Intertwining Corporate Social Responsibility, Employee Green Behavior, and Environmental Sustainability: The Mediation Effect of Organizational Trust and Organizational Identity.

AuthorMay, Amy Yeo Chu
  1. Introduction

    Over the years, global warming and climate change have drawn the attention of researchers and environmental bodies, and every effort has been made to raise awareness (Kardooni et al., 2018). Hence, sustainable development is required to generate a positive impact on our natural environment and society. In addition, environment and related protection issues have been a public concern (Tian et al., 2020; Safari et al., 2018; Binder and Blankenberg, 2017; Sihvonen and Partanen, 2017; Tang and Lam, 2017; Abdelzaher and Newburry, 2016). Chandan (2015) advocated that environmental aspects have become central parts of value creation for the shareholders. The United States and the European Union have developed extensive environmental standards, which have a significant impact on member countries as well as on countries doing business in these areas (Boasson and Wettestad, 2016). However, in Malaysia, the environmental aspect is often neglected, as most of the organizations focus mainly on the economical aspect (i.e., profit). As noted by Shahzad et al. (2020), developing countries in Asia have lower environmental concerns. Hutchins and Sutherland (2008) revealed that economic growth and its impact on society and environment must be balanced through a triple bottom line (i.e., people, planet, and profit).

    Researchers have affirmed that organizational strategy that assimilates CSR with the environmental, economic, and social can enhance smooth operations and sustainability of organizations in a changing business environment (Ikram et al., 2019; Govindan et al., 2016). CSR includes activities undertaken by organizations to affect society and the environment positively. Adoption of CSR can eliminate industrial recycle and waste, and decrease production costs, thereby reducing damage to the environment (Wang et al., 2016). According to Pomering and Johnson (2009), the CSR initiative is to go beyond the legal requirements by maximizing the organization's positive externalities and minimizing its negative externalities. Both CSR and sustainability concepts can serve as the basis for effective sustainable development of an organization, with a focus on meeting the needs of current and future generations, improving quality of life and well-being, justice and equity, and the need for individuals to live within the ecosystem limits of the Earth (Chandan, 2015; Gadenne et al., 2012; Agyeman, 2005). Chandan (2015) noted that the challenge of implementing sustainable development lies in how to integrate corporate sustainability into operational and capital investment decision. Organizations should integrate sustainability development into their day-to-day management decisions.

    According to the Ministry of Natural Resources and Environment (2016), Malaysia has been part of several environmental agreements, which includes Convention on Biological Diversity (CBD), ASEAN Agreement on Transboundary Haze, Basel Convention on the Control of Transboundary Movement of Hazardous Wastes and their Disposal, Cartagena Protocol on Biosafety (CPB), Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), and more. The agreements that Malaysia has participated in cover a wide range of subjects, which include climate change, biosafety, protection of important wetlands, haze and laws of the sea, and transboundary movement of hazardous wastes. Therefore, companies should maintain and develop their economic, social, and environmental assets to create sustainable communities (Dyllick and Hockerts, 2002). Moreover, according to the Malaysian Code on Corporate Governance (2017), one of the main focuses of corporate governance is sustainability, which has been promoted by regulatory bodies in Malaysia, including Bursa Malaysia (stock exchange) and Securities Commission Malaysia. However, the adoption of green initiatives and environmental performance by companies in Malaysia are still at a low to moderate level (Aziz et al., 2018; Kasbun et al., 2016).

    In recent years, researchers have been increasingly focusing on environmental sustainability. There are numbers of studies and literature reviews on the environmental performance of firms in developed countries with key reasons argued on heavy environmental penalties and government compliances, while awareness among supply chain has improved as regards customers (Govindan et al., 2015; Clarkson et al., 2008; Seuring and Muller, 2008; Corbett and Kleindorfer 2001). Also, prior studies emphasized on innovation concerning CSR and organizational performance (Zhu et al., 2019; Anser et al., 2018; Bocquet et al., 2017; Martinez-Conesa et al., 2017). However, Rupp and Mallory (2015) noted that although employees are important stakeholders, and their response to the organization's CSR efforts is related to understanding the social benefits generated by the CSR initiatives, the research has not yet fully taken this position. Although researchers often relate employees' green behaviors to environmental sustainability (Norton et al., 2015; Andersson et al., 2013), there is only one empirical evidence found, in Iqbal et al.'s (2018) study, to support the relationship between employees' green behaviors and environmental sustainability in the Pakistan banking context. Nonetheless, in Iqbal et al.'s (2018) study, the CSR initiative of an organization and the perception of employees towards an organization's CSR were not taken into account in their study. Although many studies have focused on how CSR could affect employees' behavior (Su and Swanson, 2019; Afar et al., 2018; De Roeck and Farooq, 2018), scarcity still exists in the research on how CSR is practiced for environmental conservation through employees' behavior in developing countries (Shahzad et al., 2020; Iqbal et al., 2018). Employees spend at least one-third of their day in an organization which makes their green behaviors affect greatly the organization's environmental sustainability. Thus, this offers an opportunity to investigate the importance of CSR by exploring employees as a primary stakeholder in a developing country such as Malaysia, and linking this to environmental sustainability.

  2. Literature Review and Hypotheses Development

    Relationship between CSR, Organizational Trust and Employee Green Behavior

    CSR has been found to create a climate of trust (Hansen et al., 2011). According to Molm et al. (2007), trust is an essential factor for successful social processes. Not to mention it is also a necessary condition for relationship continuation (Cotterell et al., 1992). Besides, Yeo et al. (2018) revealed that it is important to engage with stakeholders in order to achieve sustainable development by allowing the development of a sustainable relationship between a socially responsible organization and customers. According to Farooq et al. (2014b), one of the social exchange processes involving the organization and its employees that CSR activities can initiate is trust. In association with social exchange theory, the trust between organizations and employees occurs at the first place to initiate the social exchange process. Molm et al. (2000) suggested that, according to social exchange theory, employees perceived that their organization is benevolent, concerned, and fair, inducing them to reciprocate, which resulted in organizational trust. For instance, Vlachos et al. (2010) highlighted that salespersons' perceived CSR activities positively influenced their trust in the organization. Lee et al. (2013) found that the perception of CSR has a positive impact on organizational trust in a casino context. Similarly, Ahmad et al. (2020) found that perceived CSR is positively related to organizational trust in Pakistani universities. Furthermore, other researchers indicated that the organization's CSR initiatives directly related to trust in an organization (Farrington et al., 2017; Farooq et al., 2014b).

    Employees who perceived their organizations as trustworthy were more likely to engage in positive self-initiated discretionary behaviors (Yoon et al., 2016). Besides, other studies have found that organizational trust was positively associated with constructive social behavior, which included organizational citizenship behaviors (Ahmad et al., 2020; Chiang and Hsieh, 2012; Hansen et al., 2011). Yoon et al. (2016) identified a positive relationship between organizational trust and organizational citizenship behaviors. According to the social exchange theory, the more employees trust the organization, the more effort they will exert for the organization (Blau 1964). To be specific, employees are more willing to engage in positive behaviors that would benefit their organizations (Parzefall, 2008; Mael and Ashforth, 1992). Although numerous studies have confirmed the relationship between organizational trust and behavior, few studies have explored the direct relationship between organizational trust and employees' green behavior. Su and Swanson (2019) studied it in a hotel context and found a direct link between organizational trust and green behavior of employees, with a statistically significant relationship. Drawing from previous studies on the impact of organizational trust on numerous behaviors, this study hypothesizes that organizational trust can affect employee green behavior. Therefore, the following hypotheses were proposed:

    H1a: Corporate social responsibility has a positive effect on employees' level of organizational trust. H1b: Organizational trust is positively related to employee green behavior. Mediating Effect of Organizational Trust

    Several scholars (e.g., Li et al., 2021, and Ko et al., 2021) have studied the mediation mechanism of organizational trust between CSR and behaviors. An organization's CSR initiatives demonstrated that the organization cares about society by showing desirable attributes, which strengthen trust of stakeholders, including employees. When there is trust...

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