The role of management in improving internal corporate social responsibility among Islamic financial institutions in Saudi Arabia

Abstract

Abstract The evolving landscape of the business world continually underscores the significance of Corporate Social Responsibility (CSR) as a vital link between corporate endeavours and societal imperatives. In the ever-evolving context of Islamic financial institutions in Saudi Arabia, CSR is not a mere afterthought but deeply rooted in fundamental Islamic principles, including Tawheed, Vicegerency, and Fardh. This comprehensive study delves deeply into the intricate intersection of CSR and management within Islamic banks in Saudi Arabia. Utilizing the "Research Onion Framework," we employed a balanced blend of qualitative and quantitative methodologies. Data was gathered from a substantial sample of 161 employees spanning four major Islamic banks in the country. Additionally, in-depth interviews with managers from 15 organisations provided qualitative insights, enriching the study's multifaceted approach. One of the noteworthy revelations of this research was the profound appreciation and understanding of CSR among bank employees. It transcended mere terminology; they recognized CSR as a cornerstone in shaping the institution's broader strategy and enhancing its reputation in the marketplace. This realization reflects the cultural and religious significance attributed to CSR within this organisations. The study's findings not only acknowledged this importance but also underscored a clear link between effective management and the successful integration of CSR practices. Ethical conduct, transparency, and alignment with core tenets of Islamic finance emerged as distinctive characteristics. Furthermore, these banks exhibited a holistic approach in intertwining CSR with human resource initiatives, fostering not only an enriched work environment but also elevating overall job satisfaction. Another nuanced distinction highlighted by the research was the contrast in CSR perspectives between conventional Western financial models and Saudi Arabia's Islamic banks. While the former often base their CSR initiatives on Western theories, the latter perceive CSR as a duty rooted in Islamic teachings. This inherent alignment with religious principles sets these Islamic institutions apart, making them genuinely socially responsible entities. Beyond these pivotal findings, the research also sheds light on the proactive role of the Saudi Arabian government in reinforcing CSR practices, reflecting its commitment to nurturing socially responsible corporate behaviour This commitment aligns with the nation's vision, particularly the goals outlined in Saudi Vision 2030, which aims to empower various segments of society, including a significant focus on women. To solidify and advance these practices, the study proposes robust recommendations. These include establishing independent CSR divisions within banks, implementing transparent reporting mechanisms, and encouraging cross-sector collaborations. These suggestions are designed to amplify the already significant impact of CSR on employees, stakeholders, and society at large. In conclusion, this comprehensive exploration offers a panoramic view of management's pivotal role in fostering CSR within Saudi Arabia's Islamic financial institutions. The insights gained underscore CSR's profound influence on employee satisfaction, societal advancement, and its alignment with Sharia principles. These findings serve as a valuable knowledge repository for practitioners, policymakers, and academics, urging them to envision a future where corporate responsibility is not merely an obligation but a duty infused with deep cultural and religious significance.