Investigating CSR Implementation in Malaysian Construction Companies

This report delves into the significance of Corporate Social Responsibility (CSR) within the Malaysian construction sector, highlighting its importance in an economic framework. It addresses the sector's unique challenges, including a workforce often characterized by low levels of education and income. The report discusses the increasing environmental awareness and societal demand for better welfare, while acknowledging the lack of CSR implementation in Malaysia's construction sector despite government initiatives. It explores the reluctance of top management to embrace environmental and sustainability requirements, as well as financial constraints, particularly for small firms. The report investigates the gap between Malaysian companies and their global counterparts in CSR, focusing on environmental and workplace aspects. It poses key research questions regarding the relationship between CSR implementation and firm performance, the sector's shortcomings compared to the global scenario, cost-effectiveness, limitations, and government policies. The objectives include investigating the relationship between CSR activities and sales dynamics, analyzing the cost and benefit of CSR, and examining the positive and negative externalities caused by CSR implementation. The report aims to study the factors in the CSR itself, which affects the overall performances of the Public Listed Companies in the construction sector of the country, and how these cause and effect relationships work.

Running head: PROBLEM STATEMENT
Problem Statement
Name of the Student
Name of the University
Author Note

1PROBLEM STATEMENT
Table of Contents
Problem Statement...........................................................................................................................2
Research Questions..........................................................................................................................4
Research Objective..........................................................................................................................5
References........................................................................................................................................6

2PROBLEM STATEMENT
Problem Statement
Corporate Social Responsibility holds immense importance in an overall economic
framework of a country and particularly in the construction sector. This is because most of the
labor engaged in this sector has low levels of education, skill and income, which makes it
important on part of the companies to look after their overall welfare. There has been a
consistent increase in the environmental awareness and a demand for better equality and societal
welfare is felt among the community as a whole. Despite of promotions and awareness
generation on part of the government of the country and introduction of encouraging strategies
on their part, there still remains a lack of implementation of the CSR in the construction sector of
Malaysia as a whole (Tai & Chuang, 2014). As can be seen from the empirical evidences, the
budget allocation of the country in 2011-2015 has emphasized categorically to incorporate and
encourage investments and initiatives on part of the supply side players in the construction
industry by inclining towards investment in green construction technologies, construction and
also heavily on sustainable innovations in this sector of the country (Hopkins, 2012).
Empirical evidences show that there is in general a lack of awareness about the concept
of CSR in the construction sector of Malaysia. However, in many of the companies there are
presence of training program and other facilities for the employees, these are not termed under
the CSR aspects. The main problem in the Malaysian construction sector is that the top
management of the construction firms are mostly reluctant to modify according to the
environmental and sustainability requirements as long as they are earning profits from their
business. There are also problems of monetary expenses in implementation of Corporate Social

3PROBLEM STATEMENT
Responsible Framework, especially in the small firms, which shows the presence of bias in the
industry between the big and the small construction companies (Ahmed Haji, 2013).
If the impact of the CSR on the Malaysian companies is compared with that of their
global counterparts, it can be observed that the Malaysian companies lag significantly behind
those in the overall global scenario, in nearly all the aspects of the Corporate Social
Responsibility. There are extensive literary evidences in this aspect, which shows that among the
four aspects of Corporate Social Responsibility, which includes environmental aspects,
workplace changes, marketplace aspects and the community responsibilities of the corporations,
the Malaysian construction companies specifically lag behind in the environmental and the
workplace aspects (Esa & Anum Mohd Ghazali, 2012). This in other words, imply that there
remains a lack of awareness among the companies in the country regarding the necessity of
emphasizing on the overall environmental and sustainability aspects of their operations and their
responsibilities in this domain. The findings of the literature also suggests that in spite of several
measures taken on part of the companies to improve the welfare of their workers, there are a lot
of scopes still left in this aspect (Zhao et al., 2012).
There are considerable amount of literatures, which show the overall performance of the
construction industry of the country in terms of CSR and compares the same with their global
counterparts. However, there still remains a gap in studying the impact of the implementation of
the CSR techniques on part of the construction companies, on their overall performance as well
as on the society in general. To be more specific, there remains a huge gap in studying the
factors in the CSR itself, which affects the overall performances of the Public Listed Companies
in the construction sector of the country, and how these cause and effect relationships work. To
measure the performance of the companies in the construction sector of Malaysia, the most

4PROBLEM STATEMENT
feasible option is to look into the sales and the profit figures of the PLCs existing in the
construction sector of the country and how these figures are affected when these firms implement
various CSR techniques in their operational framework. Therefore, with the growing demand for
implementation of CSR in every aspects of corporate world, it is of immense importance to
investigate the implications of these activities on the profitability and cost effectiveness of the
construction companies in the country as well as the overall welfare (economic and social) of the
people who are directly or indirectly associated to this. This essentially becomes more crucial
especially when there is not sufficient literary works present in this aspect (Ahamed, Almsafir &
Al-Smadi, 2014).
Research Questions
It is evident from the above discussion that CSR has been increasingly gaining
importance in the contemporary period and there still remains a gap regarding the
implementation of the Corporate Social Responsibilities in the construction companies in
Malaysia. The paper tries to seek answers to the following questions which are of immense
importance to study the impact of CSR on the performance of the Public Listed Companies of
Malaysia:
1. What is the relationship between the implementation of the Corporate Social Responsibility in
the construction firms in Malaysia and their performance over the years?
2. In which aspects of implementation of the CSR does the construction sector of the country lag
behind compared to the overall global scenario?
3. What is the cost effectiveness of implementation of CSR in the construction companies of the
country?

5PROBLEM STATEMENT
4. What are the limitations and hurdles in implementation of the CSR in Malaysian construction
sector and what are the existing government policies and strategic framework which positively
and negatively affects the same?
5. What are the scopes of improvement?
Research Objective
The objectives of the paper are to:
1. Investigate the relationship between the extent of CSR activities in the PLCs in the
construction sector of Malaysia and their dynamics in sales.
2. Analyze the cost and benefit of the PLCs in implementing CSR.
3. Investigate the positive and negative externalities caused due to the implementations of the
CSR by the construction companies on the overall society as a whole as well as on the
companies in particular.

6PROBLEM STATEMENT
References
Ahamed, W. S. W., Almsafir, M. K., & Al-Smadi, A. W. (2014). Does corporate social
responsibility lead to improve in firm financial performance? Evidence from
Malaysia. International journal of Economics and finance, 6(3), 126.
Ahmed Haji, A. (2013). Corporate social responsibility disclosures over time: evidence from
Malaysia. Managerial auditing journal, 28(7), 647-676.
Esa, E., & Anum Mohd Ghazali, N. (2012). Corporate social responsibility and corporate
governance in Malaysian government-linked companies. Corporate Governance: The
international journal of business in society, 12(3), 292-305.
Hopkins, M. (2012). The planetary bargain: Corporate social responsibility matters. Routledge.
Tai, F. M., & Chuang, S. H. (2014). Corporate social responsibility. Ibusiness, 6(03), 117.
Zhao, Z. Y., Zhao, X. J., Davidson, K., & Zuo, J. (2012). A corporate social responsibility
indicator system for construction enterprises. Journal of cleaner production, 29, 277-289.