A Qualitative Analysis of Corporate Social Responsibility in Saudi Arabia’s Service Sector-Practices and Company Performance

Abstract

Corporate social practices have become increasingly important in the service sector, as companies recognize the need to not only provide quality services to their customers but also to operate in a socially responsible manner. The goal of this research is to identify the practices of Corporate Social Responsibility (CSR) in Saudi Arabia’s service sector, as well as the relationship between these practices and performance. The study was based on the data collected from six semi-structured interviews with managers responsible for CSR implementation in the banking, insurance, and telecommunication sectors. The findings support the two research propositions, and reveal, based on managers’ perceptions, that companies have adopted several practices in their efforts to become socially responsible. Evidence also revealed that CSR practices have a positive impact on companies’ performance, corporate reputation, customer satisfaction, customer loyalty, and employee engagement. This study adds to the current body of research on the impact of applying CSR practices by providing evidence that doing so positively improves corporate performance, and identifying the most common CSR practices that can help firms improve their performance.

1. Introduction

In recent years, the role of businesses in promoting and supporting sustainable development has undergone significant changes due to global developments in the business world. These changes have become more pronounced with the increase in globalization and the disruption of supply chains caused by the COVID-19 pandemic [1,2]. While corporations have been responsible for many social and environmental problems, they can also be part of the solution by implementing Corporate Social Responsibility (CSR) policies and practices as a management strategy. These practices can help companies to have a positive impact on various stakeholders, including the local community and society at large, while remaining profitable and well balanced [1,3,4,5,6].

Numerous authors have put forward different concepts of CSR. CSR can be defined as a concept that voluntarily incorporates social and environmental aspects into a business’s operation and its relationship with its stakeholders [7] or can also be viewed as a corporation’s commitment to complying with ethical standards and contributing to economic development and the quality of life of workers and the local community [8]. While developed countries have seen an explosion in articles on how companies can implement CSR practices and performance, the same cannot be said for MENA [9,10,11,12].

There is a need to conduct comprehensive research that addresses the research problems while implementing CSR practices in the service sector in the Kingdom of Saudi Arabia (KSA) [13,14,15]. Although research into CSR practices in the Middle East and North Africa (MENA) has increased in the last two decades, it is still non-organized and fragmented across different academic journals, leading to findings that are extrapolated from a single country level to the entire MENA region [16]. The MENA region is characterized by single institutional environments and social actors that can result in distinctive effects on the practice of CSR [17,18,19]. While some MENA countries suffer from extreme and persistent poverty, affecting one out of every five people others serve as an important oil hub, constituting up to 65% of the world’s oil reserves, with Gulf Middle Eastern countries ranking among the richest in the world [20], The dominance of oil-centric capitalism in these nations, as well as its associated contribution to environmental degradation, raises critical considerations about how institutional pressures can shape the sustainable development agenda of corporations operating in this subregion. Politically the MENA area is diverse; political instability, fragility, and violence exacerbate the obstacles faced by governments attempting to deal with the pandemic in regions of MENA. The economic collapse in Lebanon has had a disastrous impact on public utilities and people’s livelihoods. In Yemen and Syria, ongoing armed conflict has exacerbated the pandemic, plunging the country deeper into disaster [21,22].

While several studies have focused on implementing CSR practices in the manufacturing sector, there is limited theoretical and empirical research on the service industry and its contribution towards socially responsible practices, particularly in KSA [13]. Furthermore, there has been a lack of research exploring the relationship between CSR and performance in emerging markets, with most studies focusing on developed countries. Internationally published research about Saudi Arabia in the context of CSR is also limited, and what has been found provides an inconsistent picture [16,23,24].

The aim of this study is to conduct an exploratory study that complements the limitations of previous studies and identifies CSR practices in the service sector as well as the managers’ perception of the impact of those practices on overall company performance in KSA. The study utilized information collected from six semi-structured interviews with managers responsible for CSR implementation in the banking, insurance, and telecommunications sectors, as well as secondary evidence obtained from reports, websites, and conferences. The research questions addressed in this study are: (1) What are the social practices implemented by Saudi companies in the service sector? (2) How does the implementation of CSR practices affect a company’s performance?

This paper is divided into six sections to address the research questions raised. Section 2 discusses previous studies and the purpose of the study, while Section 3 discusses the research method used. Section 4 analyzes the empirical analysis findings, while Section 5 discusses the findings from the 6 case studies. Finally, Section 6 concludes the paper by discussing the contributions, limitations, and suggestions for future studies.

2. Literature Review

2.1. CSR in Saudi Arabia Business Context

Saudi Arabia is a country on the Arabian Peninsula that is home of the two holiest cities in Islam, Mecca and Medina. Because KSA is a sovereign Arab Islamic state and the birthplace of Islam, many institutions and their governance, including the country’s constitution, are influenced by religion. The population of Saudi Arabia is 32.17 million people, has increased by 34.2% (8.2 million) since the last Census in 201 and 4.5% (1.4 million) since 2021, and is expected to grow until 2060 to 45.35 million. The country has a total area of 2,149,690 square kilometers and is the world’s 12th most populous country. In terms of age distribution, it becomes apparent that Saudi Arabia has a young society. 63.2% of the population in Saudi Arabia is younger than 35 years old, and 51.1% is younger than 30 years, with a median age population of 29 years, which the me median age of Saudis is 22 years, and of Non-Saudis is 34 years. (https://portal.saudicensus.sa/static-assets/media/content/20230531_GASTAT_Population_Report.pdf?crafterSite=gastat-portal&trk=public_post_comment-text accessed on 17 May 2023).

Many aspects of life in Arab countries, particularly KSA, are governed by Sharia, or religious law. In Saudi Arabia, Islam is a lifestyle instead of a religion. Islam provides comprehensive guidance for all aspects of human life, including religion, business, and social justice. To develop and improve spirituality and social justice, every Muslim must take an active role in his or her life [25]. CSR is required in Islam and is incorporated into fundamental Islamic teachings. Understanding CSR requires an understanding of Sharia [26,27]. Under Sharia, there is a requirement for a corporation to practice CSR as it is obligatory for each Muslim community to implement collective religious obligation [27,28]. In Islam, the goals of businesses are not only to maximize profits but also to promote social and economic justice [29,30,31]. Zakat, also known as Zakah, is the fourth pillar of Islam that means purification and is mentioned in numerous verses in the Quran [32], considered the most important example of Islam’s positive influence on CSR. This principle signifies purity, indicating the rich’s need to support the poor. All businesses in Saudi Arabia must pay zakat in the form of a 2.5% tax on the income of a company [27]. Usman et al. [33] stated that a company that claims to operate according to the Sharia principles will naturally practice CSR.

2.2. CSR and Performance

There are three main factions in the literature on how CSR practices impact financial performance: those who argue that there is no relationship, those that argue that there is, and those that claim this relationship may be a causal one.

However, the majority of studies found a positive correlation between CSR and company performance, defending the relevance of CSR in company strategy (e.g., [23,24,25,34,35,36,37,38,39,40,41,42,43,44,45,46,47,48,49,50,51,52,53,54,55,56,57]). If a company performs well, it results in a good CSR performance, which further leads to a better reputation. On the other hand, a better reputation also improves corporate performance, bringing an improvement in CSR activities [41,58,59]. Martinez-Ferrero and Frias-Aceituno [60] confirmed the positive and bidirectional link between CSR and financial performance. For Yumei et al. [61] there is a positive and significant relationship between CSR and company performance, and environmental aspects of CSR are the most important to the reputation and employee commitment. for company. Bag and Omrane [39] found that CSR activities in KSA’s Banking sector have a significant impact on financial performance and have a significant and positive impact on customer loyalty and satisfaction [62]. Another study conducted in Taiwan revealed a link between financial performance and CSR [63]. Three other studies concluded that CSR has a positive and significant impact on a company’s performance [23,24,54]. Furthermore, companies that use their budget on CSR practices experience an increase in their profit and revenue [50]. Non-financial benefits of CSR initiatives include increase employee satisfaction and talent retention, attract, retain, and engage talented employees, improve brand reputation, and enhance innovation [64,65].

Other studies have concluded that the relationship between CSR and firm performance is unclear and extremely complex because CSR practices are contextual and ingrained in the institutions in which CSR is conducted; as well as country characteristics, forms, and dimensions of CSR [66,67]; and CSR and financial performance measurements can justify the complex nature of the relationship between them. According to Kong et al. [47], in their systematic literature review on CSR and performance, they observed that while the relationship between business performance and CSR effect is clearly understandable, the relationship between CSR and performance is inconclusive.

In research based on 437 studies, authors found there is no relationship between CSR and financial performance [43], and in their study in KSA. Syed et al. [68] concluded that there is also no significant impact of CSR on financial performance. Due to the scope of the social practices, considering green initiatives as CSR practices, the relationship between green practices and economic performance is inconclusive [69].

According to some of the studies that found a negative correlation between CSR and firm financial performance, the organization’s goal should be to maximize shareholder profits while also fulfilling legal responsibilities following laws and regulations, so economic responsibility should be the primary responsibility of firms [6]. According to McWilliams and Siegel [70], CSR practices, ethical responsibilities, and donations reduce shareholder profit. Even prior empirical research on CSR and performance yielded mixed results; the majority of studies found a positive correlation between CSR and company performance.

To address the research questions, the following two propositions were derived for primary data collection:

P1—Companies implement CSR practices.

P2—The implementation of CSR practices positively influences the overall company performance.

3. Methodology

This study is based on qualitative research, which uses a multiple case studies approach as the most suitable research approach to explore and observe a new phenomenon that applies to CSR practices in the service sector. Qualitative research allows researchers to investigate a particular phenomenon using individuals’ experience and perception [71]. Multiple case studies allow a broader analysis of theoretical development and research questions when the researcher has little control over events and wants to emphasize a current phenomenon in real life and increase external validity [72,73]. The number of cases to employ in multiple case study research varies, but Eisenhart [74] believes that the maximum that a person can mentally process is 8. Yin [73] and others are more cautious about exact numbers, arguing that data should be collected until theoretical saturation is reached. There are various examples of multiple case study research using 3 to 11 cases in operations and management research [75,76].

The study sample consists of six large firms operating in Saudi Arabia’s service sector from the telecommunication, insurance, and banking sectors. The companies studied are committed to economic, environmental, and social sustainability, and have 3rd party certification and/or recognition (e.g., ISO 9001 quality management certification; ISO 14001 environmental management system certification). Companies publish sustainability reports, corporate governance reports, and some risk management reports including climate change risk analysis. The transparency that characterizes their actions is described on their websites, social reports, newspaper stories, business press articles, and speeches at sustainability conferences. Semi-structured face-to-face, phone, and zoom interviews were conducted using an interview protocol with open-ended questions which allowed participants to provide their own perspectives and opinions rather than simply agreeing with what they perceived to be the “right” answer, reducing the impact of desirability bias. Each interview lasted from 45–60 min and was recorded, transcribed, and analyzed to gain a deeper understanding of how each company was performing. To maintain confidentiality, the names of the selected companies have not been mentioned.

Cross-case analyses were used to evaluate evidence, findings, and outcomes with the existing literature. This study used various methods to analyze the data and draw the results; including analysis, synthesis, and the monographic method; to gain a thorough knowledge of the data gathered during the investigation. The analysis process involved breaking down the data into smaller, easier to manage elements and thoroughly analyzing each to uncover patterns and themes. Synthesis includes merging data from several sources to produce a more complete picture. The monographic method was used to undertake an in-depth investigation of each case in order to uncover distinct qualities and circumstances that may have influenced the reported outcomes.

Additionally, the study utilized a triangulation approach to validate the findings [73]. This involved cross-referencing the interview data with secondary data sources, such as sustainability reports, environmental and social policies, codes of conduct, and articles from newspapers, to verify the accuracy of the information provided by participants. The use of multiple methods and data sources helped to ensure the validity and reliability of the study’s findings.

Table 1. Characteristics of the Sample.

Companies	Service Sector	Company Size	Number of Interviewees form Each Sector	Role of Interviewees	CSR Department Manager
C1	Insurance	Large	2	Organizational Development Manager	No
C2		Large		Social Responsibility Manager	Yes
C3	Banking	Large	2	Social Responsibility Manager	Yes
C4		Large		Social Responsibility Manager	Yes
C5	Telecommunication	Large	2	Corporate Sustainability Director	Yes
C6		Large		Sustainability Supervisor	Yes

provides an overview of the selected companies’ main characteristics.

4. Findings

The purpose of this section is to identify the CSR practices in Saudi companies and explore the manager’s perception between CSR practices and company performance.

More specifically, this section aims to validate the two propositions associated with it and to answer the two research questions presented in the Introduction section: (1) What are the social practices implemented by Saudi companies in the service sector? (2) How does the implementation of CSR practices affect a company’s performance?

4.1. CSR Practices

The insurance sector in KSA is playing a pivotal role in encouraging community development and economic stability and is considered a new sector by comparison with other countries; the principal laws relating to insurance were enacted in 2003. In 2020, the Saudi general insurance market was estimated to be worth USD 10 billion. The projected growth rate is more than 4% between 2021 and 2025 (Global Data, 2023) [77] (https://www.globaldata.com/store/report/saudi-arabia-general-insurance-market-analysis/ accessed on 10 January 2023). Saudi insurance laws require insurance companies to operate through joint-stock companies and to comply with Sharia [78]. They provide full support to the nation to become innovative organizations and they supported people health during the pandemic through donations, using their capital to implement various CSR practices in collaboration with the Ministry of Health [79].

Being the Insurance sector, such a crucial sector in KSA, interviews were used in two large companies to analyze CSR practices, and performance. In C1 company, there is no dedicated CSR department, the policies are implemented by the head of departments.

Table 2. CSR practices by sector.

CSR Practices	Insurance		Banking		Telecommunication		Total
	C1	C2	C3	C4	C5	C6
Treat all employees and job applicants fairly.	√	√	√	√	√	√	6
Help solve social problems	√	√	√	√	√	√	6
Support community development initiatives	√	√	√	√	√	√	6
Increase economic stability within the community	√	√	√	√	√	√	6
Enforce ethical relationships with shareholders	√	√	√	√	√	√	6
Empower women and other groups	√	√	√	√	√	√	6
Reduce human rights abuse	√	--	√	--	√	√	4
Support government policies	√	√	√	√	√	√	6
Enforce ethical relationships with suppliers	√	√	√	√	√	√	6
Maintain employees’ safety conditions	√	√	√	√	√	√	6
Enforce ethical relationships with customers	√	√	√	√	√	√	6
Charity	√	√	√	√	√	√	6
Others? Specify	-	-	√	-	√	-	2

shows the CSR practices identified by the interviews from the insurance, banking, and telecommunication sectors.

As shown in Table 2, C1 company is implementing several CSR practices. During the COVID-19 pandemic, in 2020, C1 supported the Ministry of Health with SAR 25 million, the largest donation provided by any company from the insurance sector of the country. The firm used its capital to launch a range of initiatives in collaboration with the Ministry of Health. One of these initiatives was the creation of 21 mobile and fixed COVID-19 drive-through centers. The company also established an initiative to assist the Ministry of Health’s call center (937), firm doctors, and officials in spreading awareness of Coronavirus symptoms, taking preventive measures, and responding to queries from all over the Kingdom. In 2021, the firm maintained its financial support to assist Saudi society in overcoming the social and financial difficulties imposed by the pandemic, donating SAR 1 million to charitable works. It also participated in international days and presented numerous campaigns, activities, and messages to raise community awareness.

C2 has a dedicated CSR department, to ensure that CSR policies formulated by the Board of Directors are being implemented by each department. As shown in Table 2, the C2 manager confirmed the implementation of CSR practices, such as: treating all employees and job applicants fairly, supporting community development initiatives, among others.

The banking sector plays a critical role and has a significant effect on KSA’s economic development and it is recognized as one of the most dynamic sectors in the Saudi economy in terms of social responsibility practices, having increased the responsibility with stakeholders and implementing ethical investment practices [62,80]. According to KPMG [81], with COVID-19 pandemic executives in the banking sector increased their efforts on social aspects, mainly accelerating diversity and inclusion.

C3 bank is considered the foremost Islamic Bank globally, and one of its primary responsibilities toward an Islamic society is to make sure that every product is “Sharia-compliant”. C3 conducts several programs with the Ministry of Social Affairs, such as, for example, establishing fund investment accounts for orphans to support them in their life’s ventures, developing training programs for both genders to maintain equal education opportunities, and donating money to build houses for needy families. As mentioned in its annual report, C3 implement 3 pillars to maintain responsibilities toward the business and society: environment, social, and governance. All initiatives and programs are created to support those pillars. Goals are defined into different areas such as the management of environmental impact to reduce the environmental impact by reducing carbon footprint, diversity, inclusion, and responsible procurement. Other sustainable programs are implemented by this company to support volunteering activities and an annual budget is allocated to implement sustainable activities according to Vision 2030. In the interview, C3’s manager listed the CSR practices implemented by his company, as you can find in Table 2.

For C4’s manager, CSR is a crucial factor for business success. Furthermore, they successfully implemented CSR activities by establishing a strategy to support the direction of initiatives across all departments. This company established a five pillars framework extracted from the Islamic principles of governance and management. The pillars are Nummow—Grow, Takleef—Responsability, Rea’ya—Relationships, Hifth, and Awn—Help. C4’s manager confirmed the implementation of CSR practices, as can be found in Table 2. Several initiatives in different areas were implemented to support sustainability and contribute to Vision 2030 and the bank’s strategy. Regarding the environment, funds are distributed for environmentally friendly projects, including recycling, renewable energy, waste management, and ecological services and products. Furthermore, KPIs are established to measure the progress and report it in the annual sustainability report, which contains the exact numbers of all environmental and volunteering activities. Initiatives were established by the bank to open a charity channel between customers and charity associations. These included programs to promote a healthier lifestyle, such as the implementation of electronic bike stations easily accessible for the public to use bikes through a membership scheme. Other initiatives were/are implemented, such as quarterly charity activities for blood donation and many volunteering opportunities for employees, contributing to many awareness days, including obesity awareness, children’s cancer support, breast cancer, Down Syndrome and Alzheimer’s disease awareness, earth day, and tree day.

Saudi Arabia’s telecommunications market has grown rapidly in recent years and is expected to grow even more rapidly in the next two years. Several factors, including the increasing population, improved communication services, and an increasing number of smartphone users, are driving this growth. KSA has the largest information and communications technology market in the MENA region, with over 33 million consumers. By 2025, the Middle East and Africa are expected to see stronger growth, due to the rising migration of existing 2G subscribers to higher bandwidth, and, by 2029, the majority of mobile connections will be on 5G. The impact of COVID-19 on the Saudi telecom industry was marginal. Business hours broadband consumption increased in March 2020, as more people were on lockdown and staying at home, and the telecoms sector has grown in weekday viewership, movie rentals, and purchases. Live viewing increased 15%, and free video-on-demand viewing 25%. KSA is currently constructing 16 smart cities (including NEOM, Red Sea, Qiddiya, Waad Alshamal, and SPARK) to become the world’s most connected and digitized world nation by 2030 (https://www.trade.gov/country-commercial-guides/saudi-arabia-information-and-communications-technology, accessed on 10 January 2023).

For C5, CSR policy is based on 4 main pillars: climate change, social business, inclusion, and generation youth; and the main investments are in entrepreneurship, women empowerment, charity, and youth. Regarding the practices in addition to the ones shown in Table 2, according to C5 manager some are related with the environment: “…we will soon launch a campaign related to e-waste by spreading bins around different shops, where people can dispose their electronic items to be recycled in a safe way under certain standards, as disposing electronics in a random way might harm the environment since it has some hazardous products”. Another initiative is to install recycling bins for plastic bottles in their facilities, which after will be collected by recycling companies This company, participates in several initiatives with the community such as earth day, tree day, and others; promotes gender equality in Science, Technology, Engineering, and Math-related fields, installing parental controls within the company’s networks, and partnering with governmental and non-governmental entities; suppliers are also included in their CSR practices, through the definition of goals to train suppliers in company social and environmental standards. C5 also developed policies to reduce human rights abuse by signing a memorandum of understanding with the United Nations while focusing on children’s rights. Furthermore, they are supporting charities and events in fragile communities and encouraging the development of youth and females through the promotion of education and innovation.

For C6, sustainability is the term adopted by the company, which according to the interviewee is a more holistic approach than CSR. Sustainability is a part of company culture, it is embedded in all departments, and company managers are committed to consider sustainability as an integral part of the decision-making process. To ensure the proper implementation of sustainability, the company aligns its sustainability initiatives and practices with Vision 2030.

C6 implements the practices shown in Table 2. C6’s sustainability manager outlines many practices that are crucial for the success of the business such as establishing medical centers distributed across the Kingdom along with the Ministry of Health, and being a part of establishing the King Salman Center for Culture and Civilization Heritage. The company also contributed to the creation of the Safaah Foundation for Transparency and Integrity. Moreover, to support community initiatives, and increase economic stability within the community by enhancing economic impact, C6 implement ethical relationships with shareholders, suppliers, and consumers, and collaborates with other entities to establish institutes and to support events and forums that aim to empower women and other groups, providing direct donations to more than 200 charities and nonprofit organizations. The company in study implement initiatives to reduce human rights abuse by supporting and launched campaigns such as the child helpline campaign to raise awareness and educate the community regarding children’s rights and to limit child violence, and ensure and maintain employee safety and support government policies.

Therefore, the case studies evidence supports Proposition 1:

P1—Companies implement CSR practices.

4.2. CSR and Company Performance

Interviewees from C1 and C2 both highlighted their company’s performance in the insurance sector. For C1, CSR affects the organization’s performance in three ways: through brand image, customer satisfaction, and employee performance. C1 used trainee feedback, departmental feedback, and the percentage of hired trainees as critical indicators of CSR practices. For C2 there is a positive relationship between CSR and company performance and vice versa: “… when the organization’s performance is good, it will be able to contribute more to CSR objectives;…what we can realize is that sales increase as better the performance of the organization is towards its CSR objectives”. Accordingly, ethical views and social initiative determine organizational competitiveness and performance. For both managers, customers are switching towards companies that are more socially responsible, taking advantage of word of mouth, and, as a consequence, insurance companies are focusing on CSR and customer loyalty.

Companies from the banking sector have also highlighted the bank’s performance in terms of CSR practices. C3 stated that “… the effect is not only related to overall performance but also employee behavior. Implementing CSR programs makes employees feel proud of the organization and gives them a positive image of the company, which can lead to better employees performance, attract potential customers and increase customer loyalty too”.

For C4, there is a relationship between CSR and performance, through the improvement of the organization’s image and brand differentiation, attracting new employees and customers who are interested in companies that adopt CSR activities. According to C4: “…current employees feel they are part of the company that supports the society”. The company can benefit from CSR in different ways, such as, through employees’ engagement that results in employee loyalty, through encouraging them to be part of the company’s volunteer team. Can alsodecrease the reputational risk that the company may face, when stakeholders recognizes that the company is not only a profitable organization but also social and environmentally friendly.

For C5 there is a positive relationship between CSR and organizational performance, in terms of improving workers’ engagement and brand reputation.

For C6 there is a significant positive relationship between sustainable practices and organization performance: “… financial profit results from sic the outcome of the positive correlation between financial and non-financial performance. We saw in many cases, how well-known companies have failed to consider sustainability into their practices and business such as: data security breaches, or health and safety related issues. CSR practices also improve brand image, which is also very important for the telecommunications sector as stakeholders are putting pressure on companies to incorporate CSR practices in their business strategies. Customers are more aware of this concept, and, according to the C6 manager: “…products and companies customer preferences and choices will be based on sustainable companies and how they are contributing to the community”.

Table 3. Managers’ perception regarding CSR and performance.

Company	Overall Performance	Impact
C1	Positive	Improve brand image, increase customer satisfaction, increase employees performance
C2	Positive	Positive relationship between CSR and company performance and vice versa. Increase in sales
C3	Positive	Increase employee engagement, attract potential customers, increase customer loyalty
C4	Positive	Increase brand differentiation, attract new employees and customers, and decrease the risk
C5	Positive	Improve workers’ engagement, increase customer satisfaction and brand reputation
C6	Positive	Increase financial profits, improve brand image, decrease the risk

summarizes managers’ perceptions regarding the relationship between CSR practices and the impact on company performance.

Therefore, the case studies evidence supports Proposition 2:

P2—The implementation of CSR practices positively influences overall company performance.

5. Discussion

This study aimed to explore the perceptions of managers in the service sector in the Saudi Arabia regarding corporate social responsibility (CSR) practices and their impact on company performance. The six case studies analyzed in this research supported the two formulated propositions. The first proposition revealed that the organizations studied were implementing various CSR practices, such as treating employees and job applicants fairly, supporting community development initiatives, promoting economic stability in the community, enforcing ethical relationships with stakeholders, empowering women and other marginalized groups, reducing human rights abuse, supporting government policies, ensuring ethical relationships with suppliers and customers, maintaining employee safety conditions, and engaging in charitable activities. The empirical findings confirmed that CSR practices have a positive impact on the overall performance of companies and enhance their brand image, increase customer loyalty, employee performance and engagement, attract potential customers and employees, and increase profits through non-financial benefits. These findings are consistent with the results of previous studies conducted in different sectors and countries, as evidenced in Section 2.2. (e.g., [23,24,25,36,38,39,40,41,42,43,44,45,46,47,48,49,50,53,55,56,82]).

In the insurance sector, several studies have confirmed the positive relationship between CSR practices and company performance, which improves brand image, customer satisfaction, and employee performance. The results of this research are consistent with the findings of Le [24], which demonstrated that CSR positively impacts customer loyalty, and CSR product awareness and corporate image directly influence product uptake [83,84,85]. The positive impact of CSR on corporate branding has also been confirmed by Soleimani et al. [86]. Furthermore, a positive correlation exists between profitability and environmentally conscious practices within the insurance industry [87,88,89].

In the context of the Middle East banking sector, including KSA, several studies have also confirmed the positive relationship between CSR and overall performance, employee behavior, brand reputation, and customer satisfaction and loyalty. For example, Mallin et al. [90] found a positive relationship between CSR and the financial performance of Islamic banks across 13 countries. Banks are more profitable, and customer loyalty increases when they engage in CSR activities in the community [91]. Qamar et al. [92] also found that CSR activities implemented in the Pakistani banking industry have a positive effect on customer satisfaction and employee retention. Other studies investigated CSR practices and financial performance in Gulf Islamic banks and found a correlation between these two variables (e.g., [32,93]). Recent studies in the Saudi banking industry revealed that CSR has a strong and positive influence on customer loyalty and a positive relationship with brand loyalty, and is strongly positively related to company performance. Zakat in the light of Islam has a positive impact on performance and is the most effective factor in promoting CSR [24,62,94,95]. CSR is also positively related to employee job satisfaction, employee engagement, and career satisfaction [96,97,98].

Regarding the telecommunication sector in KSA was found, as concluded by Laghouag et al. [99], that companies support charitable activities and events in fragile communities, encourage the development of youth and women through the promotion of education and innovation programs by encouraging high achievers and offering employment opportunities to new graduates.

In summary, this study provides strong evidence that CSR practices are positively related to the overall performance of companies in the KSA service sector. The empirical findings also suggest that CSR practices can enhance brand image, increase customer loyalty, employee performance and engagement, attract potential customers and employees, and increase profits through non-financial benefits. The results of this study are in line with previous research conducted in different sectors and countries. In particular, the insurance and banking sectors in the KSA have shown a positive relationship between CSR practices and company performance, and CSR has been found to have a positive impact on customer loyalty, employee retention, and brand loyalty. The findings of this study provide valuable insights for companies in the KSA service sector to improve their CSR practices and enhance their overall performance.

6. Conclusions, Contributions and Limitations

The main goal of this study was to identify the CSR practices in the service sector of Saudi Arabia and analyze their relationship with company performance. Based on empirical analysis, the results indicate that companies in the service sector implement CSR practices that positively impact overall company performance, including enhancing brand image, improving customer satisfaction and loyalty, increasing employee performance and engagement, and attracting potential customers and employees. The findings also suggest that CSR practices are integrated into the corporate strategy of service-based companies and are measured and reported annually. Therefore, managers in the service sector should prioritize investing in CSR initiatives to enhance stakeholder satisfaction, including customers and employees. This study contributes to the current scholarly discourse on CSR practices in the service sector and provides insights into how CSR practices in the context of Saudi Arabia’s service sector positively influence overall company performance. Moreover, this study highlights how companies worldwide can enhance their competitive advantage through CSR practices and contribute to addressing climate change and promoting sustainable awareness, thereby supporting the achievement of Sustainable Development Goals (SDGs) and promoting sustainable economic growth.

This study fills the gap in the academic literature on CSR practices in the service sector of Saudi Arabia, particularly in the banking, insurance, and telecommunication sectors. We believe this is the first study to identify CSR practices and the impact of CSR on overall performance in the KSA service sector. The study’s findings have important implications for practitioners in the service sector, emphasizing how CSR policies and practices can be used as a strategy to attract and retain customers, employees, and investors, thereby enhancing overall company performance.

There are some limitations in this research, which may be improved with future studies. This study focuses on CSR practices in the KSA service sector, namely in the banking, insurance, and telecommunication sectors and it was based on a sample of six case studies which limits generalization of the research findings. Additionally, the study also relies on companies’ managers interviews and self-reported data from the companies which may be subject to desirability bias. To increase the external validity of the study, generalizations of the results, and the relevance of corporate social responsibility, future studies should: Comprise multi-site studies that include participants from multiple locations, as well as applying this approach to small and medium companies; Conduct longitudinal case studies that can provide a more in-depth understanding of how CSR practices evolve over time and their impact on company performance. Another suggestion for carrying out future works would be developing a structured questionnaire to develop a social responsibility index that would provide a standardized measure of CSR practices across different companies and sectors, making it easier to compare performance and identify areas for improvement.

Finally, future research could engage stakeholders, including customers, employees, and investors, to identify their expectations and needs regarding CSR practices and help companies develop more effective CSR strategies that align with stakeholder values and priorities.