Mandatory CSR for Limited Liability Company in Indonesia: Is it Necessary?
Universitas Gadjah Mada
Business shall take into account the interests of people and environment. Unfortunately, most business players only prioritize its business to generate profit, while neglecting other aspects. Such circumstances are often found in developing countries, including Indonesia, where business players race to the ground, seeking for country with the lowest production fees as well as less-stringent laws and regulations. In Indonesia, Limited Liability Company having business in the field of and/or natural resources are obliged to perform Corporate Social Responsibility (CSR). CSR is aimed to compensate the people and environment as company has taken something from them. This mandatory CSR invites further debate among scholars who support obligatory CSR with those who want CSR to stay voluntary. It is the purpose of this research to point out the necessity of having voluntary CSR and to weigh whether CSR implementation can bring public welfare.
This is a normative-empirical research, utilizing library research and field research to answer the research questions. In the library research, the author used literature review in collecting sources. In the field research, the author uses interviewed several Limited Liability Companies who perform CSR. This research is using qualitative data analysis, resulting in a descriptive and analytical information to obtain the objective of the research.
The result of this research points out the reason behind mandatory CSR in Indonesia and relate it with the national philosophy, particularly the social justice. Since government, company, and people are seen as a unity in the system theory, it has become company’s responsibility to conduct CSR in order to create balance in the society. Furthermore, the author found that company’s contribution is sometimes less-significant to the people’s interests as it does not meet the parameter of social welfare.
Topic: Green Business