Measuring Corporate Social Responsibility for Local Communities in Mining, Oil and Gas Industries, The Case of Indonesia

Dody Prayogo

Abstract

Studies about the concept of corporate social responsibility (CSR) involve more aspects than just business and management, it is influenced by both industrial specifics and local specifics. This study examines the method to measure CSR in two companies in Kalimantan and Sumatera. It argues that CSR requires to employ the concepts of social justice and social equality, and is undertaken by using a social contract mechanism. The operationalisation of the three concepts involves legal aspect (compliance to law), business (improvement of corporate image), welfare and capacity building (both of local communities) and social integration (between the corporation and the local communities). In measuring the achievement of CSR these three aspects are given different weightings in accordance to the significance of each. Using quantitative (survey and secondary data) and qualitative (in-depth interviewing and observation) methods. The result show that CSR measurement method needs to consider two aspects proportionally, community and corporation. Another finding of the study confirms that CSR is not only a matter of philanthropy, but in fact is an obligation, as part of the mode of production, in order to gain social legitimacy, which apply social justice and equality in the practice of mining and oil industries in Indonesia.

Keywords: corporate social responsibility, social justice, equality, social contract, index measurement