The Relationship Between Corporate Social Responsibility and Continuous Improvement Orientation and Their Effects upon Employee Attitudes*

Transcription

1 The Relationship Between Corporate Social Responsibility and Continuous Improvement Orientation and Their Effects upon Employee Attitudes* David Hollingworth, Ph.D. Associate Professor of Operations Management Department of Management 293 Centennial Drive, Mailstop 8377 University of North Dakota Grand Forks, ND (701) Sean Valentine, D.B.A. UND Alumni Leadership and Ethics Professor Professor of Management Department of Management 293 Centennial Drive, Mailstop 8377 University of North Dakota Grand Forks, ND (701) *A substantially enhanced version of this paper -- which may be more appropriate for use as a reference or for citation -- is available from the authors upon request. Please address correspondence to the first author. *The authors gratefully acknowledge the cooperation of an unnamed organization which provided access and data that facilitated this research. This research was also partially supported by a grant from the College of Business and Public Administration, University of North Dakota.

2 Corporate Social Responsibility, Continuous Improvement Orientation, Organizational Commitment and Turnover Intentions Abstract Prior research has established that both Total Quality Management (TQM) and Corporate Social Responsibility (CSR) have positive effects upon employee attitudes. Some have posited that TQM and CSR are compatible, while others disagree. This study examines the relationship between continuous improvement oriented aspects of TQM and CSR by assessing the congruence of the values that underlie TQM and CSR. Survey data from employees of a Mid- Western (USA-based) financial services firm is analyzed to test hypotheses regarding the relationship between CIO and CSR and the effects of CSR and CIO upon employee s organizational commitment and turnover intentions. Results provide evidence supporting 1) a strong relationship between CSR and CIO, 2) Positive relationships from both CSR and CIO with organizational commitment, 3) A strong relationship between organizational commitment and turnover intentions. Managerial and theoretical implications are discussed, as well as limitations and future research directions. Keywords: Corporate Social Responsibility, Continuous Improvement, Total Quality Management, Employee Attitudes, Employee Turnover.

3 Introduction Are corporate social responsibility and continuous improvement aspects of TQM compatible? The view here is that CSR and quality management are based on incompatible premises. Quality management is based on absolutist ethics, while CSR is fundamentally ambiguous. Quality management has a clear objective customer satisfaction. CSR seems to convolute a set of objectives such as maximizing shareholder wealth and giving back to society. Strategic managers should take care before they attempt to simultaneously engage in TQM and CSR, as generally understood (Barrett, 2009, p. 29). CSR could be a natural progression for those organisations that have already begun their quality journey (Hazlett et al., 2007, p. 672). Based upon these two perspectives, it would appear that the jury is still out. However, the majority of existing research suggests that the practice of TQM and CSR could, in theory, be compatible (e.g. Hazlett et al., 2007; Kok et al., 2001; McAdam and Leanord, 2003; Wicks, 2001). However, there are those who take exception to the majority view, including Barrett (2009) who views CSR and TQM as incompatible, and Castka and Balzarova (2007), who view current views or interpretations of TQM as incongruent with CSR. Unlike Barrett (2009), Castka and Balzarova (2007) hold out some hope that TQM can be re-invented to be compatible with CSR. With few exceptions, previous research focuses on theoretical investigation of the question. Unfortunately, research in this area may be stalling, probably because very little, if any empirical investigation of the theory has been reported in the literature. The present study attempts to address this gap in the literature. We report on a theory-based, empirical analysis of the relationship between CSR and continuous improvement-related practices, which are an important part of TQM. Our intent is to furthering knowledge development by testing several hypotheses which directly and indirectly assess whether CSR and TQM can co-exist in an 1

4 organization. Based upon hypotheses developed from the literature, we also examine the effects that CSR and TQM have upon employee attitudes and behavioral intentions. Literature Quality Management The evolution of quality management thought and practice are described by Garvin (1988). He suggests that quality practice has progressed through four stages that might be characterized as focusing on 1) products and services, 2) processes, 3) inter-organizational issues, and 4) extra-organizational issues. It is the last stage with which we are primarily interested, because of the explicit consideration that TQM gives to the organization s relationship with society. Research in the area of quality management appears to have developed in stages. Flynn, Schroeder, and Sakakibara (1996) describe three phases of development in quality management research. In addition to the three stages of quality management research identified by Flynn et al. (1996), and consistent with the view of Garvin, 1988) we suggest that a fourth stage followed in which scholars developed a deeper understanding of the theoretical underpinnings of quality management, while also addressing the ever-broadening perspectives on quality management (e.g. Anderson et al., 1994; Choo et al., 2007; Dean & Bowen, 1994; Detert et al., 2000; Hazlett et al., 2007; Kok et al., 2001; McAdam and Leonard, 2003; Wicks, 2001). Of particular interest to the present study, are articles that facilitate an attempt to assess the relationship between quality management and CSR. Based upon commonly used views of organizational culture, Detert et al. (2000) synthesized general dimensions of organizational culture and described how those dimensions 2

5 corresponded to specific values and beliefs underlying quality management practices. They reasoned that the underlying cultural characteristics or values of an organization can be in conflict with the cultural values inherent in practices that an organization is attempting to implement. They further reasoned that such conflict will result in failed implementation or failure to maintain effective implementation. Using their framework of the cultural values underlying quality management practice, they showed that some failures of TQM implementation can be attributed to incongruent organizational and TQM values. Other studies explore more specifically how quality approaches and CSR might be interrelated. Kok et al. (2001) used a quality audit approach to evaluate the extent to which existing quality award systems (specifically, the Malcolm Baldrige National Quality Award and European Quality Award) incorporate the social responsibility directly into their evaluation processes. Their findings suggested that the award systems inadequately addressed the assessment of organizational social responsibility. From the perspective of quality management, McAdam and Leonard (2003) demonstrated how total quality management can support the implementation of CSR within organizations. This was accomplished through demonstrating that the underlying ethics values of quality management are quite similar to those supporting CSR and reasoning that compatible ethical values provide a common basis for the quality management and CSR. This same logic would also support an argument that the ethical values underlying CSR also support quality management. Wicks, (2001) reasoned that total quality management inherently includes a set of moral values and used this perspective to extend that theoretical development of total quality management. The study provides a rationale supporting the idea that successful implementation and maintenance of TQM within organizations requires an accurate understanding of and correct enactment of the moral values that are inherent in 3

6 total quality management. Hazlett et al. (2007) discuss similarities in various definitions of TQM and CSR to identify the potential for a fit between TQM and CSR. They conclude that TQM and CSR are compatible. They demonstrate this through the use of six cases studies to evaluate the fit between CSR and TQM practice. Corporate Social Responsibility CSR is part of a broader construct known in the management literature as corporate social performance, which involves the totality of a firm s efforts to meet changing societal conditions (Wartick & Cochran, 1985, p. 758). Carroll (1979) was one of the first scholars to provide a comprehensive overview of the corporate social performance concept, advancing a model that detailed three basic elements that drive an organization s socially-driven strategies and actions. This framework indicated that social performance was comprised of 1) different social responsibilities related to key stakeholders, 2) varying degrees of social responsiveness from reactive though proactive positions, and 3) a set of social concerns that encourage corporate involvement (Carroll, 1979; Geva, 2008). Other models of social performance have been proposed based on Carroll s seminal research. For instance, Wartick and Cochran (1985) expanded Carroll s work by specifying that corporate social performance is comprised of principles that guide a philosophy of social responsibility, processes that create a institutional profile for social responsiveness, and policies that establish an orientation for the administration of social concerns. Wood (1991) further distilled the corporate social performance concept by specifying that the overall system relies on basic principles of social responsibility, processes used to respond to social initiatives, and specific outcomes of organizational action. Finally, Swanson (1995) suggested that corporate social performance should be conceptualized as containing both macro- and micro-level 4

7 principles of CSR that influence the cultures of organizations and the eventual societal outcomes of socially responsible corporate behaviors. Based on this proposed model and subsequent discussions (Swanson, 1995, 1999), Swanson reoriented Wood s framework through shifting the focus of attention from the CSP branches processes of corporate social responsiveness, programs, policies, and social impacts of corporate behavior to the CSP trunk: the core responsibilities that cannot be escaped because they are integral to action (Geva, 2008, p. 3). Corporate Social Responsibility and Quality Several studies refer to an explicit or implicit linkage between CSR and TQM. For example, Hazlett et al. (2007) identify commonalities in CSR and TQM by examining their various definitions. Kok et al. (2001) search for direct measures of CSR within TQM award systems. Detert et al. (2000) consider TQM from an organizational culture perspective and discusses the values that are necessary for effective implementing and sustaining TQM, thereby providing the theoretical building blocks for a discussion of common or shared values in TQM and CSR. McAdam and Leonard (2003) extending the discussion of values by viewing CSR and TQM through the lens of ethics to identify ethical values which they indicate, are shared by TQM and CSR. Rothschild (2000) considers the impact that that TQM has had on creation of a more just and democratic workplace and the resulting effects experienced by society. To some extent, each of these studies contributes building blocks for the development of a theory linking CSR to TQM. As a group, they base the linkage between CSR and TQM on shared meanings and values that underlie both TQM and CSR or a common culture or ethic that is necessary and perpetuated by both CSR and TQM. For the most part, these studies collectively suggest that a specific set of shared values or a common culture provide the basis for an organizational context that facilitates the successful deployment of both CSR and 5

8 TQM the absence of which will result in dysfunctional outcomes when either or both TQM and CSR are implemented within an organization. Functional and, or dysfunctional outcomes may take the form of employee attitudes, behaviors, and performance. The following section considers some of the relevant literature on employee attitudes and behavioral intentions as they relate to the present study. Employee Attitudes and Behavioral Intentions. Previous research shows that employees respond to their work environments with different attitudes representing affect, cognition, and/or behavioral intentions. When the workplace provides positive experiences (i.e., opportunity, collegiality, interesting job assignments, etc.), individuals often react in a favorable manner with positive feelings and thoughts that often lead to beneficial courses of action. Alternatively, when employees experience negative factors at work (i.e., poor leadership, low recognition, incivility, etc.), they can be expected to react is similarly negative way with poor work attitudes. It is therefore in management s best interest to develop an employment context within the organization that enhances employees attitudes by fulfilling their basic work-related needs and expectations. One important employee attitude that has received much attention in the management literature is organizational commitment, which involves a profound connection an individual has for a certain company or employer (Meyer & Allen, 1997; Mowday et al., 1979, Porter et al., 1974). While several types and definitions of the construct have been proposed, a common conceptualization assumes that committed employees have a strong belief in and acceptance of the organization s goals and values, they possess a willingness to exert considerable effort on behalf of the organization, and they have a strong desire to maintain membership in the organization (Mowday et al., 1982, p. 27). Given these characteristics, organizational 6

9 commitment represents a significant attachment to a firm, rather than only a modest preference, which encourages individuals to actively support their employer (Mowday et al., 1979). Another key work response related to organizational commitment is turnover intention. Turnover intention involves an employee s willingness to leave a current work situation, or more specifically, the likelihood that a person will leave his/her job within the foreseeable future (Elci et al., 2007, p. 287). Such intentions and actual turnover are often driven by adverse job experiences such as role stress, poor job satisfaction, and generally poor working conditions (Hom & Griffeth, 1995). Consequently, when employees are provided a workplace characterized by positive employment experiences, it is often expected that turnover intention will be attenuated. Hypotheses It has been suggested that CSR and TQM are related because the two concepts share common principles and require/engender similar and compatible moral values (McAdam and Leonard (2003). In addition, CSR and TQM are both anchored in similar ethical foundations and require similar organizational cultures or climates. This similarity in underlying values not only allows both to co-exist, but actually creates conditions supporting a partnership between TQM and CSR. Wicks, (2001, p. 525) reasons that the moral factors that support TQM also support CSR: Finally, the extension of the basic value dynamics particularly trust, cooperation, and integrity to relations with other stakeholder groups would appear to provide value to the firm as well as additional advantages First, opportunism tends to undermine one s reputation for being trustworthy, and therefore, for sustaining willing cooperation over time. While opportunistic actions aimed at workers or suppliers would more directly affect their willingness to trust and cooperate, opportunism directed at other stakeholders would also appear to have this effect. Second, research on trust and cooperation indicates that consistency and integrity are critical to the maintenance of trust and cooperation. For managers to sustain the internal environment, they will need to 7

10 act with integrity and trust (though not necessarily at the same levels) with other groups, so the extension of such behavior is a natural outgrowth of their commitment to TQM. Third, the extensive literature on corporate social performance, though it has produced mixed results, suggests that it is unlikely that the firm would suffer significant harm from such behavior. Indeed, Donaldson and Preston (1995) maintains that greater concern with and respect for the interests of a broader group of stakeholders tends to benefit the firm. From a similar point of view, Hazlett et al. (2007, p. 672) state, the principled basis of quality is one of the key factors that identify it as a key influence in CSR. Similar statements and reasoning found in the literature also support the compatibility of TQM and CSR when viewing them through the lens of ethics. Meehan et al. (2006) reasoned that, TQM has a foundation similar to that of corporate social responsibility, in that they both have ethical anchors (p. 390). Leonard and McAdam (2003) sought to clarify the ethical basis of quality, based primarily on their perceptions of issues focused upon by the quality gurus. Their arguments recall Crosby's focus on integrity, Deming's support for an ethical organizational climate, Juran's discussion of values and behaviors, and Ishikawa's observation of the necessity to facilitate the happiness of all people connected to the firm. The commonalities that exist in the values, ethics, and principles that underlie CSR and TQM provides for strong value congruence within an organization. Previous research on value congruence has demonstrated that employees who experience higher levels of value congruence in the workplace are more satisfied with work and experience higher levels of organization commitment (Boxx and Odom, 1991). The theoretical basis for this argument can be traced back to Rizzo et al. (1970), who reasoned that dysfunctional individual and organizational consequences will result when employees experience role conflict or role ambiguity. Among other outcomes, they observed that role conflict and role ambiguity are correlated with lower levels of employee satisfaction and higher turnover intentions. Since then, numerous studies 8

11 have demonstrated the adverse effects of role conflict and ambiguity. We assert that the commonalities in principles, values, ethics, and objectives of TQM and CSR should result in decreased role conflict and role ambiguity, resulting in a positive relationship between CIO and CSR. Furthermore, we suggest that this underlying commonality and expected reduction of role conflict and role ambiguity should also result in higher levels of functional employee attitudes, intentions, and behaviors. To further illustrate the degree to which TQM (and hence, CIO) and CSR share common values, we note that a careful reading of Detert et al., (2000) concerning the values underlying TQM and of Kok et al.s, ( 2001) analysis of CSR indicate that the following values are held in common by TQM and CSR: truth and rationality, information sharing, cooperation, change as important and necessary, employee empowerment and involvement, shared vision and goals, stakeholder orientation, and long term perspective. In summary, CSR and TQM/CIO share numerous values that are fundamental for their success implementation and continuing effectiveness. This congruence of values underlying the two constructs is expected to contribute to a positive relationship between TQM and CSR. Therefore, we propose the following hypothesis: Hypothesis 1: Employees perceptions of CSR are positively related to their perceptions of CIO. As we have previously mentioned, employee attitudes are affected by the employee s work context and environment. One part of that context is the employee s perception of the organization s involvement in continuous improvement. The concept of value congruence can be used to show a mechanism that precedes job attitudes, cognitions, and behaviors (Robert et al., 2000). Following Robert et al. (2000, p. 644) we note that met expectations, or the congruence between the values implicit in any given 9

12 managerial practice and the values held by individuals who are subject to those practices result in a functional (as opposed to dysfunctional) effect in employee attitudes. The congruence of organizational values embodied in CSR and CIO should be expected to contribute to increased organizational commitment. In addition, to the extent that an employee s values are congruent with CIO values, employees should also experience higher levels of organizational commitment. Creativity and innovation which are central to continuous improvements in TQM generally imply or require criticism and often the tearing down of old ways of doing something. In addition, the intensification of effort that come when people feel they are truly being asked for their analysis or for fresh ideas cannot come when people are asked only to ratify their boss's ideas (Rothschild, 2000, p. 200). TQM facilitates employee voice through the collection of information about systems and processes, solicitation of employee suggestions, and the provision of feedback to employees regarding performance and ideas. Increased flow of information, voice, and democratic problem solving processes would be expected to enhance commitment to the organization by satisfying employee needs for voice, pride in work, etc. (Rothschild, 2000). Deming (1986) reasoned that pride in work, among other things, serve as a powerful motivational force. Furthermore, information sharing builds trust and supports cooperation and trust and cooperation are important aspects underlying TQM (Deming, 1986; Detert et al., 2000) and are crucial to continuous improvement, because employees who experience trust and cooperation are more likely to generate and implement ideas for product, process and organizational improvement (Deming, 1986; Wicks, 2000). Rothschild (2000, p. 200) observes that, We are told repeatedly in the TQM/team guidebooks that the point of empowerment is to enhance workers sense of ownership and control in their work, and thus to make them feel more motivated and responsible (Juran and Gryna 1993: 171). Thus, it is 10

13 apparent that TQM supports higher levels of personal control (an aspect of empowerment) (Wicks, 2000) and prior research indicates that personal control is positively related to higher organizational commitment (Arthur, 1994; Liden and Tewksbury 1995). Based upon the preceding discussion, we hypothesize that: Hypothesis 2: Employee s perceptions of CIO are positively related to organizational commitment. Wicks (2000) notes that TQM supports higher levels of personal control, which is an important aspect of worker empowerment. Prior research indicates that personal control is positively related to lower turnover intention (Arthur, 1994; Liden and Tewksbury 1995). Rothschild (2000) observes that, We are told repeatedly in the TQM/team guidebooks that the point of empowerment is to enhance workers sense of ownership and control in their work, and thus to make them feel more motivated and responsible (Juran and Gryna 1993: 171) and Robert et al. (2000) make an effective argument that employee involvement and participation, which are closely related to employee empowerment and which are also implicitly and, or explicitly important aspects of TQM, contribute to reduced turnover due to increased employee satisfaction. Therefore, we hypothesize that: Hypothesis 3: Employee perceptions of CIO are negatively related to turnover intention. Both organizational commitment and turnover intention should be highly related to individuals perceptions of their organizations CSR orientation. Indeed, individuals tend to be more committed to organizations that have a benevolent climate one that focuses on the welfare of employees and the community, while organizational commitment is lower in egoistic climates (based on self-interest and people being out for themselves) (Trevino & Nelson, 2011, p. 338). Further, a company s focus on social concerns likely provides workers an 11

14 idea about how justice and fairness is supported in the work environment, ultimately influencing different work outcomes such as organizational commitment, citizenship, absenteeism, and turnover (Aguilera et al., 2007). Previous empirical work appears to support these claims. For instance, Greening and Turban (2000) determined that individuals often prefer employment in organizations that support CSR initiatives. Using a large sample of business professionals, Valentine and Fleischman (2008a) also concluded that perceptions of CSR were associated with increased job satisfaction, with CSR either fully or partially mediating the positive relationships between different ethical programs and job satisfaction. Consequently, the following hypothesis is presented based on past work investigating CSR and work attitudes: Hypothesis 4: Individual s perceptions of CSR are negatively related to turnover intention. Hypothesis 5: Individual s perceptions of CSR are positively related to organizational commitment. Previous research suggests that turnover intentions should be consistently influenced by broader feelings about the organization as a whole, with organizational commitment influencing an individual s relative likelihood to turnover (Porter et al., 1974). For instance, Mathieu and Zajac (1990) using meta-analytic procedures determined that organizational commitment was associated with decreased intentions to quit. Using meta-analysis, Tett and Meyer (1993) also concluded that organizational commitment was negatively related to turnover intention. Consequently, the following hypothesis is presented based on past research: Hypothesis 6: Organizational commitment is positively related to turnover intention. 12

15 Method Data Data was gathered from 527 businesspersons employed in a financial services firm based in several locations across the Midwestern and Western United States. Subjects were ed a link to an online survey that contained different ethics/attitudinal measures, and 144 fully or partially completed surveys were received from this first wave of contacts. Several weeks later, a second wave of s was sent to subjects resulting in an additional 27 surveys, which was followed by a third wave several weeks later that resulted in 16 additional questionnaires. A total of 187 surveys were therefore received for an overall response rate of approximately percent. Analysis of variance models, cross tabulations, and chi-square statistics were utilized to assess the differences in the demographic and focal variables across the three waves of questionnaires (Armstrong & Overton, 1977), and the findings showed that differences were found only for subject age and job tenure, indicating that non-response bias was likely not a problem. Subjects average age was 38.84, and many individuals were women (65.3 percent), almost all were white (99.3 percent), and most were married (72.4 percent). Almost 24 percent of individuals had some college. Of those, 56.9 percent had a Bachelor s degree and 9.0 percent had a graduate degree. With regard to work attributes, individuals had an average of 6.25 years of job tenure and 6.47 years of organization tenure. Over 85 percent were working in a full-time job, and slightly over 27 percent were working as a manager/supervisor. Almost 23 percent of subjects were employed in sales/marketing positions, 17.4 percent were employed in customer service, and 16.7 percent were employed in operations. The firm s ethics code had been given to almost 91 percent of subjects. An average of 1.63 hours of ethics training had been received by 13

16 individuals in the last year and an average of 7.49 hours of ethics training had been received by individuals since being hired. Measures Corporate Social Responsibility. Perceived CSR was measured with a broad five-item measure that identifies the degree to which an organization supports communities and stakeholders, establishes ethical practices, and exhibits fiscal responsibility (Valentine & Fleischman, 2008b; Valentine & Godkin, 2009). Continuous Improvement Orientation. Employees perceptions of CIO, which includes practices involving the acquisition and dispersal of quality-related information to support continuous improvement within the organization was measured using adaptations of previously published measures to fit the context of the current study. A process control measure was adapted from several process control and statistical process control measures (Flynn et al., 1994a, 1994b, 1995). A employee suggestions and feedback measure was adapted from an internal learning scale (Schroeder et al., 2002) and an employee participation scale (Ahn and Matsui, 2006). A continuous improvement measure was adapted from a scale developed by Flynn et al. (1999). Organizational Commitment. Organizational commitment was assessed with nine statements taken from the organizational commitment questionnaire (OCQ) developed by Mowday et al. (1979), which is a common instrument for measuring positive feelings for a company. Turnover Intention. Intention to turnover in the organization was evaluated with three items taken from a turnover intentions scale (Cammann, Fichman, Jenkins, & Klesh, 1979; Chen, Hui, & Sego, 1998). 14

17 Social desirability (control). Two statements from a shortened social desirability scale (Crowne & Marlowe, 1960; Fischer & Fick, 1993; Strahan & Gerbasi, 1972) were used to identify the potential for bias in this research (Randall & Fernandes 1991). Analysis Structural equation modeling as part of the AMOS software was utilized to evaluate the study s working hypotheses. A second-order confirmatory factor analysis (CFA) of the measures was first specified by constraining the error terms of the continuous improvement measures to be equivalent and setting the variance of the continuous improvement orientation factor to a value of 1 (Byrne, 2001). After model adjustments were made, composite reliability and variance extracted measures were calculated, and a single-factor model was specified to check for common method bias. Average scores were computed for the focal variables, and variable descriptive statistics and correlations were calculated with SPSS (pairwise deletion was used to compensate for missing data). Coefficient alpha scores were also estimated for each of the measures. A finalized second-order structural model was then initiated (Anderson & Gerbing, 1988). In each of these models, the first path for each latent variable was specified as 1 (Arbuckle & Wothke, 1999), and missing item information was accounted for with maximum likelihood estimation. Results Second-Order CFA The second-order CFA showed acceptable fit characteristics (Arbuckle and Wothke, 1999; Hu and Bentler, 1999), which are presented in Table 1. The measurement model indicated that the items were highly related to the latent constructs (p <.01). 15

18 Table 1 Model Fit Statistics Model 2 df p 2 / df RMSEA NFI IFI CFI Initial Confirmatory Factor Analysis Revised Confirmatory Factor Analysis Single-Factor Model Structural Model / df = relative chi-square, RMSEA = root mean square error of approximation, NFI = normed fit index, IFI = incremental fit index, CFI = comparative fit index; N = 187. Composite reliability and variance extracted scores were calculated for each of the latent variables using the associated standardized regression weights (Hair et al., 1998). Discriminant validity was verified by determining that all of the variance extracted scores were higher than the associated variable correlations identified in AMOS that were squared (Fornell & Larcker, 1981). Finally, a single-factor model was specified to assess the potential for same source bias (Podsakoff et al. 2003), and results showed poor model fit statistics (see Table 1), which suggested that such bias was not an issue. Variable descriptive statistics, correlations, and reliability estimates Table 2 provides a summary of the descriptive statistics, correlations, and reliability estimates calculated in SPSS. The mean values for CSR and the CIO variables suggested that individuals generally perceived that the organization was concerned about both social responsibility and continuous improvement of quality. The mean values for organizational commitment and turnover intention also indicated that the employees were committed to the company and less inclined to quit their jobs. The mean score for social desirability was only moderate. 16

19 The correlation analysis showed that CSR was positively related to the all three measures of continuous improvement orientation and organizational commitment and negatively related to turnover intention, which suggests that employees perceptions of the organizations social performance is related to the organizations efforts in continuous improvement. In addition, it also suggests that employees perceptions of CSR are related to various employee job responses. The measures of continuous improvement orientation were interrelated, which implies that such corporate efforts might be cumulative in nature. All of the CIO measures were also positively related to organizational commitment and two of the three were negatively related to turnover intention, suggesting that CIO might be a key lever for influencing employees reactions to the workplace. Finally, organizational commitment and turnover intention were strongly and negatively related, suggesting that intentions to quit are influenced heavily by generalized feelings about an organization. Continuous improvement, organizational commitment, and turnover intention were weakly related to the social desirability variable, suggesting that social desirability should be included as a control variable in additional analysis. Table 2 Descriptive Statistics, Correlations, and Reliability Estimates Variable M SD N Corporate Social Responsibility Employee Suggestions Process Control Continuous Improvement Organizational Commitment Turnover Intention Social Desirability Correlations >=.3 have p <.001; >=.25 have p <.01; >=.17 have p <

20 Structural Model The structural model results are presented in Table 3. The structural model had highly acceptable fit statistics (see Table 1), and the latent variables were highly associated with the observed items (p <.01). Turnover intention was the only variable related to the social desirability measure. With regard to hypothesis testing, CSR and CIO orientation were positively related, and both variables were associated with increased organizational commitment, which provided adequate statistical support for Hypotheses 1, 2, and 5. Organizational commitment was also associated with decreased turnover intention, which provided support for Hypothesis 6. Analysis of the structural model did not provide support for Hypotheses 3 and 4. The following section describes the study s managerial implications, limitations, and suggestions for future research. Discussion The results of this study indicate that employee s perceptions of corporate social responsibility and continuous improvement orientation are strongly related. From the perspective of Quality Management, CSR is one of the evolutionary steps organizations take in broadening their perspective on quality. From a CSR perspective, continuous improvement is an important means of fulfilling organizational responsibilities to society. Each perspective might reason that it causes the other to occur. However, without clear theoretical and empirical evidence to support a direction of causality, we developed a model and performed an analysis that allowed a bidirectional relationship. Previous research has reasoned that CSR may be more easily assimilated into organizations that are already practicing TQM due to the similarity of values of the two systems. However, it is not just the practice, but the underlying values that are 18

21 Table 3 Structural Model Results Hypothesis Testing Covariance S.E. Correlation H1: Corporate Social Responsibility Cont Imp. Orientation.65 *** Regression Weight Estimate S.E. Std. Est. H2: Continuous Improvement Orientation Organizational Commitment.20 ** H3: Continuous Improvement Orientation Turnover Intention H4: Corporate Social Responsibility Turnover Intention H5: Corporate Social Responsibility Organizational Commitment.18 * H6: Organizational Commitment Turnover Intention *** Second-Order Factor (Continuous Improvement Orientation) Regression Weight Estimate S.E. Std. Est. Continuous Improvement Orientation Employee Suggestions.94 *** Continuous Improvement Orientation Process Control.39 *** Continuous Improvement Orientation Continuous Improvement.75 *** Control (Social Desirability) Regression Weight Estimate S.E. Std. Est. Social Desirability Organizational Commitment Social Desirability Turnover Intention -.27 * Covariance S.E. Correlation Social Desirability Corporate Social Responsibility Social Desirability Quality Orientation *** p <.001, ** p <.01, * p <.05; N = 187; measurement model results not shown.

22 crucial (Hazlett et al., 2007; McAdam and Leonard, 2003; Vinten, 1998; Wicks, 2001). However, from the theoretical basis established in the present study, it might also be argued that firms already successfully engaged in CSR may already have the values in place that support CIO or TQM. For firms that failed to implement TQM previously, or that have allowed their TQM emphasis to languish, but that are currently engaged in CSR, the possibility of a successful TQM implementation may now be greater than before, due to the infusion of CSR values within the organization. However, firms attempting to implement quality management practices such as continuous improvement or CSR without an understanding of or a commitment to their underlying value systems may struggle or even fail to effectively implement CIO, TQM and CSR. Employees perceptions of corporate social responsibility and continuous improvement orientation appear to have similar, but also unique and therefore additive effects upon employee s commitment to the organization. This observation is significant because the effects of CIO on organizational commitment and CSR on organizational commitment might be attributed to shared covariance due to shared values alone, if the correlations among these constructs were evaluated alone and no further analysis were conducted. However, the results obtained from our analysis of the structural model demonstrate that in spite of significant shared covariance, CIO and CSR are both contributing to unique explained variance of organizational commitment. Theoretically, this can be explained in at least two ways. First, the theoretical arguments supporting a relationship between CIO and organizational commitment have similarities, but also differences from the theoretical arguments supporting a relationship between CSR and organizational commitment. Second, this result may be due, at least partially, to the effect of value congruence. We have argued that one of reasons that CIO and CSR are

23 related, is that their underlying values are congruent. Prior research on value congruence shows higher levels of organizational commitment occur when values from different aspects of the organization are congruent (Boxx, Odom, Dunn, 1991). From a practical perspective, organizations practicing either CSR or CIO should expect to see enhanced organizational commitment, while organizations that implement both CSR and CIO should expect to see even higher levels of OC. Arguments indicating that TQM and CSR are incompatible (e.g. Barrett, 2009; Castka and Balzarova, 2007) were not supported by the results obtained in this study. One plausible explanation of the perceived incompatibility between CSR and CIO expressed by some may arise out of differing definitions and interpretations of TQM what it is and how to measure it. For example Castka and Balzarova (2007) define TQM from the perspective of quality management systems that are standards based (e.g. ISO 9000 and ISO 14000). Although it is difficult to be sure, this could be Barrett s (2009) position as well. Conceptually, this may be a narrower view of TQM and that perspective may affects their understanding and interpretation of it in relation to CSR. CSR also suffers from some definitional imprecision, as noted by Barrett (2009) and also referenced in this study. Thus, interpretational differences of the meaning of TQM and CSR may be a force driving the differences of opinions expressed at the beginning of the present study. Castka and Balzarova (2007), citing practitioner and academic criticism of (standards based) quality management systems, argue that TQM must be reinvented (or perhaps redefined more broadly) in order to be compatible with CSR a view not inconsistent with the conclusions reached by Kok et al. (2001). Our perspective of TQM (and CIO), which admittedly is not standards based and which, we assert is more consistent with the broader Quality Management literature, and CSR concepts as well as the analysis conducted in this research 1

24 reveals significant points of compatibility and no such divergence or incompatibilities, as have been suggested. While CSR and CIO are correlated with turnover intentions, the structural analysis performed in this study demonstrates that neither CSR nor CIO has a direct effect upon turnover intentions. These results support the idea that the effects of CSR and CIO upon turnover intentions operates indirectly through organizational commitment. This result is not inconsistent with prior research that shows that employee attitudes can mediate the effects of organizational variables (e.g. management practices, systems, etc.) upon turnover intentions (Hom and Griffeth, 1995). Since both CSR and CIO both appear to have a unique effect upon OC, then it stands to reason that they both have a unique indirect effect upon turnover intentions as well. It should be noted that we did not specifically hypothesize that organizational commitment would mediate the effect of CIO and CSR upon turnover intention; therefore, further analysis is necessary to confirm this result. Managerial Implications In addition to the findings and discussion of their implications noted previously, a number of managerial implications arise out of this study. First, similar values underlie both CSR and CIO. Therefore, if a firm is currently utilizing either of these approaches, it should be able to implement the other without significant re-alignment of organizational values. However, it is important to remember that shared values alone are insufficient for successful implementation of either CIO or CSR. Similarly, the implementation of either CSR or CIO, without the necessary underlying values may result in failure (Detert, 2000; Kok et al., 2001; Wicks, 2001). In other words, the underlying values of CIO and CSR provide the glue that lends deeper and continuing meaning to the practices of CSR and CIO for individual employees. 2

25 Second, CSR and CIO are not just compatible; they can be used in concert with one another to further enhance desirable employee attitudes and behaviors. When implemented together, CSR and CIO appear to facilitate higher levels of organizational commitment (than if they were implemented separately) which in then appears to support reduced levels of employees intentions to leave the organization. The value of employee commitment to the organization and the costs of excessive turnover have been discussed extensively in the literature. The results of this study suggest yet another way that managers may leverage the findings of this and prior research in the current business environment; in order to develop and sustain higher levels of desired organizational outcomes. Research Limitations and Suggestions We identify several limitations to this study and suggest how future research can build upon this study by addressing them. As with many organizational studies, the present study utilized cross-sectional data; therefore, conclusions regarding causality must be interpreted with caution. Future studies could incorporate longitudinal data combined with careful research designs, in order to accurately and precisely assess cause-effect relationships. In studies of this type, social desirability can be a potentially biasing factor. In the present study, we measured it and controlled for it (statistically) in our analyses, and it did not appear to have adverse effects. However, future studies, particularly those in contexts differing from the present one, should be aware of and appropriately deal with the issue of social desirability. This study utilized information collected from employees representing predominantly one ethnic background. Therefore, generalizing beyond this relatively homogenous sampling frame should be done with caution. As this is one of the first empirical studies of CSR and CIO and 3

26 their individual and particularly, their combined effects upon employee attitudes, the responses of individuals from different cultures and, or organizational contexts is not fully understood. Future studies might consider how national, ethnic, and organizational cultural influences affect employee attitudes in the context of CSR and CIO to determine precisely when and how the results of this study might (or might not) be bound by the cultural characteristics. While a significant aspect of quality management practice (continuous improvement orientation) was included in this study, other important aspects of Quality Management were omitted. Future studies should consider how other important aspects of quality management or quality management practices may be related to CSR and the effect that they and CSR have on employee attitudes, intentions, behaviors, and organizational performance. This study used subjects (respondents) throughout one financial services organization with multiple locations in the United States. Generalization beyond that context (a single organization and one specific country) should be carefully considered. At a minimum, additional studies from other types of service organizations, as well as from other sectors such as manufacturing, not for profit, government, etc. are needed to confirm the applicability of the findings in this study. Finally, some have reasoned that organizational commitment is an antecedent of continuous improvement (e.g. Flynn, 1995). However, as we have demonstrated above, the predominant theoretical explanation of the relationship between continuous improvement and organizational commitment is that continuous improvement precedes organizational commitment. However, with a cross-sectional data set, we were not able to demonstrate causality in one direction or the other. Therefore, we acknowledge arguments that are contrary to our position and suggest that there may exist a feedback loop from organizational commitment 4

27 back to continuous improvement orientation or aspects of quality management that are antecedents of continuous improvement orientation. Further theoretical development and research could help clarify this issue. Conclusion This study commenced to assess the relationship between employees perceptions of corporate social responsibility and continuous improvement orientation and their effects upon employee attitudes and intended behaviors toward the organization. In this study involving employees of a financial services firm with multiple locations in the mid-western United States, we found that employees perceptions of corporate social responsibility and continuous improvement orientation were strongly related. Furthermore, we found that both corporate social responsibility and continuous improvement orientation were positively related to organizational commitment and their combined effect on employee commitment was greater than their individual effects, indicating that both have a unique effect upon employee s commitment to the organization. We found evidence that corporate social responsibility and continuous improvement orientation indirectly affect employees turnover intentions through employee s organizational commitment. Limitations and suggestions for future research were identified and discussed. References A complete list of references is available upon request from the authors. A substantially enhanced version of this paper -- which may be more appropriate for use as a reference or for citation -- is available from the authors upon request. Please address correspondence to the first author. 5