Effective CSR Practices on Hotel Industry in Hong Kong

Measurement of effective Corporate Social Responsibility Practices on Hotel Industry in Hong Kong

CHAPTER 1 – INTRODUCTION

Measurements of the effective impacts of CSR Practices in the Hotel Industry

Impacts of CSR in the Hotel Industry has particularly been approached from the perspective of the overall Return on Assets (ROA), which theoretically is the short-term outcome, or in some perspective, the long -term outcome on the available data in diverted industry databases (Wang, Hu, & Zhang., 2020). Despite studies, researchers have not focused on an essential component of the performance from the overall financial success aspects, evaluated using the firm’s financial capabilities and excellence.

Foundation of the Study

Corporate social responsibility (CSR) is an essential concept in the hotel, hospitality, and tourism industry because of its effects on financial and non-financial factors such as the brand and reputation of a firm (Kim et al., 2018). CSR aids the firm in establishing a brand and lets them compete with other firms that offer the same service with an advantage by enhancing the satisfaction of the stakeholders and customers to improve the company’s image.

When a business embraces CSR, owners can be in a good position to develop a good image and a better working environment, assisting them in finishing trading bottom line.  As Kim et al. (2018) note, a hotel located in China in 2005 has improved its brand image and sales by engaging in Corporate Social Responsibility. Businesses can have a good position to achieve their goals, increase their respective customer satisfaction, create an outstanding image and relatively establish a good company reputation as the most notable beneficial elements by engaging itself in CSR activities.

Problem Statement

Hotel business owners face a downtrend in their sales experience, relatively low profitability (who, when). For instance, a 7.4% decrease in consumer preference leads to a decrease in sales by more than 18.9% in revenue (Appiah., 2019). One unique aspect of CSR is that most of the firms cannot comprehend how their relative perception of Corporate Social Responsibility and rating of the hotel might influence their sales and image ratings, affecting profitability. The issue is that most of the hotel owners in Hong Kong and Beijing don’t realize how CSR and other associated elements such as the start ratings affect their sales and image in general.

Purpose of the study

The main purpose of the study is to evaluate in depth the impacts of CSR in the Hotel industry in Hong Kong. Evaluation extends to the use secondary and primary sources, as well as literature.

Objectives

The core objective of the study therefore is to evaluate the relationship that exists between the policy application and overall CSR performance, focusing on Hong Kong, China’s Hotel Industry. Another essential objective that will help serve the purpose of the study is to use the evaluation make recommendations on the best available social corporate social responsibilities.

Research Question

  • What are the most potentially beneficial effects and positive consequences of CSR in the Hotel Industry in Hong Kong?

Operational Definitions

Significance of the Study

Contribution to Business Practice

The study’s most significant contribution is the contributions to the Hotel Industry’s business as a whole. Findings from this study may be significant to the practice of the hospitality business. The research study’s findings and outcomes will help the owners of hotel businesses in Hong Kong better understand that the company’s CSR engagement will most certainly help enhance its branding, increase sales, and build on trust, loyalty image, and customer satisfaction. The outcomes of the study will as well contribute to the literature of the effects of CSR in the Hotel Industry and, on the same note, make the operators of the hotel industry have a positive or, on the other hand, negative view of CSR and respective possible consequential implications for the rates of its service consumers.

Corporate social responsibility: The term is best definite in both the corporate world and theory as the business’s commitment to making contributions to the sustainability and economic development, partnering with employees, local communities, and the society as a whole to better the quality of life in means that are deemed suitable for the development of the business. CRS entails corporate governance, protection, and care for the environment, protection of team member welfare, and practice and exercise of public relations (Farrington et al., 20170). Sustainability being legal confinements, positively responding to the social environment, is all the values of CSR.  Such action in the modern world helps a corporation increases its sales volumes; attract the most qualified consumers of its products and supplies.

Stakeholder: The term involves two classifications; the internal stakeholders who, in essence, as the name suggests, have a straight linkage to the management’s activities and whose views and respective trends impact the corporation’s strategic approaches. On the other hand, are the external stakeholders who are affected directly by the organization’s decisions.

 

CHAPTER 2 – LITERATURE REVIEW

Theoretical Framework

The study is founded on CSR theory (Windsor, D. (2001). Research scholars used the term ‘CSR’ until Bowen, a theorist, to imply to the obligations that business according to policies, decision-making, and, consequently, the actions that a firm might take in line with the firm’s essential objectives core values. There are several definitions of the term that have been evolved afterward.

CSR has become crucial after corporate organizations, and other businesses developed their maximum influences on the business communities, the society, and its surrounding environment as well (Chung, Gao& Leung., 2019). Adoptions of ASR aid corporations retain and attract employers and consumers of its products, ensuring the company survives in the long term. CSR helps firms enhance their respective relationship with states and its officials, the community, attract motive employers, and even better and efficiently pursue their potential markets with ease. The paper’s primary objective is to comprehensively explore CSR’s most significant influences in the Hotel Industry.

The evolution of corporate social responsibility

Over the last couple of decades, research scholars have advanced different contextual definitions of CSR. In general, research implies that the term involves the accumulation and distribution of wealth to the community (Ilkhanizadeh et al., 2017).  Ilkhanizadeh and company (2017) argue that a trading entity should be in a position of giving back a proportion of the benefits it makes to the community. As the scholars put it, the evolution of CSR concepts occurred in three stages; rise and consequent extension in the 1950s, another expansion in the 1970s and 80s, and finally a full-fledged proliferation to the current world, from the 1980s.

Social responsibility

CSR has a relatively rich history of development. However, social responsibility is not a remedy for the business but a core that corporations must assimilate as part of their activities. Bowen (1953) argued that social responsibility is not a remedy for businesses. In the same context, social responsibility is the business managers’ decision. It is conducted with objectives that partially surpass the legal and company’s profitability and other interests, direct technical or economic interest (Hung., 2018).

Mohammed (2020) posited that a business firm has a responsibility to voluntarily enhance society’s living standards (Mohammed., 2020). He also suggests that “social responsibility” as a term has attracted more attention in the corporate business world over recent decades.  Mohammed (2020) argues that Hong Kong’s Hotel Industry has a relatively unique socio-economic and political environment, which in several dimensional views; result in a wide variety of consequences that promote the concepts of integrating SCR in businesses. In his Hong Kong’s study, the researcher investigated the effects of corporate social responsibility disclosure on the value of more than 466 companies that operate in China, based on their CSR audit reports from a China Corporate Responsibility website.

Company disclosure

Mohammed (2020) concluded that a company’s market value rose on disclosure of its CSR levels, and significant social activities or government legal industry policies, according to the research findings, were the core reasons the government in the contemporary world involved itself in CSR reporting. The scholar gathered 5,334 listed companies sampled from both China and Hong Kong to evaluate the relationship that exists between the decisions of CSR reporting and the regulatory pressure and further the most probable relationship that may be existing between CSRE and Hotel business ownership. Their research revealed positive but mild relationships between the Hotels Industries owned by the sates and Corporate Social Responsibility practices of reporting; private-owned Hotel businesses, according to the findings, are more likely to engage themselves in CSR practices reporting.

Effects of CSR on Consumers

Researchers, including Leung et al. (2017), concluded that consumers prefer Hotels that are more socially responsible because they, in most cases, have good branding and reputation. Essential elements of CSR, for instance, the components of legal and economic responsibilities, impacted the purchasing intentions of the customers directly. On the other hand, philanthropic and ethical duties of the same firm had relatively weak consequences on the decisions of the consumers to purchase its products or service (Leung et al., 2017).  According to Leung and the company, substantial company values are directly related to corporations with high consumer awareness. The scholars identified another significant reason that justifies the company’s CSR; it makes consumers believe that the Hotel business offers a relatively higher quality of service and other products because CSR involvement implies higher management competency. On the other hand, Lee (2012) argued that society’s stakeholders have the possibility of the CSR commitment to the hotel company. Its product consumers may not show any major concern to the same.

Team member Motivation

Among all company’s stakeholders, the employees have enough power, urgency, and legitimacy to be part of the company. In the contemporary world, Hotels hugely invest in Corporate Social Responsibility to retain and attract the best available employees. CSR’s effects on a hotel’s workforce increased the company (Lee., 2012). Similarly, in the same context, job seekers with limited connections with the company tend to presume CSR directly relates to its competency and commitment. Evaluate the relationships between CSR policies and overall performance and effects in the hotel industry in Hong Kong. Lee also notes that CSR bears commendable effects on team member turnover, loyalty, satisfaction, commitment, and recruitment, even though the forms of motivation influenced by CSR are not yet defined. Lee suggests that the employees’ chances for sufficient treatment of corporate social responsibility activities emanate from needs founded on functionality, rationale, morality, and existence, which then motivates the employees in the long run.

Trust

Further, trust is necessary for long term engagement is to be attained between consumers and loyal customers of a hotel. Trust guarantees its service consumers that the hotel will competently act in a manner that proves its competence. Gorenak, Špindler&Brumen (2019) imitated the component in which he posited that CSR has significant impacts on loyalty founded on trust and customer satisfaction. Many other variables indicate both direct and indirect consequences between the components (Gorenak, Špindler&Brumen., 2019).  The researchers also investigated the direct consequences of Corporate Social Responsibility on establishing the firm and matters image on similar variables such as trust, consumer satisfaction, and, more importantly, future behaviors of potential consumers to feel the effect of CSR’s positive influence on the foundation of trust. In the Hotel Industry, the scholars illustrated the consequences on the subject on the foundations of trust.

Satisfaction

Satisfaction, from a broader perspective, is the response of consumers to a compliance degree. However, Lee (2012) ensured the necessity of treating the constructs of satisfaction following the prescription of whichever context it may come up. Several other documented academic research studies argue in defense of the CSR’s positive influences concerning performance on financial perspective as a competitive advantage in the hotel, hospitality, and tourism industry, which bears positive effects on consumer satisfaction, company branding, and other aspects. Still, on the same note, CSR enhances customer satisfaction and the company’s value.

Satisfied customers with the hotel have higher chances of enhancing sales volume due to frequent visits they make, increasing loyalty. Lee (2012) verified the direct relationships between customers’ future intentions and satisfaction concerning CSR. As mentioned above, the relationships happened to be a major one in research studies, scholars in line with the outcomes obtained by Gorenak, Špindler&Brumen (2019).

Team member Loyalty

Only a handful of research findings have emphasized their interest in the general hotel and hospitality in Hong Kong on CSR and the overall economy’s performance in their conclusive investigations. Hospitality and tourism research scholars argue that CSR directly affects the overall performance of the economy. Despite the express relationship that exists between performance and apparent consumer loyalty, research findings by Renouard&Ezvan. (2018) are hardly considered for citation. The author implied in his argument that a hotel could enhance its profitability and other benefits from 15% to 85%, even though the profitability is dependent on the sector in the hotel industry, helping the company retain up to 5% of its clients; a significant figure considering densely populated countries like Hong Kong (Renouard&Ezvan., 2018). In the hotel industry, there is considerable interest in identifying the factors that directly determine consumer’s loyalty to a hotel, especially in conservative communities like China and Hong Kong, because several scholarly studies have confirmed that CSR related loyalty enhances the company’s profitability.

Relationship between the effects of CSR and the Company’s performance

In agreement with Renouard&Ezvan (2018), Moneva et al. (2020) emphasized direct relationships between the performance of the company’s hospitality and CSR in the Hotel industry. There are consistent outcomes as obtained by other academicians on matters the consequences on the account due to the CSR of a company in the Hotel industry (Moneva et al., 2020). The few chances and resultant outcomes from finding on the subject matter, as argued by the scholars, result from the need to rely on research studies in this field. The researchers’ analyses on the effects of the social-environmental corporate responsibility of a company and respective relationship with matters profitability and performance indicate that literature on the subject greatly contradicts, more particularly in the Hotel industry, provided that there is an immense relationship that exists between the industry and its socio-economic and cultural environment.

The measurements of the effects of Corporate Social Responsibility in the hotel industry has been in most research studies, made from the perspectives of Return on Assets given both short and long term, and more often based on the available secondary documented data retrieved from company databases (Galant&Cadez., 2017). According to most of the research studies applied to the industry, all the variables have not considered the core components of SCR’s effects and its respective performance on financial matters in the hotel and hospitality industry in general.

Overall, most research findings have emphasized that CSR bears significant effects in general hotel and hospitality in Hong Kong. CSR’s products positively impact consumer satisfaction, company branding, rise in sales, enhance consumer loyalty, team member motivation, commitment, and efficiency. As illustrated from the research outcomes and literature, the paper CSR bears significant relationships between policies and affects the general hospitality and tourism industry in socio-economic environments such as Hong Kong.

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