The Role of Corporate Social Responsibility on the Relationship of Competitive Pressure and Business Performance of Batik Industry in Central Java, Indonesia

Title : The Role of Corporate Social Responsibility on the Relationship of Competitive Pressure and Business Performance of Batik Industry in Central Java, Indonesia
Authors :
1. Dr. Noorlailie Soewarno, SE., MBA., Ak.
2. Prof.Dr. Bambang Tjahjadi, SE., MBA., Ak.
3. Fitriyah Rose
Department : Accounting
Journal Name: Journal of Asian Finance, Economics and Business
Kind of Journal : Scopus Q2
Keywords : Batik MSMEs; Competitive Pressure; Corporate Social Responsibility; Business Performance

Batik has played an important role in Javanese society in Indonesia. UNESCO has recognized Indonesian batik and included it in the Representative List of Cultural Heritage because of the philosophy of batik in Indonesia and the use of batik in the daily life of Indonesian people, especially the Javanese. Therefore, the batik industry plays a culturally and economically important role in Indonesia. In a global environment with a complex background, competition has an important role, therefore business organizations need to adapt to respond to competition in order to survive (Flammer, 2014; Meng, Zeng, Xie, & Qi, 2015; Anning-Dorson, 2016). ). Business organizations need to make the right strategy and implement that strategy, especially when there is competitive pressure in the business environment (Kaplan & Norton, 2004). Based on the theory of industrial organization, to face competition, companies need to carry out certain strategies (Porter, 1981). Maintaining relationships with external parties is a strategy in the form of social capital to face competition (Ruiz-Ortega, Parra-Requena, & García-Villaverde, 2015), namely Corporate Social Responsibility (CSR).
CSR is a company's commitment to balance social, environmental, and economic practices by implementing ethical behavior to achieve stakeholder satisfaction (Agyemang & Ansong, 2017; Feng et al., 2017; Garg, 2016; Moir, 2001; Pinto & Allui, 2020; ). In the modern era, CSR has become a medium of communication with stakeholders both formally and informally and the concept itself not only focuses on benefits and economic entities but also social (Jain, Vyas, & Roy, 2017; Taghian, D'Souza, & Polonsky , 2015). All sizes and types of companies have a responsibility to implement CSR, but large companies with MSMEs have differences in implementing CSR (Madueño et al., 2016; Orlitzky, Siegel, & Waldman, 2011).
MSMEs have an important role in the economy and society, because they contribute both economically and non-economically in the form of providing jobs for the surrounding community (Andoh, Quaye, Akomeafrimpong, & Futter, 2018; Jain et al., 2017). This study aims to determine the mediation of CSR the effect of competitive pressure on the business performance of batik SMEs in Central Java. This study provides empirical evidence on industrial organization theory and stakeholder theory on the effect of competitive pressure on business performance through CSR. This study also provides empirical evidence that can assist MSMEs in making decisions regarding performance improvement through CSR due to competitive pressures and can be a reference for further research regarding the importance of paying attention to competitive pressures on business performance.

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