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Article

The Impact of Corporate Culture on Corporate Social Responsibility: Role of Reputation and Corporate Sustainability

by
Saeed Siyal
1,2,*,
Riaz Ahmad
3,
Samina Riaz
3,
Chunlin Xin
2 and
Tang Fangcheng
2
1
Department of Business Administration, Greenwich Research and Development Center, Greenwich University, Karachi 75500, Pakistan
2
School of Economics and Management, Beijing University of Chemical Technology, Beijing 100029, China
3
Department of Business Studies, Bahria University, Karachi 75260, Pakistan
*
Author to whom correspondence should be addressed.
Sustainability 2022, 14(16), 10105; https://doi.org/10.3390/su141610105
Submission received: 6 April 2022 / Revised: 3 June 2022 / Accepted: 7 July 2022 / Published: 15 August 2022
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Abstract

:
The issues surrounding corporate sustainability (CS), which have gained importance in organizational theory and practice that could help in gaining a competitive advantage, are becoming complex and far-reaching. Competitive advantage could decline if CS will not be maintained. Various factors affect CS. Among those, corporate social responsibility (CSR) practices, organizational culture (OC), and reputation (R) are important factors to consider for improving corporate sustainability. Therefore, the current study objective was to investigate the impact of OC on CSR in the hospitality industry. In addition, the mediating role of R between CSR and CS has been analyzed. The data were collected through a self-administered questionnaire from 350 managers, who were working in the hospitality industry across the country, by using a convenient sampling technique to test the proposed hypotheses empirically and validate the findings. Using a cross-research design and a quantitative-research approach, the partial least squares structural equation modeling (PLS-SEM) findings indicated a positive impact by OC, CSR, and R on CS. Based on these findings, the study has practical and theoretical implications for researchers and practitioners. Moreover, the current study is also considered to be a pioneer study, contributing to the related findings in the previous literature specifically in the context of Pakistan.

1. Introduction

The past few decades have demonstrated the research trend of examining the role of commitments made by organizations toward better performance [1,2,3,4,5,6,7]. However, corporate social responsibility (CSR) is also viewed as a strategic commitment [8] that has recently gained attention in the management literature [9]. This has resulted in the adoption of these practices by all types of organizations to enhance their reputations and performance and reduce conflicts with stakeholders [10]. However, organizations find it difficult to formulate and implement these practices and face difficulty in aligning such practices with their organizational culture as well [11]. Additionally, customers are asking for transparent dealings from brands while making purchases [12]. Hence, a uniform practice of mentioning CSR on websites is being followed [13] for the benefit of shareholders as well as internal and external stakeholders [14]. Organizations that demonstrate responsible behavior toward society tend to define and apply such strategies by considering CSR activities ranging from economic to social aspects [15].
Organizations clearly emphasizing CSR tend to have integrated the objectives and expectations of different stakeholders. Such a perspective can be observed in the hospitality industry when businesses advance and apply certain practices to satisfy their stakeholders [16]. Previously conducted studies have emphasized the environmental dimension and the relationship between CSR and financial performance [17]. Additionally, previous studies have emphasized the perceptions of consumers regarding the CSR practices being followed by organizations [18]. However, only a few studies have emphasized the perceptions of hotel general managers regarding CSR [13]. It is worth noting that these studies have not captured the essence of the influence of organizational culture (OC) on the formulation and implementation of these practices in certain hotels [15]. The proper manner in which to conduct CSR activities within an organization is defined by the culture of that organization. These beliefs and values are formed by leaders, conveyed, and reinforced through a variety of techniques, and, eventually, influence the organization’s social activities [19,20]. Therefore, OC is an important indicator for CSR activities. Additionally, previous studies have not examined the relationship between CSR practices and reputation (R). R determines the levels of credibility, trustworthiness, responsibility, and reliability that a stakeholder has with a business [21]. It is one indispensable part of corporate core competency [21]. In other words, R is regarded as one of the important and intangible assets of organizations [22] that drives performance, and it is also regarded as an outcome of the CSR practices of organizations [23]. Although the R of an organization is regarded as a significant source of organizational competitiveness, only a few studies have examined it as an outcome of CSR [24] or how it leads to CSR.
Previous discussions have shown that OC, R, and CSR are important indicators for corporate sustainability, but such discussions have had various gaps. For instance, previous studies have had a major focus on the direct effect of OC impact on firm performance [25,26,27], but there is limited literature on this about CSR and CS [28]. In addition, CSR also has had a major focus on its relationship with firm performance [29,30], not on its relationship with corporate sustainability (CS) [31]. On the other hand, R has had more studies on its relationship with firm performance [32,33,34] but has had limited studies on its relationship with CS [31]. Along with these gaps, previous studies also include findings [30,35,36,37] that show that there is need of time to conduct research in other contexts.
Keeping the previous discussion in mind, the previous literature also had a major focus on developed economies [11,38], while there have been limited studies on developing economies [11]. Pakistan is also a developing economy, which shows that there is a need to conduct research here [39]. In Pakistan, various separate studies had been conducted on the relationships between CSR, R, and OC [40,41,42]. However, as per the researchers’ best knowledge, there is not any study with a combined model of OC, CSR, R, and CS. For instance, the relationship between CSR and firm performance [43,44], CSR and R [45] and moderating role of OC between the relationship of CSR and firm performance was tested in the study of [46]. Moreover, in Pakistan, the previous studies had more attention to other sectors [39] but have little attention to the hospitality industry in Pakistan [47].
The Pakistan hospitality industry market is predicted to grow at a CAGR of 3% by 2026, with a market size of roughly USD 20 billion in 2020. Due to the global tourism potential, the hospitality business has evolved into a substantial investment opportunity in recent years. Pakistan has benefited from this trend, and the country has become a popular tourism destination in the last five years. Even though now the hospitality business is becoming an appealing sector for investors to invest extra capital, such investment opportunity comes with several People who are unable to visit Pakistan due to safety measures and different lockdowns implemented by the government during the current COVID-19 outbreak, putting Pakistan’s hospitality sector in danger. In 2019, tourism contributed almost 7.1 percent to Pakistan’s gross domestic product (GDP). However, the market has suffered significant losses as a result of the pandemic. Hotels in the country have suffered significant losses as a result of the COVID-19 pandemic, with three out of seven major hotels in Karachi, Pakistan, closing since March 2020. As a result, in 2019, the hospitality industry provided 5.7 percent of the gross domestic product (GDP), however in 2020, the total contribution to the country’s GDP declined to 4.4 percent, resulting in fewer job possibilities [48]. This could have an impact on Pakistan’s hospitality industry’s long-term viability. In previous literature, various points were discussed in decreasing the sustainability of the Tourism industry of Pakistan. Among those, organizational culture, corporate social responsibility, and reputation are important factors to decrease the sustainability of the hospitality industry of Pakistan [49,50,51,52]. In another context, it is also mentioned that CSR, OC, and R are important factors in decreasing the sustainability of the hospitality industry [53]. Therefore, considering the importance of the issue, the present study considers the role of CSR practices from different dimensions, OC, and R in generating the CS. In this regard, the current study objective was to investigate the impact of OC on CSR in the hospitality industry. In addition, the mediating role of R between CSR and CS has also been analyzed. Firstly, the literature review is provided details of the association between the variables and hypotheses of current research. Secondly, a research methodology is provided. Thirdly, results and discussion are provided. Finally, this research study also sets out the directions for future research studies.

2. Literature Review

The Section 2 of the study consists of two Section 2.1 and Section 2.2. These two as are being discussed below:

2.1. Theoretical Review

Corporate social responsibility (CSR) is defined as the process which is used by organizations for the integration of societal, environmental, and ethical, issues along with customer concerns as well as human rights within businesses with the primary purpose to create a maximized value for the shareholders and owners [54,55]. It also involves the value creation for the shareholders at large (Society) [56]. Recently, the World Business Council for Sustainable Development [57] defined CSR as the organizational commitment in which an organization assumes to contribute to economic development via collaborating with its workforce, and families, for the betterment of living quality in the social environment CSR emphasizes the importance of stakeholders other than entrepreneurs, investors, and owners, according to the stakeholder theory.
Organizations are required to encompass all of their targeted customers for the implementation of CSR activities aimed at dealing with the principles of an environment, society, and economy [23]. All of CSR related actions will be performed by the relevant audience’s expectations [58]. By following this method, hospitality industry firms can address the expectations of the stakeholders along with addressing the wide group of individuals that are directly or indirectly get influenced by such organizations [59].
CSR entertains the influences that organizational operations exert on society [60]. Stakeholder theory is widely used by academicians to the identification of the influence of societies and their demands on companies’ missions for the investigation of CSR practices [61]. It emphasizes relationship management with individuals/groups which can potentially influence the organizational practices or can get affected by them as well [62]. Already available literature has primarily focused on the identification of how organizations affect their stakeholders such as the workforce, community, and customers related to the issues regarding the environment [63,64,65] through finding out an association among predictors as well as consequences of CSR practices followed organizations [63,66,67]. Theoretically, it is also found that CSR is an important predictor of reputation (R) that could help to enhance the sustainability of the organization. Various previous studies had also used the stakeholder theory regarding the relationship between CSR, R, and organization culture (OC) and corporate sustainability (CS) [68,69,70]. The following literature review presents CSR practices adopted for both internal stakeholders (employees) and external stakeholders (local communities, customers, and communities related to environmental issues) that may present a significant relation with OC as an antecedent of CSR, CS as one of the outcomes derived from CSR, and R as another key factor derived from implementing CSR strategies.

2.2. Empirical Review

After discussing the Section 2.1, the current section consists of an empirical review of previous studies.

2.2.1. Organizational Culture and CSR

Organizational culture (OC) is the collection of beliefs, expectations, and practices that guide and inform the activities of all team members [71]. In other words, OC is a highly customized term, which depends on the concepts adopted in the company. Since it is closely related to both the tradition and history of the company as well as current management methods which leads to improved CSR activities of the business [28]. Therefore, OC could be used in place of anything that is composed of a collection of ideas, faith, norms, standards, and social practices [15]. All of these are shared and embraced by the groups [72]. Whereas it can also be defined from the management perspective as well, it denotes the structure of the organization inclusive of the groups and units creating a shared norm, faith, and practices to be followed by individuals working within an organization that could lead to CSR activities of the business [15]. It is regarded as the organizational culture that facilitates the organizational strategies to gain a sustained competitive advantage by adopting proper CSR activities [73,74]. Since the organizations have different environments so they do not have similar cultures and their performance varies as well. Therefore, [75] pointed out the four types of organizational culture, namely clan, adhocracy, market, and hierarchy. All of these cultures are based on the control systems that describe the practices or actions of the individuals working within an organization [15]. Where the clan culture represents the flexibility and discretionary power of the individuals to act by promoting teamwork and employee participation. Adhocracy culture denotes the cultural settings that motivate individuals (should they become inventive) by focusing on their environmental surroundings [15]. Market culture places a premium on achieving objectives through identifying and filling market gaps. Finally, the hierarchy culture presents the formalization as well as an organization while performing the job duties within an organization [75]. All organizational cultures are primarily focused on relationship management with the stakeholders [58,66,76,77]. In addition, the previous study by [78] also found a positive and significant relationship between corporate culture and corporate social responsibility. Based on these discussions the following hypotheses were formulated:
H1. 
Organizational culture had a positive and significant impact on CSR toward employees.
H2. 
Organizational culture had a positive and significant impact on CSR toward the customer.
H3. 
Organizational culture had a positive and significant impact on CSR toward the local community.
H4. 
Organizational culture had a positive and significant impact on CSR toward the environment.

2.2.2. CSR Practices and Reputation

A reputation is defined as the trustworthiness, accountability, and reliability that a stakeholder has with an organization’s success [79]. Further, it was argued that it could be described as the judgment of an observer regarding an organization and that these judgments are depending economic, societal, and environmental considerations that impact an organization over some time [80]. R is a joint representation of business long-ago activities and potential prospects that explain how key resource providers interpret business initiatives and assess its ability to deliver valued customers. Studies refer to it as the prestige or status of a product or service as perceived by the purchaser based on the image of the supplier. Similarly, [81] sees corporate reputation as the general intuition dazzling the perception of a combined stakeholder group. Hence, the organizations strive to build their R by focusing on their CSR efforts and methods of communication [82]. Moreover, the stimulus-organization-response model holds that external provocation influences the internal regulation process to for opt the choices later on resulting in the behaviors of the consumers. Ref. [83] explain how CSR initiatives taken by an organization drive the consumer behaviors influenced by the organizational status [84]. As in circumstances, external incentives determine the preferences of the consumers, and organizations are in a position to control these factors. For instance, they can take CSR-related initiatives by sponsoring, cause-related marketing, and philanthropy as well. While deciding the customers take into account the CSR initiatives of an organization [85], and their response is represented by their action of purchasing the products or services led by CSR real decisions, results, and actions [86]. Resultantly, CSR performed by an organization results in the R and facilitates the organizations to enrich their overall R among the general public. Later on, it offers the organizations a competitive advantage [24,87,88,89,90]. Empirically, further, it is also found a positive and significant relationship between CSR and R [23,79]. This shows that corporate social responsibility is an important predictor of R. Hence, the following hypotheses were formulated:
H5. 
CSR toward employees had a positive and significant influence on the reputation of the hotel industry.
H6. 
CSR toward customers had a positive and significant influence on the reputation of the hotel industry.
H7. 
CSR toward the local community had a positive and significant influence on the reputation of the hotel industry.
H8. 
CSR toward the environment had a positive and significant influence on the reputation of the hotel industry.

2.2.3. CSR, Reputation, and Corporate Sustainability

In the past, the importance of a company’s reputation (R) to its long-term viability has been discussed [28]. It was further argued that CS was also boosted by this factor. Further, 53 percent of the 140 U.S.-based organizations examined reputational improvement as a primary reason for CS. According to KPMG International (2008)’s survey, over half of respondents identified R improvement as a key reason for raising the CS. For example, let corporations “negotiate more attractive contracts with host governments, to attract potential personnel, to charge premium pricing for their products and to minimize their cost of capital.” On the other hand, [91], discusses increasing the R giving as a strategy for strengthening a CS. Empirically study demonstrated a connection between the CS and R, showing that R is an essential predictor for CS [15]. In the same vein, R is positively and significantly associated with CS [92]. Based on the previous discussion, it is argued that R is an important predictor increase the CS.
On other hand, CSR practices followed by the organizations tend to have a positive influence on the R and help them gain a competitive advantage [24,87,90]. Similarly, the organizations having a positive image regarding CSR activities they perform will tend to have a good R and to maintain a good reputation they will tend to actively engage in these activities, resulting in corporate sustainability. Previously the studies [9,11,87] revealed that CSR initiatives taken by organizations tend to result in corporate sustainability. Evidence regarding CSR and sustainable performance is also present in the hospitality industry [23,65,93,94]. In other words, it was also found a positive and significant relationship between R and CS [95]. While on the other hand, it was found a positive and significant association between R and CS [96]. In another context, it was further recommended by [97,98] that when CSR is being improved then the R is also enhanced which could positively affect CS. Thus, based on this evidence, the following hypotheses were proposed:
H9. 
The reputation had a positive and significant association with corporate sustainability.
H10. 
CSR toward employees has a positive and significant influence on corporate sustainability by reputation.
H11. 
CSR toward customers has a positive and significant influence on corporate sustainability by reputation.
H12. 
CSR toward the environment has a positive and significant influence on corporate sustainability by reputation.
H13. 
CSR toward the local community has a positive and significant influence on corporate sustainability by reputation.

2.2.4. Conceptual Framework

The previous Section 2 has become the foundation for the development of the research conceptual framework. The current research framework consists of four variables namely organizational culture (OC) and corporate social responsibility (CSR) which were measured by four dimensions (CSR employees, CSR customers, CSR local, and CSR environment). These two variables were used as independent variables while the third variable is reputation (R) which was used as mediating variable. The fourth variable was corporate sustainability (CS) which was a dependent variable of the study. All of these variables are predicted in Figure 1 below.

3. Research Methodology

In research, there are many different methods (i.e., quantitative and qualitative). Ref. [99] used a quantitative method, which includes a deductive approach and emphasizes quantifying and evaluating data. Based on previous studies, the present study took up a quantitative method since it is thought to be more effective whenever testing a hypothesis consistent with past theory. On the other hand, in the work of [100], exploratory, explanatory, and descriptive studies were discovered. As the title suggests, the purpose of this research is to look at the influence of organizational culture on corporate sustainability, and specifically the impact of corporate social responsibility and reputation in the hospitality business. As a result, this research is explanatory in character. To put it another way, [101] further explained the cross-sectional and longitudinal research. Cross-sectional research is undertaken at that time when data are gathered for a single time to obtain responses, regardless of the time span. This could take several days, weeks, and months, but it must be carried out all at once. In contrast, longitudinal research aims to investigate “before and after” occurrences. Hence, data in these studies are gathered many times. It takes a long time to explain a change in behavior. The latest research used a cross-sectional time horizon, which was achieved through a questionnaire which was distributed and through collecting data all at once.

3.1. Population and Sample Procedure

Ref. [102] explained that the target population is a “group of individuals” who has the same characteristics. Managers of hotels in the midscale to luxury category (three, four, and five stars) who were recognized as members of the Pakistan Hotels Association made up the target population. The target respondents of the study are in line with previous study in the field of corporate social responsibility, corporate culture, and corporate reputation [15,103]. The data were acquired using a suitable sampling technique from two regions, Lahore and Karachi, and the unit of analysis was the individual. The sample is the subset of the population, or representative of the population [104]. Therefore, an appropriate sample size chosen is very necessary for making the inference about the population. There are two methods for the selection of the sample; probability and non-probability [104]. In probability sampling, each element has an equal chance of occurrence from the entire population, whereas in non-probability every element does not have an equal chance of occurrence [105]. In the current study, the population of the study is not known. Therefore, for data collection, the researchers have applied the convenient non-probability sampling technique since the survey was conducted through an online questionnaire. Data were collected via a self-administered online survey to maximize cost savings, quick reaction times, or better control over the sample. The reason to choose this technique is that it saves time, it is easy to use, and it allows the respondents voluntary participation in filling the questionnaire. Moreover, using the 10 times rule of thumb, G*Power program version 3 was also to be employed to ensure that the sample size was sufficient for the study. A prior test of analysis for G*Power was to be used for the proper sample size estimation on some statistical parameters [106]. Using two predictors, a medium 0.15 effect size, a 0.05 level of significance, and this study obtained a 200-sample size at the statistical power of 0.95. Moreover, it is argued that diversified samples enhance the generalizability of the results [107]. Therefore, with the help of the convenience sampling technique, 500 questionnaires were distributed among the male-female. The data-gathering process was finished by conducting telephone poles with managers who found the online survey challenging to complete [108]. A total of 350 people returned questionnaires, indicating a response rate of 70%. According to [109], a 50% response rate is considered to be adequate, 60% is good, while 70% is very good. This indicates that the response rate for this study (which is 70%) is very good. Therefore, this study sample was considered to the significant for analysis. Males made up 65 percent of the group, while females made up only 35%. Since Pakistan is not a female-dominated society, the female-to-male ratio was not high. The respondents’ job experience ranged from five to twenty years.

3.2. Research Questionnaire

The research questions were adopted using previously conducted studies in which it had been thoroughly evaluated. As a result, the construction was more reliable and legitimate. The following four elements of corporate social responsibility (CSR) were measured: CSR for employees, CSR for the environment, CSR in the direction of the local community, and CSR in the direction of the local community. Among these dimensions, CSR toward employees was measured five items, CSR toward local was measured four items, CSR toward community was measured three items, and CSR toward ‘customers was measured three items. These dimensions and questionnaire were adapted from the study [110]. In addition, organizational culture (OC) was measured by four dimensions, and an assessed instrument was proposed from the study [75]. Each organizational culture dimension was measured from three items that were adopted from the study of [111,112]. On the other side, three items were adopted from the study to evaluate reputation (Rep) [113]. Before the final data collection, the questionnaire was pilot tested by the field experts and several managers in which the clarification, grammatically, as well as the applicability of the scales, have all garnered positive reviews. The questionnaires were graded on a 5-point Likert scale, with 1 indicating severe disagreement and 5 indicating strongly agree.

3.3. Data Analysis and Interpretation

To analyze the data for the present study, statistical techniques, i.e., (inferential statistics) were used to achieve the research objective. The inferential statistics explained the relationships and their strength among variables. For this purpose, Smart-PLS (partial least squares) statistical tools were used. Smart-PLS is an appropriate tool for partial least squares structural equation modeling (PLS-SEM) that explains the inferential statistics of the model [114,115,116,117]. Secondly, SEM is a flexible technique due to the nominal requirement of the measurements scale, normality of data, and sample size [118]. Thirdly, PLS provides more analysis, and investigators used it to test their model for the moderating effect [119]. Fourthly, PLS-SEM is more effective in dealing with the higher and lower loading in the complex model as compared to other techniques such as LISERAL and regression [120]. Lastly, the smart PLS could be used for the reflective and formative measurement models. This researcher has used PLS-SEM.

3.4. Common Method Bias

The common method biased (CMB) issues should be resolved in quantitative research. The responses of the study could be effective for the CMB at that time when the respondents could not give a proper answer and also could be unwilling to give answers [115,121]. Numerous strategies were made there in the latest research to mitigate this issue. In line with the suggestion of [121], the question of CMB was dealt with a priori in conception and was implemented. The questions were simple and brief, and the respondents were able to understand them at the same level. In order to reduce ambiguity, we avoided unfamiliar terms and a complex syntax. The questionnaire had spread items that measured the same constructs to ensure consistent responses. Low individuality in representing the right answer perceived was condensed by emphasizing that their personal views were important for both themselves and the management of the hotel. In the context of PLS, a thorough analysis has also been undertaken of the possible methods for the testing of CMB. The statistical technique for the CMB detection was used which was recommended by [24]. Table 1 shows the value of Harman’s Single Factor Test which is less than the recommended cumulative value of 50%. The resulting biasness were not found in the data and there is no CMV problem in this present paper.
This included a Variance Inflation Factor (VIF) test as an integrated procedure to evaluate vertical and secondary collinearities simultaneously. The whole collinearity approach was adopted for this purpose [122]. VIFs for all latent variables in the model are generated with this procedure. The VIF greater than 3.3 is considered to be an uncontrolled collinearity sign and also shows CMB model contamination. The VIF values were less than 3.3 which showed that the model was free from CMB. Therefore, the model is considered CMB-free since the maximum value of VIF is 2.015. The value of VIF is shown in Table 2 and it is seen that the figures of all variables are less than the recommended threshold values 5 [123] and 10 [124] indicating the problem of multicollinearity is not observed and the variables are not correlated.
For estimating the structural model R2 value of endogenous latent variables is also examined. Table 2 shows the value of R2 and adjusted R2 which are 0.839 and 0.836, respectively. It means that the model explains 83.9% vulnerability of the feedback figures or data encompassing its mean. So, it can be concluded that R squared shows a good regression model appropriate to statistical details or observations (Table 3).
The value of effect size (f2) is shown in Table 4 and it is seen that the values of f2 for organizational culture, reputation, CSR toward employees, CSR toward customers, CSR toward the environment, and CSR toward local community are 0.345, 0.161, 0.224, 0.225, 0.355 and 0.173 respectively. The result showed that organizational culture had a large effect, reputation had a medium effect, and CSR toward employees, CSR toward customers, and CSR toward local community also had a medium effect. CSR toward the environment had a large effect.

4. Measurement Model

Partial least squares (PLS) is a variance-based structural equation modeling approach that was used to assess the study model [125]. This conclusion was influenced by the fact that the variables in the research model were composites. The indicators or dimensions of composites were combined in linear combinations. Consequently, taking markers or dimensions out of a composite alters its meaning [126]. PLS can represent unidimensional and multidimensional entities using a two-stage technique [127]. Consequently, the study’s main goal was to look into the relationships between the several basic driving components and their influence on hotel performance. To account for such relationships between the variables CSR consumers, CSR workers, CSR local community, CSR environment, reputation, and sustainability performance, a composite model was generated in Mode A (correlation weights). Since correlation weights are important when indicators are linked, mode ‘A’ (correlation weights) was chosen [126]. Since internal consistency was not expected, the four variables of OC were modeled as composites and estimated using Mode ‘B’ (regression weights) estimation techniques [128]. Model B was also used at the second-order construct level, as previously mentioned. Smart PLS v.3.2 software was used in this investigation [129]. A distinction was made between the composites estimated in Modes A and B in order to evaluate the measurement model. The validity and reliability of the measurement model for Composite Mode A were evaluated as part of the evaluation process for Composite Mode A. [125,130]. Moreover, as shown in Table 1, the indicators of Mode A composites meet the reliability requirements since the loadings are more than 0.7. The composites fulfill the requirements for composite reliability (R) and average variance extracted (AVE). The CR statistics are larger than 0.7, while the AVE statistics are greater than 0.5. Finally, Table 2 demonstrates that all Mode A composites obtain discriminant validity when tested using the Heterotrait–Monotrait correlation (HTMT) criteria for discriminant validity. As a result of this finding, each Mode A construct appears to be distinct from the others [131].
In the following step, the OC construct and its dimensions (which had been computed in Mode B) were examined. Composites were evaluated at the indicator level (multicollinearity and weight assessment) for both the lower-order OC dimensions [132] and the higher-order OC construct [76]. Initially, the researchers looked for indicators of possible multicollinearity between the elements in each dimension and the multidimensional construct in the first dimension. A VIF value greater than 3.3 implies a high degree of multicollinearity [133]. The maximum VIF values were less than 2.3, indicating that there are no problems with multicollinearity with the items [134]. After this, we checked the weights for their magnitude and relevance (Table 5). It was discovered that all indicators had statistically significant weights (Table 6 and Table 7).

5. Structural Model

The research hypothesis was then tested once the measurement model had been tested. The bootstrap 500 resampling approach has been used with a PLS-SEM for this objective. The findings of the SEM study revealed that corporate social responsibility (CSR) toward customers had a favorable and significant influence on reputation (Rep), confirming our hypothesis. In addition, corporate social responsibility (CSR) toward employees used to have a substantial and positive association with Rep which also supports the proposed hypothesis. In the same vein, CSR toward the environment used to have a substantial and positive association with Rep, which lends credence to the proposed concept. Furthermore, CSR forward into local exhibited a positive and substantial link with Rep, corroborating the hypothesized concept. The above discussion findings had shown that CSR activities are considered to be important indicators for increasing the Rep of the hotel industry of Pakistan. On the other hand, the organizational culture (OC) use to have a substantial and good link with CSR that supports to proposed hypothesis. Similarly, OC also had a significant and positive relationship with CSR toward the environment which supports the proposed hypothesis. OC also positively and significantly affects CSR toward Local, which also supports the proposed hypothesis. These findings had shown that OC is an important predictor to enhance CSR activities in the hotel industry in Pakistan. In other words, reputation also positively and significantly affects corporate sustainability (CS) which also supports to proposed hypothesis. On the other hand, the four CSR activities also positively and significantly affect the CS through the mediating effect of Rep which also supports to proposed hypothesis. The entire hypothesis of the study is supported. Therefore, this study is considered to be a pioneer study and major contribution to the extant literature with respect to increasing the importance of CSR for enhancing CS. Below, Table 8 predicts all of the previously described outcomes (Figure 2).

6. Discussion and Conclusions

The sustainability of the hotel industry is considered to be an important part of the survival of the long-term economy. If the sustainability of the organization is not properly addressed, then sustainability could be minimized overall. Various factors affect the sustainability of the organization. Among those factors are organizational culture (OC), corporate social responsibility (CSR), and reputation (R), all of which affect the corporate sustainability (CS) of the hotel industry in Pakistan. Therefore, the current study objective is to check the insights of OC on CSR and then the effect of CSR on the reputation and CS of the hotel industry in Pakistan. CSR is an integral part of contributing to the company’s performance [135]. As a second-order construct, an OC was employed which shows a positive and significant impact on four CSR activities which supports the proposed hypothesis (1, 2, 3, 4). These findings show that companies should be involved in the proper implementation of CSR activities by taking into consideration the stakeholder groups (communities, consumers, and employees). Strong clan culture organizations should stress how CSR is applied in a variety of ways “(CSR toward customers, CSR toward employees, CSR toward local community, and CSR toward environment”). Hotels that are market-sensitive and have an innovative culture should work together to give better services and goods to market customers. CSR activities are regarded as high-cost practices that disadvantage organizations financially and are likely to have a negative influence on CSR adoption. There has been no research examining the direct impact of OC on CSR in the hospitality literature. For instance, some studies used the OC as a moderating variable. After investigating OC as a moderating variable across CSR and corporate sustainability, it was shown that CSR, as well as market cultures, get a positive moderating influence on corporate sustainability connections, whereas adhocracy and hierarchical cultures have a negative mediation role. While in the current study the OC was used as a predictor for CSR activities that positively and significantly affect CSR activities. These findings show that when the OC is increased, then CSR activities are also increased. Therefore, this relationship is considered to be the study’s main influence. The same results had been found in the study carried out by Dimitrova [78].
Moreover, research findings show that hotels with managers view hotels with a stronger reputation for CSR employees and CSR client initiatives. Employees were among the most important stakeholders in the hotel sector, and satisfying their expectations for suitable salary, fair promotion, training, and the adoption of flexible policies to ensure a happy environment for workers and work-life balance helps to boost the hotel’s reputation. As a result, the existing findings of this study revealed that corporate social responsibility has a favorable and considerable influence on employee reputation [8]. The positive effect on the reputation of strong CSR toward employees was also confirmed by [79,136]. Customers are also an important group of hotel stakeholders who improves the reputation of hotels by providing high-quality services that meet customer needs [79]. This is the main reason that the current study found a positive and substantial connotation among CSR toward customers and reputation. The strong CSR toward customers has also been confirmed to positively affect a hotels’ reputation [88].
In the same vein, CSR toward the environment and CSR toward the community also demonstrated a positive and significant association with reputation. These findings are further supported by [137] who also found a positive and significant association. These show that the companies that consider this view can be explained by customers rather than environmental or social problems [138]. Refs. [139,140] acknowledged that eco-saving is the key to environmental performance and that most CSR-based practices pay more attention to acquiescence by laws that have significant influence at tourism destinations. Ref. [141] recognized that important local community players are mainly underestimating the importance of CSR. Policymaking can, therefore, lead to improper CSR procedures being designed and deployed. Managers may think that customers accurately understand CSR initiatives that benefit the local society; the community may be aware of the hotel’s CSR initiatives. Therefore, to increase the reputation of the hotel industry there is a need for time to improve CSR toward the environment and CSR community activities due to the fact that reputation leads to the formation of local communities and sustainability initiatives [142]. On the other hand, it is also found that reputation had a positive and significant association with corporate sustainability, which shows that when the corporate reputation increased then the CS also increased. These findings are supported by various previous studies who also found the same results [28,103].
On the other hand, it has also been discovered that there is a positive and considerable indirect impact of four CSR activities on CS through the mediating role of reputation. In the short term, these findings had shown that hotel operators were also concerned about the high costs involved, which could put them at a competitive disadvantage in comparison to less socially responsible hotels. However, in terms of using CSR as a program to enhance a company’s image, the hotel’s performance can have a sustainable competitive advantage. Therefore, after improving the hotel’s reputation, CSR activities projects will positively affect hotel CR. This finding is in line with the findings of previous investigations in which the hotel’s reputation was employed as a mediator between CSR and performance indicators [92]. Furthermore, other researchers explained that their brand image increased their reputation (e.g., a strong brand image that encourages people to come back and upturns the hotels’ reputation [143].
It is concluded depending on the aforementioned findings that OC, CSR activities, and R are important predictors to improve corporate sustainability. This shows that Pakistani hotels play an important role with respect to the above factors for increasing their corporate sustainability. These demonstrations, namely that Pakistani hotels could contribute more if they manage their activities in a more properly, could enhance sustainability on an international level and could increase the contribution to the social and economic development of Pakistan. It is suggested that depending on these observations, managers and owners of the hotel industry in Pakistan should develop a proper strategy to improve their OC, CSR, and R for a hotel’s long-term sustainability as well as to compete in the international marker. Since in most of the developing countries the hotel industry play a significant role in the progress of economic development, this concept plays a significant role.

6.1. Theoretical Implications

While CSR is an essential topic for all companies, exploration in the hotel business is lacking. Furthermore, the majority of studies on the tourism industry have been conducted on the environmental and financial performance consequences along with CSR activities [144]. While the current research enriches hotel industries by effectively combining the functions of OC and CSR (employees, consumers, environment, and local communities), reputation as well as corporate sustainability are important components of the research framework. The paper fills up research gaps in the existing literature with an empirical investigation of how OC influences different CSR activities, how CSR activities affect the hotel reputation, and the role that corporate reputation plays with respect to these concepts (something which has not been investigated in previous studies). The findings of this study support the relationship between CSR and the stakeholder theory by acknowledging the numerous affected parties, including workers, consumers, and communities.
With respect to previous researchers’ knowledge, no previous research has considered reputation as a mediating variable in the hotel business. The investigation aims to fill a vacuum in the hotel industry literature through examining the relationships between such intangibles and corporate sustainability [145]. The present investigation adds to the body of knowledge by looking at the relationships between several aspects of CSR as well as a hotel’s reputation. Some academics have suggested that there are correlations between CSR and CR [136]. While there is research on the association between CSR and reputation playing a mediating role in the academic literature, there are few studies on the relationship between CSR and reputation mediating role in the business world [146] and the customers’ view [147,148].
In contemporary studies related to the links between corporate social responsibility as well as reputation and their influence on performance, there has been a lack of knowledge on the restructures [149]. Furthermore, even though the majority of research has paid more attention to the influence of CSR on a specific metric of performance (usually financial), many studies have looked at the links between CSR and broader sustainability indicators [14]. Following this line of inquiry, the study investigates the competitive advantages of hotels as evaluated by corporate sustainability. Moreover, previous studies in the field of corporate social responsibility, organizational culture, and reputation have been conducted in Pakistan on other sectors while having little attention to the hotel industry in Pakistan. Therefore, the current study addresses a need in the academic literature on hotel management by presenting empirical results and discussing the findings of these results.

6.2. Practical Implications

The validation of the current research assumptions will enable hotel professionals to recognize the significance of OC in the development as well as the implementation of CSR projects and provide explanation about why CSR practices should be considered in improving their reputation. GMs could also realize the significance of integrating relevant stakeholders via Corporate social responsibility activities utilizing different CSR measurements, thereby improving the assimilation of CSR into corporate strategy through CSR measures (such as staff training, involvement in community programs, and stakeholder communication) to improve efficiency [150].
The existing research has suggested several practical implications for hotel managers to improve performance. Since workers are the most important internal group of stakeholders, hotels must effectively convey their climate policies through a variety of internal communication methods. Hotel chains, in particular, require flow communication among departments and services [77]. Transparency of environmental as well as local practice reporting seems to be very essential to improve communication with stakeholders and to improve the reputation of a company [151]. When making decisions about social services that the community considers suitable, hotels should engage with the local community. Customers must be informed about the hotel’s environmental efforts promptly (for example, water waste reduction, recycling, and laundry reduction). Open and honest information on activities that are socially responsible seems an efficient way to attract customers to a hotel [24]. Additionally, organizations must incorporate CSR practices into any long-term plan that considers equally different stakeholders, such as consumers and the community [67]. A long-term approach such as this would aid hotels in establishing long-term success [66].
By leveraging a major intangible asset, hotels need to pay attention to their reputations. They may profit from high levels of distinction, customer happiness, and trustworthiness, as well as generate client loyalty by establishing and maintaining a positive reputation. Hotels should keep an eye on their reputation in place of as a strategic resource and make necessary modifications. The initiatives of GMs to build a favorable reputation can help their hotels acquire a competitive edge.

6.3. Limitations of the Study and Future Research

Whereas the above-mentioned conceptual and applied consequences are essential, the research has numerous shortcomings that might lead to further research. Social desirability distortion can exist as a result of managers’ self-reported perceptions [152]. Nevertheless, confidentiality and anonymity were maintained, and disparities in reactions to sensitive problems were minimized. Since the sample is primarily confined to Pakistan, the findings may not be applicable to other countries. Therefore, future research could be carried out by collecting data from other front-line employees or practitioners to know about the research’s generalizability. Moreover, these findings are consistent with previous research [16,88] but the current research could not be generalized to other countries since those countries have a separate working environments. Hence, future research could be carried out on other developing and developed countries to enhance research generalizability.
For both practitioners and scholars, hotel sustainability is a key issue. Ref. [153] showed that most research pays more attention to the financial aspect or operative aspects used individually or in a joint manner. The variable ‘corporate sustainability’ was used in the current study, but future studies could be enhanced by using ‘firm performance’ as a dependent variable. In addition, the current study was limited to direct and mediation effects. Therefore, it may be helpful to expand the research model with more predictors in the context both in the background and consequences with moderators of corporate governance. Lastly, the study was limited to a cross-sectional research design in which data were collected at one time, which represents the limitation of the study. Therefore, the relationship between the research models may be updated and consolidated with longitudinal studies in the future.

Author Contributions

Conceptualization, S.S.; Data curation, R.A. and C.X.; Formal analysis, S.S. and S.R.; Funding acquisition, T.F.; Investigation, S.S. and T.F. Project administration, T.F.; Resources, C.X.; Supervision, T.F.; Writing—original draft, S.S.; Writing—review & editing, S.S. All authors have read and agreed to the published version of the manuscript.

Funding

The authors received no funding to conduct and publish this research.

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Not applicable.

Data Availability Statement

The data supporting the conclusions of this article will be made available by the authors.

Conflicts of Interest

The authors declare no conflict of interest.

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Sustainability 14 10105 g001 550
Figure 1. Conceptual framework.
Figure 1. Conceptual framework.
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Sustainability 14 10105 g002 550
Figure 2. Structural model.
Figure 2. Structural model.
Sustainability 14 10105 g002
Table
Table 1. Harman’s Single Factor Test.
Table 1. Harman’s Single Factor Test.
CriterionAcceptability
Harman’s Single Factor Test31.472% variance proportion
Table
Table 2. Collinearity assessment for inner model [variance inflation factor (VIF) values].
Table 2. Collinearity assessment for inner model [variance inflation factor (VIF) values].
VIF < 5DT
Organizational culture 2.998
Reputation2.182
CSR toward employees1.877
CSR toward customers2.894
CSR toward environment2.674
CSR toward local community2.032
Table
Table 3. R2 and adjusted R2 values.
Table 3. R2 and adjusted R2 values.
R SquareR Square Adjusted
Corporate reputation0.8390.836
Table
Table 4. Effect size (f2).
Table 4. Effect size (f2).
DT
Organizational culture 0.345
Reputation0.161
CSR toward employees0.224
CSR toward customers0.225
CSR toward the environment0.355
CSR toward local community0.173
Table
Table 5. Reliability and validity of construct.
Table 5. Reliability and validity of construct.
ConstructItemsWeightsLoadingsCronbach’s AlphaCRAVE
Adhocracy cultureAC1 0.8560.7490.8570.666
AC2 0.775
AC3 0.816
Clan cultureCC1 0.8240.7490.8570.666
CC2 0.818
CC3 0.806
Hierarchy cultureHC1 0.750.7010.8230.609
HC2 0.85
HC3 0.737
Market cultureMC1 0.7830.7460.8560.664
MC2 0.810
MC3 0.715
CSR customersCSR_Cus1 0.7290.7020.8200.606
CSR_Cus2 0.897
CSR_Cus3 0.705
CSR employeesCSR_Emp1 0.7390.8140.8680.569
CSR_Emp2 0.775
CSR_Emp3 0.722
CSR_Emp4 0.741
CSR_Emp5 0.792
CSR environmentCSR_Env1 0.7970.7160.8370.634
CSR_Env2 0.703
CSR_Env3 0.887
CSR localCSR_Loc1 0.7410.7950.8570.603
CSR_Loc2 0.785
CSR_Loc3 0.709
CSR_Loc4 0.902
ReputationRep1 0.8310.7040.8360.629
Rep2 0.742
Rep3 0.803
Corporate sustainabilityCS1 0.7280.7600.8630.678
CS2 0.855
CS3 0.88
Organizational Culture *Adhocracy culture0.357
Clan culture0.348
Hierarchy culture0.356
Market culture0.382
Note: * Second-order construct; AC, adhocracy culture; CC, clan culture; HC, hierarchy culture; MC, market culture; CSR-Cus, CSR toward customer, CSR-Emp, CSR toward employees; CSR-Env, CSR toward enivornment; CSR-Loc, CSR toward local; Rep, Reputation; CS, corporate sustainability.
Table
Table 6. Fornell Larker.
Table 6. Fornell Larker.
CSR
Customers		CSR
Employees		CSR
Environment		CSR LocalCorporate
Sustainability		Reputation
CSR customers0.798
CSR employees0.0770.892
CSR environment0.7600.5630.850
CSR local0.7550.0870.1910.821
Corporate sustainability0.110.1360.1100.2710.732
Reputation0.1740.1250.1440.1210.1320.843
Table
Table 7. Heterotrait Monotrait Correlation.
Table 7. Heterotrait Monotrait Correlation.
CSR
Customers		CSR
Employees		CSR
Environment		CSR
Local		Corporate
Sustainability		Reputation
CSR customers
CSR employees0.034
CSR environment0.6710.314
CSR local0.3560.0560.691
Corporate sustainability0.1460.5360.1300.087
Reputation0.1890.6250.1340.1120.383
Table
Table 8. Hypothesis Results.
Table 8. Hypothesis Results.
BetaSDT Statistics p Values2.50%97.50%
CSR customers ⟶ Reputation0.240.1062.2250.0340.1520.348
CSR employees ⟶ Reputation0.2970.0612.6590.0190.1070.401
CSR environment ⟶ Reputation0.2760.1262.6150.020.1510.365
CSR local ⟶ Reputation0.2830.1292.6360.0190.1090.376
Organizational culture ⟶ CSR customers0.1560.0661.9830.0470.1480.27
Organizational culture ⟶ CSR employees0.2010.0573.56800.1170.305
Organizational culture ⟶ CSR environment0.1610.0742.8250.0150.1460.293
Organizational culture ⟶ CSR local0.1910.082.0250.0450.1250.299
Reputation ⟶ Corporate sustainability0.8180.02335.21100.7660.855
CSR customers ⟶ Reputation ⟶ Corporate sustainability0.1960.0842.1250.0390.160.372
CSR employees ⟶ Reputation ⟶ Corporate sustainability0.2430.0652.2260.0330.1230.412
CSR environment ⟶ Reputation ⟶ Corporate sustainability0.2380.0952.2220.0340.1360.403
CSR local ⟶ Reputation ⟶ Corporate sustainability0.2320.0982.0110.0460.1410.391
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Siyal, S.; Ahmad, R.; Riaz, S.; Xin, C.; Fangcheng, T. The Impact of Corporate Culture on Corporate Social Responsibility: Role of Reputation and Corporate Sustainability. Sustainability 2022, 14, 10105. https://doi.org/10.3390/su141610105

AMA Style

Siyal S, Ahmad R, Riaz S, Xin C, Fangcheng T. The Impact of Corporate Culture on Corporate Social Responsibility: Role of Reputation and Corporate Sustainability. Sustainability. 2022; 14(16):10105. https://doi.org/10.3390/su141610105

Chicago/Turabian Style

Siyal, Saeed, Riaz Ahmad, Samina Riaz, Chunlin Xin, and Tang Fangcheng. 2022. "The Impact of Corporate Culture on Corporate Social Responsibility: Role of Reputation and Corporate Sustainability" Sustainability 14, no. 16: 10105. https://doi.org/10.3390/su141610105

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