
general domain of corporates, as an entity to reckon with.
Observations have been made by Fritzsimmons & Fritzsimmons (1994)
regarding the prominence that services have gained and how modern
industrialized economies are dominated by employment in service
sector industries.
In India, as in the whole world economy, the advent and growth of
service sector has been phenomenal. The share of agriculture sector,
which constituted over 50% of GDP in 1960, has now come down to
around 24% in 2000-01. According to a report of IMF, the service
sector in India has consistently outperformed the rest of the economy
in recent years (Shankar, 2002).
Though there is mention of service sector growth, in general,
substantially, yet ‘CSR in Service organizations’ finds a very less
mention in the literature that has been explored by the researchers.
Whatever data is available is for limited section of service sector i.e.
banking and insurance, while other sections of vast service sector have
miscule mention. But, the importance of the such work can be
understood from the fact that Sureshchandar, Rajendran,
Anantharaman (2002) in their work identified Social responsibility as
one of the critical dimensions of TQM and TQS and Schuyt, Theo,
Breedijk (2005) in their empirical investigation of the internal effects of
employee volunteering conducted amongst employees of the Dutch
ABN-AMRO found that, employee volunteering seems to have positive
effects on attitudes and behavior of employees towards the
organization.
So, it can be concluded that there is dearth of studies about CSR in
service sector organizations.
3.3 Aviation in India
It will be fair to discuss what is prelude to the CSR in aviation, in
relation to the purview of this paper.
The first major flying event that marks the Indian Aviation was the
flight of JRD Tata, the first PPL holder (Private Pilot License) of India.
Aviation grew around Tatas in India with other airlines such as Airways
India, Kalinga Airlines, Deccan Airways etc. But, with the passing of Air
Corporation Act, 1953 the nationalization of Air Transport Industry took
place.
The two national air carriers came into existence - Air India and Indian
Airlines (now renamed ‘Indian’). Being the public sector organization,
the carriers were governed by the policies and programmes, laid down
by the government. In the early stages and upto mid 1980s the
carriers didn’t have any challenge or pressure to introspect the
functioning and performance. So, there was no urgency to make a
change. But, later in early 1990s the scenario changed with the
competition coming in, due to liberalization of Indian economy. Many
private players like NEPC, Eastwest, VIF, Modiluft, Jet and Sahara
opened their shops (Satish & Jutur, 2005). The National carriers then
revamped themselves and joined the fray. Presently there are eight to
ten Indian air-carriers operating, with stiff challenges lying ahead, due
to coming in of foreign air operators.
In India, the Aircraft movements and Passenger movements (including
domestic and international sector) in 2001-02 had been 509932 &
39.98 Million and the figures had grown to be 730018 and 59.54
million in year 2004-05, which speak for themselves the phenomenal
growth of the industry (Kumar, 2006).
Thus, Aviation is one of the fastest growing service sectors in India and
with increase in competition the intrinsic forces relating to economy,
performance etc. have started playing with pronounced effects, such
as- Takeover of Sahara by Jet Airways, Privatization of Airports in India,
Infrastructure development, Modernization of existing airports, Up-
gradation of ATCs, Training of Pilots and up-gradation of training
facilities, Pricing and costing of air fares, and Costing of Aviation fuel,
along with Procurement of new aircrafts, Development of aviation R&D
facility within the country and Manufacturing of aircrafts with
indigenous technology; and so, New Aviation Policy has become
inevitable in India.
3.4 CSR in Aviation
CSR in aviation was found to be a familiar term in foreign context and
the foreign air operators were practicing it. But, it was new to the
Indian Aviation Industry. So, when the idea of doing research on social
responsibility in aviation industry was mooted,, many didn’t realize the
importance of it. But, the way this industry is coming up and is pitched
against the opportunities of future, the issue of CSR gains more
importance. The clear reason being that, if CSR issues get addressed in
the initial stages, and get incorporated into the system from the
beginning itself, the spirit of CSR shall become an integral part of the
system. In all probability, that shall also help in saving lots of
expenditure, in terms of time and money, in correcting the system,
once it gets fully developed without CSR practices.
For aviation industry the CSR procedures and initiatives which were
once a ‘self-searching idiom’, are now in practice as exhibited in the
following examples of different airlines: Japan Airlines (JAL) defines
corporate social responsibility in terms of air safety, environment,
management structure and action plans, preventing global warming,
reducing wastes and promote recycling, reducing noise, promoting
green purchasing, managing chemical substances, introducing low-
pollution/low-emission vehicle, and introducing & promoting
environmental accounting, promoting environmental communication
and social contribution, and collaborating with other organizations
Kawahara ( - ). JAL also brings out a separate CSR report annually.
Thus, JAL conveys an image of organization, which is eco-friendly and
people-friendly and this helps in building of confidence of people and
employees. Malaysia Airlines annual report can be accessed on
internet and provides the following details: that it accepts the need to
strike a harmonious balance between private sector pursuits and
corporate social responsibility, both of which provide the synergy that
earn not only customer loyalty and support, but the support of
stakeholders at large; that most important contribution Malaysia
Airlines makes in the field of corporate social responsibility comes from
the wealth created by maintaining the 22,513 highly-skilled jobs which
arise from business activities, mainly in Malaysia and the destinations
they fly to; Other areas of CSR for Malaysian Airlines are- Code of
Conduct; Promotion of Malaysia in the National, Regional and
International arenas; Commitment , adoption and community care;
Relief aid; Internship facility for students and professionals;
Occupational safety and health & environment; Rural air service;
Affordable fares; Environmental friendly operations, Air passage for the
needy; Air passage for the worthy causes (Annual Report, 2004-05)
Again, in case of Malaysia Airlines the review of report shows that the
corporate identifies itself with the national sovereignty & pride, student
well-being and concern for health & environment, making a complete
picture of being lively, caring and with concern for all. This shall result
in enhanced business in competitive South Asian nations.
Korean Air recognizes CSR on its website in terms of having
Environmental Policy; Environment Management Activities i.e. having
Environment Management System, Environment Accidentcounter
Management System, Environment Education; Environment Reporting;
‘Sharing Management’ i.e. Global Environment Protection Activities, In-
Flight Meal Donations, Charity service activities and disaster site relief
activities (Korean Air, 2006).
Their main concern that emerges from the information available is
environment. The Management makes one to feel about the alertness,
care and concern for an issue other than aviation. Virgin Atlantic’s CSR
Report of 2004-05 is third in the row, which is indicative of the
seriousness and foresightedness shown by the company for the issue.
As expressed by Richard Branson, the Chairman, that in the three
years company has come a long way and had been able to establish
better reporting structures for data on emissions and aircraft noise,
have undertaken accessibility audits and re-launched website making
it more user-friendly, and got more involved in a variety of community-
based projects. Also has published the Virgin Group’s own strategy for
Corporate Responsibility, “Virgin Aware”, to which, Virgin Atlantic is a
signatory (Virgin Atlantic, 2006).
Virgin Atlantic classifies CSR initiatives in three major categories:
Economic performance; Social Performance- customer relations,
accessibility, employee relations, health & safety, employee assistance
programmes, Virgin Atlantic in community; Environmental
Performancefleet, weight watchers, Air quality, Aircraft Noise, Travel
plan, Waste management audit (Virgin Atlantic, 2006).
Here, Virgin Atlantic by way of their efforts have tried to project that
their entire business is impregnated with CSR element. It’s a fair
attempt to make customers to believe that, its not me, but the society
for which the service has total commitment. Such impression goes a
long way, if honestly pursued. Air New Zealand provides Corporate and
social responsibility policies on its website. They are- Audit
Independence Policy, Continuous Disclosure Policy, Dividend Policy,
Environment Policy, Group Compliance Policy, Integrit-e Statement,
Risk Management Policy, Securities Trading Policy, Shareholder
Communication Policy.
This airline provides a way of looking at the entire activity of airlines to
be oriented to social responsibility. Such amalgamation may not be
acceptable to people and society. Regarding Air Emirates, Air India,
Indian Airlines the information on CSR is not available on the website.
Jet Airways provide Community service details on its official website.
Other airlines like Go, Kingfisher etc. are yet to be evaluated for want
of information, as they are in their inception stage.
OBJECTIVE OF STUDY
METHODOLOGY
It was envisioned by the researchers at the time of beginning the
study, that aviation industry would be witnessing a boom in coming
times in India, and Udaipur in Rajasthan province would be one place
where expansion in air travel facilities would be done, it being a
prominent tourist place and business centre on Indian Map, and
upcoming educational city of Rajasthan. Recently, the decision to
convert Udaipur Airport into International Airport has been taken.
The Research Design for the study has been Exploratory and Causal in
nature. Regarding Sampling Design, the selection of the respondent
organizations was done on the basis of judgment sampling method,
because the researchers wanted to study only those organizations,
which were having demonstrated capabilities in their societal
orientation. Two organizations from Aviation Industry, one from public
sector and other from private sector was chosen for the study.
For getting responses from public, about their perception of the social
orientation of the above mentioned organizations, approximately 100
persons with general awareness level were selected using the Non-
probabilistic sampling method of judgment. These respondents from
the society were asked about their opinion as well as their perception,
towards the social orientation of the selected service organizations.
Such information was useful in assessing the social commitment and
fulfillment of the same.
Data was collected both from the secondary and primary sources.
Relevant books, research papers from Journals, working papers,
popular articles from magazines and newspapers, company
publications, websites etc. were studied and referred for the research.
Primary data was collected on the basis Questionnaires developed by
the researchers for the purpose of study and were structured
questionnaires. One questionnaire was administered to the managers
at all the levels of the selected airlines in Udaipur region and second
was administered to the general cross-section of the society for their
perception of CSR orientation of the selected organizations.
Questionnaire to Managers: Questionnaire given to managers had 4
parts. Part A seeked personal information about the respondents, like
name, organization, designation, age, educational qualification,
experience. Part B contained the instrument. Part C had close ended
questions of additional CSR practices followed by the organizations and
Part D contained open ended questions.
The instrument (in Part B) was developed on the basis of literature
review, and 33 measures in form of statements were identified. Later
on, after Pilot testing and discussions with academicians and
colleagues, on the aspects such as readability, comprehension,
wording, clarity etc. the number was brought down to 22 statements.
A five point Likert scale was used to enable the managers to indicate
their perception about CSR orientation of their airline. To quantify the
responses following scale was used:
The 22 statements were then grouped into 5 categories, which were
termed as the factors for measuring CSR perception of managers.
Table 4.1 provides the ‘Names’ given to the factors.
Table 4.1: Critical Factors of CSR
The reliability of the instrument was measured by the internal
consistency method (Nunnally, 1981) and was 0.71. Questionnaire to
Public: Questionnaire administered to public had 3 parts. Part A seeked
personal information about the respondent like name, age income,
rural/urban location and whether s/he has heard of the organization,
availed its services and had any information about the social initiatives
of the organization. Part B contained detailed questions regarding
her/his opinion on different CSR activities for airlines industry and part
C contained open ended questions.
A five point Likert scale was used to enable the respondents to indicate
their perception of CSR orientation of organizations. To quantify the
responses following scale was used:
In analysis of the responses received and data obtained, appropriate
statistical tests have been used to arrive at the understanding of the
comprehensive CSR framework, common for Airlines and other related
service organizations.
KINGFISHER & CORPORATE SOCIAL RESPONSIBLE
COMPANY PROFILE
Kingfisher is Europe's leading home improvement retail group and the
third largest in the world, with leading market positions in the UK,
France, Poland, Italy, Turkey, China.
Sales for the year ended 02 February 2008 were £9.36 billion, over half
of which was generated outside the UK. Adjusted pre-tax profit for the
year was £386 million.
Kingfisher operates 780 stores in 9 countries in Europe and Asia. Its
main retail brands are B&Q, Castorama, Brico Dépôt and Screwfix.
Kingfisher also has a 21% interest in, and strategic alliance with
Hornbach, Germany's leading DIY warehouse retailer, with over 120
stores across Europe.
A market-leading home improvement retailer, the Kingfisher Group
comprises a number of companies including B&Q, Castorama and Brico
Depot, with stores in the UK, France, Poland, Italy, China, Taiwan,
Spain and Turkey. In addition to retail stores Kingfisher has sourcing
offices in Eastern Europe, China, India and South Africa, and over 8,000
suppliers based all over the world.
The mission of the company is to be either the largest (or, depending
on the country, second largest) home improvement retailer in the
European and Asian countries in which it operates. The company
includes sustainable development in its vision “….to ensure that the
long-term development of our business is sustainable and reflects the
values and expectations of our communities”.
In the 1990s B&Q developed a reputation for environmental policies
that were driven by risk management. These policies were initiated by
a simple question from a journalist, who asked how much tropical
timber B&Q sold. B&Q worked with a range of interested groups,
including the environmental NGO WWF, to develop a market-based
system – the Forest Stewardship Council’s certification scheme – to
provide the necessary information to verify that B&Q’s timber and
wood based products come from forests that are managed sustainably.
When Kingfisher acquired Castorama in 1999 it realised that, due to
differences in approaches to corporate social responsibility (CSR)
between Castorama and B&Q, they needed a coordinated approach to
CSR. Kingfisher’s response to this challenge began with the
development of a plan for CSR and a strategic toolkit approach, which
it published in October 2001. The plan described the business case for
CSR and outlined six areas where CSR would help the business: being
ready for the future; maintaining respect for people; creating stores
that are welcomed by communities; product innovation; saving costs;
and enhancement of the brand. The plan is now in action and
Kingfisher started producing CSR annual reports in 2002.
CR Policy
Kingfisher’s Corporate Responsibility (CR) Policy was introduced in May
2005 and is reviewed annually by the Board. During 2008/09 it will be
updated in the light of the new sustainability goals.
Kingfisher's Corporate Responsibility Policy
6 key focus areas 12 issues
Environmenta
l
issues
1 Product
stewardship
1 Chemicals
2 Timber
3 Supplier environmental
performance
4 Product environmental
and social impact
2 Climate change 5 Energy
6 Transport
3 Sustainable
operation
7 Product disposal
8 Waste
9 Packaging
Social issues 4 Supply chain 1
0
Factory working conditions
5 Community 1 Store neighbourhoods
investment 2
6 Equality and
diversity
1
1
Respect for the diversity of
people
Kingfisher also manages and reports on a number of other CR issues
including health and safety, employment issues and governance.
Social Responsibility and Kingfisher
Kingfisher aims to be the world’s best international home improvement
retailer, selling new and exciting products at great prices. Our strategy
is
to develop a world-wide chain of stores sourcing products from
factories
around the world.
As a global retailer we recognise that we have a local and world-wide
impact on the
environment and society. We need to develop and maintain a thriving
business, but we
believe that “being the best” also means ensuring that the long-term
development of our
business is environmentally and socially sustainable.
Ensuring that our commercial success and growth is not achieved at
the expense of the
communities and environments in which we operate, presents complex
and difficult
challenges. We don’t have all of the answers, but as a global business
with a wide range of experience across many different markets and
cultures, we are well-placed to take a led in developing and
implementing solutions to the issues which arise.
Our vision is “to improve the quality of life of everyone our business
touches”, not just for our customers and shareholders but equally our
employees, the people making the products we sell and the wider
community.
Our policy sets out our aims and commitments and provides the
framework for our
actions to improve our social and environmental performance in the
areas of:
Environmental Social
Product stewardship Respect for the diversity of
people
Energy management Factory working conditions
Sustainable operation Store neighbourhoods
These commitments are organised around 12 key areas where our
research shows that
we can have the greatest impacts.
This policy has been adopted by the board of Kingfisher, who will
ensure that the
commitments it contains are progressively implemented through its
individual operating
companies’ defined action plans to agreed timescales. Progress will be
measured, reported
and independently verified using appropriate performance indicators.
This policy and our action plans and performance indicators are
reviewed at least annually.
The drivers
Initially there were two main drivers for Kingfisher’s CSR approach. The
first was the need to respond to enquiries about Kingfisher from
investors and journalists. This meant that the company needed to be
aware of the impact of the operations of all its operating companies
within the group. Secondly, there was recognition of the need for a
coordinated approach across the whole business on issues, such as
sourcing of raw materials, which affect the company’s reputation.
Today a major driver is the actual business case that CSR helps deliver
to investors, customers and staff who all appreciate a business that
makes sustainable profits based on a sustainable supply of products.
The diversity and differences across the businesses operating within
the Kingfisher group presented a particular challenge in developing a
corporate management tool for CSR. “As a global company we did not
aspire to have the same standards across the business, but rather to
have a common approach and a common direction,” said Ray Baker,
Director of Social Responsibility at Kingfisher.
Taking action
The ‘toolkit’ approach that was developed by Kingfisher is in the form
of a ‘ladder’ (see Box 1). Essentially it is a simple way of helping
individual companies to identify and approach CSR issues and progress
up the ‘ladder’. The tool also enabled different companies in the group
to benchmark their varied activities against each other, against
competition and against government indicators.
The Kingfisher ‘ladder’ was devised as a concept in 2000, and built on
B&Q’s ten years’ experience of addressing issues such as the sourcing
of legal and sustainably managed timber and wood products.
An important principle in the ‘ladder’s’ development was the
identification, through discussions with managers in all the operating
companies in the group, of twelve key issues or global trends. These
included nine environmental elements, such as the amount and
disposal of waste, and three social elements, for example factory
working conditions. Each of the operating companies has a ‘ladder’ for
each of these 12 issues.
The ‘ladder’ approach was approved by Kingfisher’s CSR steering
committees, comprising company directors and members of staff
representing all areas of the business, as a way of protecting the
integrity of the business in terms of risk to reputation and also
identifying the opportunities which CSR offers and how it related to
their business.
Implementation of the ‘ladder’ was varied, depending on the initial
reaction of the operating companies, some of which had difficulty
understanding the concept of CSR seen to be working and progress
can be demonstrated on different issues.
The ‘ladder’
The ‘ladder’ has four rungs which cover:
Leadership – companies on this, the highest, rung will be
actively involved on a particular trend or issue. They will be
recognised as ‘best in class’ and making a significant
contribution to the overall discussion in society.
Creating opportunity – companies on this rung will be using
the trend to create a business opportunity, whether from cost
savings, an improved marketing position, or in some other way
Managing the issue – On this rung companies will be managing
the trend in a positive and comprehensive manner. They will
have a good understanding of how trends will affect their
products, processes and people and be willing to discuss the
issues with interested parties.
Managing the risk – companies on this rung will take a reactive
approach implementing only those actions which are essential to
protect their business from current trends.
This can be illustrated by the example of B&Q China, a relatively new
retailer in the country and arguably one without the power to influence
supply chains due to the low volumes it buys compared to, for
example, the leverage that B&Q UK’s 300-odd stores can exert.
Currently, as a comparison, B&Q China would not be able to meet the
minimum requirements acceptable by B&Q UK. The initial challenge
was therefore to develop a management tool that would help B&Q
China managers to identify actions that could be monitored and
evaluated, ensuring that minimum requirements were met – this is the
first rung of the ladder. The ‘ladder’ achieved this by providing a
framework that recognised that, instead of a ‘one size fits all’
approach, actions developed must be appropriate to local conditions.
Further actions will be then be identified by B&Q China so that it can
move up the ladder and eventually demonstrate leadership as a
company operating in China.
The business benefits
Both risk elements and commercial opportunities are explicit in
Kingfisher’s ‘ladder’ approach to CSR. The ‘ladder’ makes clear the
relevance of CSR to the group’s commercial strategy and links it back
to corporate business objectives. “An example would be our actions on
a sourcing strategy that allows us to work with our suppliers to help
them understand how improving factory working conditions and raising
standards of health and safety helps to improve productivity”, said Ray
Baker.
The ‘ladder’ approach has enhanced the Kingfisher brand as investors,
board members of operating companies and their staff have become
engaged in it. Within Kingfisher it has also helped operating companies
to understand the role of Kingfisher as both the group’s ‘policeman’
(helping to identify issues before they happen), and ‘coach/trainer’
(helping the operating companies to grow their businesses and
respond to the CSR issues).
Why is it CSR?
Moving up the ‘ladder’ involves actions that go beyond compliance, as
the lowest rung involves meeting legal requirements as a means of
managing risk. These actions result in improvements in Kingfisher’s
operations, which have an impact on its social, environmental, ethical
and economic performance.
What next?
The ‘ladder’ is still maturing and will require further refinement. The
next step will be to secure commitments by operating companies for
progress up the ladder and with Kingfisher’s help develop policies and
targets in the form of business focused action plans.
Kingfisher's Code of Conduct for Ethical Business Practice
Kingfisher’s Code of Conduct sets out minimum standards for ethical
business practice and applies to all employees/contractors across the
Group. It also outlines the company's approach on employment issues
and health and safety. The Code is reviewed on a regular basis and a
number of revisions were made in 2007 – these provide further
clarification on ethical business conduct, including supplier
relationships and procedures to prevent bribery and corruption. A
series of workshops have been run for senior management across
Kingfisher operating companies to raise awareness of the revised
Code. Non-compliance with the Code can result in disciplinary action
for employees or termination of contract for vendors and contractors.
REPORT OF DATA COLLECTION – FINDINGS & ANALYSIS
Profile of the Airlines under study:
Public Sector Airlines is the domestic player in India. MD earmarks the
fund for social initiatives, but mention of it in form of CSR is not done in
the annual report. It has comparatively more number of flights to
remote destinations and provides all support during calamities and
disasters. The Airline is member of UN Global Compact.
The Private organization is the fastest growing airlines company in
India. It has young fleet and claims to provide exceptionally good
quality service. To keep their identity anonymous the airlines have
been referred to as A and B through out the study.
Managers’ Profile:
Six managers each, from two airlines, who gave their responses were
categorized into two groups on the basis of their ‘experience’ in the
present organization. The details are given in Table 4.2.
Table 4.2: Work Experience of Managers
Another classification of managers was done on the basis of ‘age’ of
the managers. Three categories were formed as shown in Table 4.3.
Table 4.3: Age Distribution
Ranking of Factors of CSR in Organizations:
The factor wise ranking has also been attempted taking the average of
mean scores for all the statements pertaining to that factor. The
ranking is assigned to factors on the basis of this score. The results
can be observed from Table 4.4.
Table 4.4 Ranking of Factors of CSR
Ranking of factors shows that, in both the organizations there is active
involvement of the top management for CSR practices. In organization
B top management initiatives and employee participation are equal in
ranking, meaning that overall initiative is uniform. Judging by all the
factors, and through grand mean, organization A is better placed than
organization B in terms of CSR orientation, but both of them are lowest
on Factor pertaining to CSR driven practices (Refer table 4.4)
Comparison of Additional CSR Practices of CSR orientation of
organizations:
Table 4.5: Additional CSR Practices
Comparison between the means of responses given by managers in
part C of the questionnaire shows that airline A is better placed than
the airline B in additional CSR practices. This also supports the above
analysis of table 4.4.
Test of difference of means between age of employees and CSR factors
gave insignificant result.
It may be concluded that all the employees have been initiated in the
CSR practices in near past, and that too not very intensely, so the age
factor is not influencing the CSR practices in both the organizations.
Experience wise analysis (Aggregate and Factor wise):
The respondent airlines have been classified on the basis of experience
of managers in the organizations. For analyzing the influence of
experience of managers on their perception of the CSR orientation of
the organization, following six hypotheses have been formulated:
Ho1: There is no significant difference between managers belonging to
different experience categories regarding their perception of ‘the
top management involvement in CSR practices and initiatives’
Ho2: There is no significant difference between managers belonging to
different experience categories regarding their perception of ‘CSR
Driven Practices in organization’
Ho3: There is no significant difference between managers belonging to
different experience categories regarding their perception of
‘resource allocation for CSR practices and initiatives’’
Ho4: There is no significant difference between managers belonging to
different experience categories regarding their perception of
‘Employee Participation in CSR practices and initiatives’
Ho5: There is no significant difference between managers belonging to
different experience categories regarding their perception of
‘feedback mechanism for effectiveness of CSR practices and
initiatives’
Ho6: There is no significant difference between managers belonging to
different experience categories regarding their perception of
‘Aggregate CSR practices and initiatives’
Summarized results of hypotheses testing are depicted in table 4.6
Table 4.6 Test of Difference of Means between Experience and
CSR orientation
Hypothesis Ho1, Ho2, Ho3, Ho5 and Ho6 have got rejected at 5%
significance level. In other words there is statistical evidence available
to believe that the experience of employees in the organization affects
their understanding about the CSR practices of the organizations
except affecting their participation in CSR practices. The inference can
be drawn that more the experience of the manager, more is inclination
for CSR practices in the organization i.e. the employees tend to
become more sensitive about the organization’s CSR initiatives and
their participation, in terms of their sincerity and commitment in
organization has been uniform throughout, because Ranking of
‘Employee participation’ is also high in table 4.4 in both the
organizations.
Difference between perceptions of managers regarding CSR orientation
in two Airlines:
For analyzing the difference between the CSR perceptions of managers
in their respective airlines, following null hypotheses were formulated:
Ho7: There is no significant difference between managers of public
sector and private sector organizations regarding their
perception of ‘top management involvement in CSR practices
and initiatives’.
Ho8: There is no significant difference between managers of public
sector and private sector organizations regarding their
perception of ‘CSR Driven Practices in organization’.
Ho9: There is no significant difference between managers of public
sector and private sector organizations regarding their
perception of ‘resource allocation for CSR practices and
initiatives’.
Ho10: There is no significant difference between managers of public
sector and private sector organizations regarding their
perception of ‘Employee Participation in CSR practices and
initiatives’.
Ho11: There is no significant difference between managers of public
sector and private sector organizations regarding their
perception of ‘feedback mechanism for effectiveness of CSR
practices and initiatives’.
Ho12: There is no significant difference between managers of public
sector and private sector organizations regarding their
perception of ‘Aggregate CSR practices and initiatives’.
Summarized results of hypotheses testing are shown in Table 4.7
Table 4.7: Test of Difference of Means between organization A
and B
It can be seen that all the null hypotheses have been rejected at 5%
significance level. Looking at the managers perception, it can be
inferred that, all the factors are affected by the ownership of
organization in terms of private sector and public sector; and public
sector organization scores over the private sector. CSR practices are
more effective and better understood in public sector organization.
Public Profile:
The respondents from the general public were classified in three
categorized for their monthly income. The details are given in Table
4.8 and it can be seen that more than 59% of the respondents are in
the category of income below INR 10,000 per month.
Table 4.8: Income categorization
Then the respondents were also grouped into three age categories and
from Table 4.9 it can be observed that half of the respondents are
above 40 years.
Table 4.9: Age Categorization
Another classification which was done was on the basis of the
geographical location of the respondent. If the respondent was from
Udaipur city, then he was put under the category of ‘Urban’ and if the
person was from village/countryside, then s/he was put in the category
of ‘Rural’. Details are given in Table 4.10 and it can be seen that
maximum people are from Urban area.
Table 4.10: Location of respondent
Researchers also tried to find out the awareness of public regarding
the airlines and if they have availed their services. The details are
shown in Table 4.11, and it can be seen that although more than 75%
people are aware of the existence of the organizations in society, they
haven’t availed their services and even lesser number (below 25%)
were aware of the social Initiatives of the organizations.
Table 4.11: Awareness about organizations A and B and Social
Initiatives
Analysis of People’s perception of CSR orientation of Airlines:
Following hypothesis was formulated to test, whether income of people
affects their perception of CSR orientation of airlines.
Ho13: There is no significant difference between the income of people
and their perception of CSR orientation of Airlines.
Table 4.12: Test of Difference of Means between people’s
perception of airlines CSR orientation and Income of People
The Null hypothesis got rejected at 5% significance level. It may be
inferred that the perception of people for CSR orientation of airlines is
affected by their income. It also indicates that the price tag for the
service matters to evaluate CSR practices.
Relationship between perception of public for Airline A and Airline B:
To find out if public made any difference between Airline A and B on
the basis of their CSR initiatives following null hypothesis was
formulated:
Ho14: There is no relationship between the perception of people for
Airline A’s CSR orientation and Airline B’s CSR orientation.
Results of the analysis are given in Table 4.13
Table 4.13: Correlation between Perception of people and type
of Airlines
The results show that there is a positive correlation between the
perception of people for CSR orientation of public sector and private
sector organizations. It may be inferred that people don’t make the
distinction between the public or private airlines when they talk about
their social responsibility and place them equally. Corroboration of
managers’ perception and Public’s perception of CSR orientation of
Airlines:
Ho14: There is no significant difference between the perception of
Managers of organization A and perception of people about its
CSR orientation.
Ho15 There is no significant difference between the perception of
Managers of organization B and perception of people about its
CSR orientation.
Table 4.14: Test of Difference of Means between perception of
managers and perception of people for the organization’s CSR
orientation.
Both the null hypotheses are rejected at 5% significance level
indicating that perception of people is different from the perception of
managers about CSR orientation of the airlnes. People have no
knowledge of CSR practices and initiatives of the airlines, whether
public or private. Moreover, it may also be inferred that PR
department’s projection for CSRP in the public sector organization is
inferior to the Private sector organization.
6. Suggestions and concluding remarks
The study shows that managers of both the airlines have readiness and
commitment for CSR practices and initiatives, but with a difference.
There is positive attitude and willingness at top management level for
implementation of CSR practices. But implementation needs ensuring
of allocation of required funds for CSR activities. Further, it has been
observed that system needs augmentation for being more effective in
delivering the results envisaged at planning stage for CSR.
Airlines need to make public aware, at least their customers of their
social orientation and relevant initiatives may be taken up by the PR
departments in this direction.
In nutshell, as CSR activities lead to better business, consequently they
may ensure future development with end results of reduction in cost
and time, exploration of new destinations, and higher level of
sensitivity of organizations towards society being served. In context of
Aviation in India, it must be remembered that, better business and
development shall lead to up-gradation of many existing airstrips in
remote areas, which are non functional at present, but have the
potential of providing air services in remote areas, thus resulting in
expansion of this industry.
It is also suggested that, instead of competing with each other for
existing air routes and attempting for supremacy, the public and
private airlines may work in tandem and contribute towards the
infrastructural development in the country for exponential growth.
Hence, joint ventures may be given a thought.
The airlines may also reinvest the part of increased turnover in CSR
oriented activities for real image building through delivering of good to
Society along with reinvesting in resource generation, instead of
investment in mere advertisement.
In the end it can be very well be understood that CSR has been and is
going to be the integral component of business. As Selekman (1959)
puts it -No matter how high the moral intentions, a corporation may
not survive long unless it can produce goods and services which the
community will buy in a competitive market, at a price which will pay
bills, provide for depreciation and at the same time yield a profit i.e.
the technical ‘must’ vs ethical ‘ought’.
CONCLUSIONS & IMPLICATIONS
“Our customers are increasingly looking for products, services
and information to help them create more sustainable homes.
Putting sustainability at the heart of our commercial agenda
therefore brings tremendous opportunities. We need to
mobilise our business and engage all our employees in order to
deliver on our aim to be the customer choice for sustainable
products and services.”
Kingfisher has been working for a number of years to embed
sustainability across the Group through its Steps to Responsible
Growth environmental and social management programme. However,
feedback from stakeholders identified the need to set a long-term
strategic direction on CR that takes into account the way the world is
changing and more explicitly links to overall business strategy.
During 2007, Kingfisher worked with the sustainable development
charity, Forum for the Future, to develop a revised sustainability
strategy to prepare the business for the future. The company has
introduced a new overall aim on sustainability “to fully integrate
sustainability into business thinking and be the customer choice for
sustainable home improvement products and services”. It has also
introduced a set of sustainability goals to deliver this. In 2008,
Kingfisher plans to embed the new sustainability goals within the
business – it will develop a set of success factors and key performance
indicators (KPIs). The company will also revise its Steps programme
and it will become the principal tool to monitor progress across the
Group.
In early 2008, Kingfisher introduced a new overall aim on sustainability
and a set of goals to deliver this. These were produced following
consultation with the Kingfisher Board and other stakeholders. The new
aim is twofold: to promote sustainability within Kingfisher’s own
operations and also to enable customers to create more sustainable
homes. Kingfisher recognises that taking a leading position in the
marketplace for sustainable home improvement products has the
potential to enhance profits in line with its core business strategy.
“To fully integrate sustainability into business thinking and be the
customer choice for sustainable home improvement products and
services.”
Sustainability goals
Our products and
services
Enable sustainability in all our product and service
categories
Our customersMake it easy for our customers to create their homes
in a sustainable way
Our stores and
operations
Ensure our stores and operations are efficient and
sustainable
Our peopleEngage employees to be champions of sustainability
across our business
Our economic
growth
Use our sustainability strategy to create value for
the benefit of our business and shareholders
Our community Be a good neighbour in all the communities we serve
Our world:
Suppliers and
partners
Work with our suppliers, governments and other
stakeholders to make sustainability easy and to find
solutions to common sustainability problems
Aiming to compete with their rivals in the international market, the
fast-growing Indian airlines are looking at global platforms to widen
their overseas presence.
The two Indian international carriers, Air India and Jet Airways,
currently have less than 25% share in the long-haul market to and
from the country. With the third carrier Kingfisher Airlines joining the
ranks this month, the Indian aviation scenario is all set to change.
Kingfisher Airlines, which is starting its international operations on
September 3 with a Bangalore-London flight, is considering options to
join the SkyTeam Alliance led by Air France-KLM and Delta Airlines of
the US. The national carrier, Air India, has already joined the Star
Alliance, the world's largest airlines consortium led by Lufthansa and
Singapore Airlines.
Mumbai-based Jet Airways could eventually become the Indian partner
of the Oneworld Alliance, led by British Airways and American Airlines,
according to industry sources. Under such global alliances, airlines
agree to co-operate, tie up to provide better connectivity to
international passengers, share terminals as well as expertise in back-
end operations.
Indian airlines are aiming for a greater presence in the lucrative
international market with the ambition of taking market share from the
large number of international carriers such as Singapore Airlines,
Emirates, Lufthansa and British Airways, which dominate international
traffic to and from India.
Kingfisher executives said that it would be “most logical” for the airline
to eventually join the SkyTeam alliance, given the growing links with
the Air France-KLM.
“It is a bit early to comment on our global alliance plans, but we are
already looking at developing synergies with Air France-KLM, which are
providing back-end technical support in London to our aircraft,” he
said. Kingfisher has already entered into a maintenance and technical
support pact with Air France-KLM for its wide bodied aircraft used in
international operations.
Meanwhile, Kingfisher Airlines is currently evaluating our options. “We
have not decided to join any alliance as of now. There are no specific
time frames. The airline industry is going through a phase of
consolidation and airline groupings could also possibly change in the
immediate future.
Kingfisher Airlines currently has frequent-flier programme partnerships
with 16 carriers and has codeshare partnerships with Qantas, American
Airlines, Brussels Airlines, Etihad Airways and Air Canada.
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