1. CRS in Kingfisher Final

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.

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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

http://www.kingfisher.co.uk/index.asp?pageid=46







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’


different experience categories regarding their perception of ‘CSR

Driven Practices in organization’


different experience categories regarding their perception of

‘resource allocation for CSR practices and initiatives’’



‘Employee Participation in CSR practices and initiatives’



‘feedback mechanism for effectiveness of CSR practices and

initiatives’



‘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’.



perception of ‘CSR Driven Practices in organization’.



perception of ‘resource allocation for CSR practices and

initiatives’.



perception of ‘Employee Participation in CSR practices and

initiatives’.



perception of ‘feedback mechanism for effectiveness of CSR

practices and initiatives’.



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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APPENDICES

RESPONSE SHEETS

1. CRS in Kingfisher Final

Documents

Transcript of 1. CRS in Kingfisher Final