THE ROLE OF MULTINATIONAL COMPANIES IN SUSTAINABLE

SOCIOECONOMIC DEVELOPMENT: THE CASE

OF PALESTINE

__________________

Dissertation

Presented to the

Graduate Faculty of the

School of Management

Alliant International University

__________________

In Partial Fulfillment

of the Requirements for the Degree of

Doctor of Business Administration

__________________

by

Yousef A. Ibrahim

San Diego, 2012

 UMI Number: 3503449

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 Abstract of Dissertation

THE ROLE OF MULTINATIONAL COMPANIES IN SUSTAINABLE

SOCIOECONOMIC DEVELOPMENT: THE CASE

OF PALESTINE

by

Yousef A. Ibrahim, D.B.A.

School of Management

Alliant International University

Committee Chairperson: Gregory A. Lorton, D.B.A.

THE PROBLEM. This study investigated the role of multinational companies

(MNCs) and their impact on sustainable socioeconomic development in Palestine.

Integrating corporate social responsibility (CSR) into MNC’s core business would

improve the organization’s financial and social performance.

METHOD. The target population for this research included multinational

corporations (MNCs) and domestic Small and Medium Enterprises (SMEs) that had

operations in or were contemplating undertaking FDI investment in Palestine. An online

survey was used to collect responses from 11 companies for a correlational study. The

study investigated different aspects of the Strategic Success Paradigm developed by

Ansoff (1984) and examined the relationships among MNCs’ environmental turbulence,

MNC strategy aggressiveness, MNC capability responsiveness, and MNC corporate

social responsibility (CSR) posture. Two intervening variables, defined as gaps,

measured the absolute and actual differences between aggressiveness and turbulence and
responsiveness and turbulence and the financial and social performance of MNCs

operating in Palestine.

RESULTS. Nine hypotheses were tested using Spearman’s rho, a non-parametric

measure of statistical dependence between 2 variables for a significance level of 5% (p <

.05). Four hypotheses (1, 2, 3, and 4) tested the relationship between social and financial

performance relative to strategy aggressiveness and capability responsiveness gaps,

respectively, and found no significance; hence, they were not supported. Hypothesis 5,

relating strategy aggressiveness to MNC CSR posture, was not supported. Hypothesis 6,

the relationship between MNC capability responsiveness and MNC corporate social

responsibility (CSR) posture, was supported (r [11] = .642, p = .033). Hypothesis 7, the

relationship between MNC CSR posture and MNC financial performance, was supported

(r [11] = .735, p = .010). Hypothesis 8, the relationship between MNC CSR posture and

MNC social performance, was supported (r [11] = .642, p = .033). Finally, Hypothesis 9,

the relationship between MNC financial performance and MNC social performance, was

supported (r [11] = .665, p = .026).

THE ROLE OF MULTINATIONAL COMPANIES IN SUSTAINABLE

SOCIOECONOMIC DEVELOPMENT: THE CASE

OF PALESTINE

__________________

Dissertation

Presented to the

Graduate Faculty of the

School of Management

Alliant International University

__________________

In Partial Fulfillment

of the Requirements for the Degree of

Doctor of Business Administration

__________________

by

Yousef A. Ibrahim

San Diego, 2012

  2012

YOUSEF A. IBRAHIM

ALL RIGHTS RESERVED

 THE ROLE OF MULTINATIONAL COMPANIES IN SUSTAINABLE

SOCIOECONOMIC DEVELOPMENT: THE CASE

OF PALESTINE

__________________

Dissertation

Presented to the

Graduate Faculty of the

School of Management

Alliant International University

__________________

by

Yousef A. Ibrahim

Approved by:

______________________________ ______________________________
Gregory A. Lorton, D.B.A. Date
Chairperson

______________________________ _____________________________
Jon Kevin Loebbaka, D.B.A. Chet Haskell, D.P.A.
Dean

______________________________
Rick Ansoff, Ph.D.
 DEDICATION

This dissertation is dedicated to my family:

my wife, Suzanne, my daughter, Noelle,

and my son, Omar.

iv
 ACKNOWLEDGEMENTS

I would like to thank my dissertation committee members, who provided me with

the guidance and support needed to complete this work. There is no doubt in my mind

that without their continued support and counsel, I could not have completed this process.

I would like to acknowledge the inspirational instruction, guidance, and thorough review

by Dr. Greg Lorton, my committee chair; Dr. Rick Ansoff; and Dr. Jon Kevin Loebbaka

during the development of my research and survey questions.

I would like to thank the instructors from whom I have taken classes at Alliant

International University, especially Dr. Alfred Lewis, who inspired me through his

teaching of strategic management and through his thoughtful ideas when I started my

dissertation research. I am also grateful for the helpful comments provided to me on the

draft proposal and questionnaire. Thanks to all my committee members for their support,

patience, encouragement, and useful suggestions.

Finally, I would like to thank my family, who gave me the moral support and

allowed me to devote the time to work on my dissertation. My wife, Suzanne, was very

supportive and proud of my work; my daughter, Noelle, was my initial editor, who spent

lots of time editing and restructuring my writing. And special thanks go to my son,

Omar, for his patience and support as I accomplished this research study about my

country. Also, I would like to thank my brother, Jamal, for his ideas and cooperation.

v
 TABLE OF CONTENTS

Page

LIST OF TABLES ........................................................................................................ xiii

LIST OF FIGURES ........................................................................................................ xv

Chapter

1. THE RESEARCH PROBLEM ........................................................................ 1

Definitions and Abbreviations .................................................................. 2

Theoretical Background of the Problem ................................................... 5

Practical Background of the Problem ....................................................... 8

Economic and Political Environment .................................................... 11

External Political Environment ...................................................... 11

Geography ...................................................................................... 13

Political System Structure .............................................................. 17

External Socio-Economic Environment ................................................. 17

Demographics ................................................................................ 17

Unemployment Rate and Labor Force ........................................... 18

Working Conditions in Palestine ................................................... 19

Human Resource Development ..................................................... 19

Poverty Rate ................................................................................... 20

The External Macro-Economic Environment ......................................... 20

Structure of the Palestinian Economy ..................................................... 23

vi
Chapter Page

Infrastructure in Palestine ....................................................................... 25

Palestinian Financial Sector .................................................................... 25

Investment Climate ................................................................................ 26

Free Trade Zones .................................................................................... 27

Foreign Direct Investment (FDI) Statistics ............................................. 28

Palestinian Reform and Development Plan (PRDP) ............................... 29

External Legal Environment ................................................................... 31

Palestine Country Strengths/Weaknesses/Opportunities/

Threats (SWOT) Analysis.............................................................. 33

Multinational Companies (MNCs) ......................................................... 34

Statement of the Problem ........................................................................ 37

Contribution of the Study........................................................................ 38

2A. GENERAL THEORETICAL FRAMEWORK ........................................... 39

Global Model .......................................................................................... 39

CSR Change Management Framework .................................................. 49

Leadership Capabilities and Competencies ............................................ 52

CSR and Accountability ......................................................................... 53

Partnering With Stakeholders ................................................................. 54

CSR Implementation and Organizational Challenges ............................ 55

Performance Monitoring ......................................................................... 55

Environmental Turbulence of MNCs...................................................... 60

Factors Influencing FDI .......................................................................... 64

vii
Chapter Page

Political Risk Factors and FDI ................................................................ 67

Strategy and Social Responsibility ......................................................... 70

Strategic Corporate Social Responsibility (CSR) ................................... 74

Proactive and Reactive Corporate Social

Responsibility (CSR) ..................................................................... 78

2B. RESEARCH MODEL AND SUPPORTING

LITERATURE ........................................................................................ 87

Research Model ...................................................................................... 87

Strategic Success Paradigm .................................................................... 91

MNC Issue Turbulence ........................................................................... 91

CSR Strategy Aggressiveness ................................................................. 95

Process Dimension of CSR “Built-in” and “Bolt-on” ............................ 95

CSR Capability Responsiveness ........................................................... 100

CSR Management System Strategic Posture ........................................ 104

The Research Questions and Research Hypotheses.............................. 111

Research Variables: Conceptual and Operational

Definitions.................................................................................... 113

Independent Variables .......................................................................... 114

MNC Issue Turbulence ................................................................ 114

MNC Strategy Aggressiveness .................................................... 116

MNC Capability Responsiveness ................................................ 118

MNC CSR Posture ....................................................................... 120

Intervening Variables ............................................................................ 123

viii
Chapter Page

MNC Strategy Aggressiveness Gap............................................. 123

MNC Capability Responsiveness Gap ......................................... 123

Dependent Variables ............................................................................. 123

Control Variables .................................................................................. 125

3. RESEARCH METHODOLOGY.................................................................. 128

Research Strategy.................................................................................. 128

Data Sources ......................................................................................... 129

Instrument and Procedure ..................................................................... 130

Research Variables................................................................................ 130

Independent Variables .......................................................................... 131

MNC Issue Turbulence ................................................................ 131

MNC Strategy Aggressiveness .................................................... 132

MNC Capability Responsiveness ................................................ 132

MNC Corporate Social Responsibility

(CSR) Posture ..................................................................... 133

Intervening Variables ............................................................................ 134

MNC Strategy Aggressiveness Gap............................................. 134

MNC Capability Responsiveness Gap ......................................... 134

Dependent Variables ............................................................................. 135

MNC Financial Performance ....................................................... 135

MNC Social Performance ............................................................ 135

MNC Overall Performance .......................................................... 135

ix
Chapter Page

Validity and Reliability ......................................................................... 136

Data Analysis ........................................................................................ 136

Assumptions.......................................................................................... 137

Limitations ............................................................................................ 137

4. RESEARCH FINDINGS .............................................................................. 142

Hypothesis 1 (Not Supported) .............................................................. 143

Hypothesis 2 (Not Supported) .............................................................. 144

Hypothesis 3 (Not Supported) .............................................................. 144

Hypothesis 4 (Not Supported) .............................................................. 145

Hypothesis 5 (Not Supported) .............................................................. 145

Hypothesis 6 (Supported) ..................................................................... 145

Hypothesis 7 (Supported) ..................................................................... 146

Hypothesis 8 (Supported) ..................................................................... 146

Hypothesis 9 (Supported) ..................................................................... 146

Summary of Results .............................................................................. 147

5. SUMMARY CONCLUSIONS AND RECOMMENDATIONS ................. 150

Background of the Problem .................................................................. 150

Statement of the Problem ...................................................................... 151

Purpose of the Study ............................................................................. 152

Expected Contributions......................................................................... 152

Global Model ........................................................................................ 153

x
Chapter Page

Strategic Success Paradigm (SSP) ........................................................ 155

MNC Environmental Turbulence ......................................................... 156

MNC Strategy Aggressiveness ............................................................. 159

MNC Capability Responsiveness ......................................................... 159

Strategy and Strategic CSR ................................................................... 161

CSR Change Management Framework ................................................ 162

Research Model .................................................................................... 164

Research Variables................................................................................ 167

MNC Environmental Turbulence ......................................................... 167

MNC Strategy Aggressiveness ............................................................. 168

Process Dimension of CSR “Built-in” and “Bolt-on” .......................... 169

CSR Capability Responsiveness ........................................................... 173

CSR Management System Strategic Posture ........................................ 177

The Research Questions and Hypotheses ............................................. 179

Research Strategy.................................................................................. 181

Data Sources ......................................................................................... 185

Instrument and Procedure ..................................................................... 185

Validity and Reliability ......................................................................... 186

Data Analysis ........................................................................................ 188

Assumptions.......................................................................................... 188

Limitations ............................................................................................ 189

xi
Chapter Page

Research Findings ................................................................................. 190

Discussion of Findings .......................................................................... 192

Additional Findings .............................................................................. 194

Conclusions ........................................................................................... 199

Recommendations for Business Managers ........................................... 201

Contributions to the Academic Field of

Strategic Management ................................................................. 202

Contributions to the Practice of Management ...................................... 202

Recommendations for Further Research ............................................... 204

REFERENCES ............................................................................................................. 206

APPENDICES

A. PALESTINIAN TRADE CENTER – PALTRADE ..................................... 223

B. PALESTINIAN COMPANIES ON STOCK MARKET .............................. 245

C. SURVEY QUESTIONS................................................................................ 249

D. PALESTINIAN LABOR FORCE STATISTICS ......................................... 260

E. CALCULATED VARIABLES ..................................................................... 262

xii
 LIST OF TABLES

Table Page

1. Palestine Country SWOT Analysis .................................................................. 33

2. Levels of Environmental Turbulence............................................................... 45

3. Matching Turbulence-Aggressiveness-Responsiveness .................................. 46

4. Strategic Stakeholder Criteria .......................................................................... 63

5. MNC Issue Turbulence .................................................................................... 94

6. CSR MNC Management System Aggressiveness

Verses MNC Issue Turbulence .................................................................. 98

7. CSR MNC Management System Responsiveness

Verses MNC Issue Turbulence ................................................................ 102

8. The Attributes of General Management Capability ....................................... 105

9. Research Questions and Research Hypotheses .............................................. 139

10. Summary of Statistical Tests ......................................................................... 140

11. Descriptive Statistics of the Research Variables ........................................... 143

12. Summary of Statistical Results ...................................................................... 148

13. Levels of Environmental Turbulence............................................................. 156

14. Matching Turbulence-Aggressiveness-Responsiveness ................................ 160

15. MNC Issue Turbulence .................................................................................. 168

16. CSR MNC Management System Aggressiveness Verses

MNC Issue Turbulence ............................................................................ 171

xiii
Table Page

17. CSR MNC Management System Responsiveness Verses

MNC Issue Turbulence ............................................................................ 175

18. The Attributes of General Management Capability ....................................... 178

19. Variables of the Research Study With Conceptual and

Operational Definitions ............................................................................ 182

20. Variable Reliability and Descriptive Statistics .............................................. 187

21. Summary of Statistical Results ...................................................................... 191

xiv
 LIST OF FIGURES

Figure Page

1. Historic Divisions of Palestine......................................................................... 13

2. Map of Palestine: West Bank, Gaza, and Jerusalem ........................................ 15

3. Comparison of the 1947 Partition Plan Borders and the

Armistice Lines of 1949............................................................................. 16

4. Real GDP Palestinian Growth ......................................................................... 22

5. Palestinian Establishments ............................................................................... 24

6. Palestinian Security Exchange (PSE) Sectors.................................................. 26

7. Governance Indicators in Palestine.................................................................. 32

8. The Global Model ............................................................................................ 41

9. CSR Change Management ............................................................................... 51

10. MNC Company Governance and Stakeholders ............................................... 61

11. The Research Model ........................................................................................ 90

12. The Role of MNC in Sustainable Socioeconomic

Development: The Case of Palestine ....................................................... 154

13. MNC Company Governance and Stakeholders ............................................. 158

14. The Three Areas That Require Specific CSR Design ..................................... 164

15. The Research Model ...................................................................................... 166

xv
 Chapter 1

THE RESEARCH PROBLEM

This study investigated the role of multinational companies (MNCs) and their

impact on sustainable socioeconomic development in Palestine. Integrating corporate

social responsibility (CSR) into MNC’s core business has become the center of

management decision-making. MNCs face challenges to provide products and services

that add value to society and to prompt economic development and social transformation

in host countries. According to Ansoff and McDonnell (1990), the firm of the future

would become a socioeconomic institution, and the firm’s business strategy would not be

based purely on financial performance, but would include political and social

considerations along with its commercial ones.

The turbulent political environment in Palestine, coupled with severe

socioeconomic conditions, presents multinational companies with external societal

challenges. Successful multinational companies operating in this challenging market

have diagnosed their environmental turbulence with inside-out and outside-in approaches

to optimize their long-term economic and social profitability. Trucker and Broom (1993)

defined an organization’s issue management as a management process wherein the goal is

to preserve its markets, reduce risks, and create opportunities to manage assets for the

benefit of the organization and the public. Saunders and Thorne (2002) agreed that there

is a need for ethical and socially responsible issues management to be integrated as part

of the organization’s strategic management decision-making.

1
 This study examined the background of the MNC issue management and clarifies

the strategic approach of CSR as an integral part of the overall core business strategy for

optimal organizational performance for companies operating in Palestine. This chapter

presents definitions and abbreviations, the theoretical background of the problem, the

importance of integrating CSR as part of the overall MNC core strategy in Palestine, a

statement of the problem, and the expected contribution of this study to management

theory and practice.

Definitions and Abbreviations

The term emerging markets was originally cited by the International Finance

Corporation (IFC) (2010) to describe a fairly narrow list of middle-to-higher income

economies among developing countries with stock markets that allow foreigners to buy

securities (SustainAbility Ltd., 2002). Emerging markets describe countries’ economic,

social, and business activity growth towards industrialization. They are characterized by

lower per-capita incomes, socio-political instability, higher unemployment, and lower

levels of manufacturing relative to industrialized countries, such as the United States and

Europe (Investing Answers, 2011).

A multinational company (MNC) is an enterprise operating in two or more

countries. Generally, any firm or group that derives its revenue from operations outside

of its home country is considered a MNC (“Multinational Corporation,” 2010).

The term corporate social responsibility (CSR) is defined as the commitment by a

business to manage its activities in a responsible way with a comprehensive set of values

and principles integrated into the business operations through management system

2
policies, practices, and decision-making processes (International Chamber of Commerce

[ICC], 2002). It pertains to a business’s contribution to sustainable development—how a

business takes into account the economic, social, and environmental impact of its

operations on society.

The Center for Business and Government and the Kennedy School of

Government at Harvard University defined CSR as encompassing not only what

companies do with their profits, but also how they make the profit, going beyond

philanthropy and compliance and addressing how companies manage their economic,

social, and environmental impacts, as well as their relationships in all spheres of

influence: (a) the workplace, (b) the marketplace, (c) the supply chain, (d) the community

and (e) the public policy realm.

The World Business Council for Sustainable Development (WBCSD, 2010)

defined CSR as a continuing commitment by business to contribute to economic

development while improving the quality of life of the workforce members and their

families, as well as the community and society at large. The definition by the

International Organization for Standardization (IOS) (2010) standard guidance norm

stresses integration of CSR in all business processes, responsiveness to stakeholders’

expectations, and CSR activities that contribute to sustainable development. According

to this standard, CSR is the responsibility of an organization for the impact of its

decisions and activities on the society and the environment, through transparent and

ethical behavior that (a) contributes to sustainable development, health, and welfare of

the society; (b) takes into account the expectations of stakeholders; (c) is in compliance

3
with applicable laws and consistent with international norms and behaviors; and (d) is

integrated throughout the organization and practiced in its relationships.

Small and Medium Enterprises (SMEs) are defined as those enterprises that

employ between 10 and 99 employees. The small enterprises employ between 10 and 49

employees, whereas medium enterprises employ between 50 and 99 employees, with

measurable indicators of the following: (a) annual sales threshold of $1.4 million; (b)

assets threshold of $1.4 million; (c) enterprises that fall within either the annual sales

and/or the total assets threshold; and (d) if both indicators are above $1.4 million, the

enterprise cannot be considered an SME (United States Agency for International

Development [USAID], 2007).

Sustainable development is a pattern of resource use that aims to meet human

needs while preserving the environment so that these needs can be met not only in the

present, but also for future generations. The Brundtland Commission (Global Oneness,

n.d.), formerly known as the World Commission on Environment and Development

(WCED), used this term to coin what has become the most oft-quoted definition of

sustainable development: a development that meets the needs of the present without

compromising the ability of future generations to meet their own needs (United Nations

[UN], 1987).

The Palestinian Authority (PA) or Palestinian National Authority (PNA) is an

interim self-governing body responsible for areas of the West Bank and the Gaza Strip

under Palestinian control. The PA was authorized by the Oslo Accords (1993) and

subsequent Palestinian agreements with Israel and was established in 1994. It is

4
constituted by a president, prime minister, a cabinet, a legislative council, and security

forces (Palestinian National Authority [PNA], 2010).

The concept of shared value is defined as policies and operating practices to

enhance competitiveness of a company while simultaneously advancing economic and

social conditions in the communities in which the firm operates (Porter & Kramer, 2011).

Theoretical Background of the Problem

According to the World Bank (2009a), the political and the socioeconomic

environments in Palestine have seen frequent, unpredictable, and surprising upheaval.

This has contributed to delays and blockades on the movement of people and goods. The

constant upheaval has led to a deteriorated socioeconomic situation in Palestine. It has

impeded internal and local cross-border trade and reduced the ability of Palestinians to

hold their jobs. As a result, it has raised the level of unemployment, entrenched deep

poverty, and caused insignificant growth and fiscal collapse (World Bank, 2009a).

This research investigated the role of multinational companies (MNCs) in

sustainable socioeconomic development when they integrate strategic CSR (Corporate

Social Responsibility) into the overall business strategy of the company. The research

was built upon theoretical and empirical support drawn from a variety of disciplines. It

entailed exploration of environmental turbulence and managerial capabilities for

multinational companies’ strategic responses where strategic CSR was integrated into the

business strategy.

Emery and Trist (1963) proposed that the business environment was composed of

several distinct segments with different levels of turbulence. Based on this proposal,

5
Ansoff and McDonnell (1990) identified and defined environmental turbulence and how

it affects strategic business behavior. They introduced the Strategic Success Paradigm

(SSP) and stated that a firm’s potential was optimal when the following three conditions

were met:

1. Aggressiveness of the firm’s behavior matched the turbulence of its

environment.

2. Responsiveness of the firm’s capability matched the aggressiveness of its

strategy.

3. The components of the firm’s capability support one another.

Ansoff and McDonnell (1990) argued that the survival of a firm in a competitive

business environment required companies to evaluate the environmental turbulence by

defining the trends, threats, and opportunities facing the organization and recommended a

5-level scale, ranging from repetitive to unpredictable, to judge and thereby adjust

strategic aggressiveness and capability responsiveness. Otherwise, according to Ansoff

and McDonnell, the firm’s resources would be wasted, and opportunities would be

missed. Ansoff and McDonnell also noted that an overly aggressive strategy in a low-

turbulence environment was just as wasteful as slow responsiveness in a fast-paced

environment. Aligning Ansoff’s equation of turbulence, aggressiveness, and

responsiveness would help firms attain their objectives and capture all opportunities to

enhance their financial and social performance.

A business operating internationally will encounter multiple challenging factors

that pertain to socioeconomic, political, and cultural differences (Ansoff & McDonnell,

1990). Ansoff and McDonnell argued that the foreign environment would have a

6
different level of economic development relative to (a) the size of the total market for the

firm’s products, (b) the degree of saturation of the market, (c) consumer taste and buying

habits, (d) the ability to use technologically advanced products, (e) the regulation of

foreign investments, and (f) constraints and enablement under which the firm must

operate. Ansoff and McDonnell outlined various modes of strategic entries for firms

venturing abroad and added that selection of strategic business areas (SBAs),1 requires

copious information such that an analysis of pertinent economic, cultural, and

sociopolitical trends is completed prior to entry into the market.

Ansoff and McDonnell (1990) also stressed the need to develop a new

environmental surveillance and capability analysis for firms to succeed in foreign

markets and cited that a firm seeking to internationalize should outline clear objectives as

part of its strategy and conceived and offered a gradual-commitment entry-mode strategy

that starts by exporting, followed by stepwise commitment, further followed by a local

presence. When a firm reaches a multinational (MNC) status, the firm will begin to

optimize its global strategy through trade-off between global economies and local

responsiveness.

Multinational companies have become drivers for the provision of foreign

investments, employment, goods, and services produced, as well as for development of

technologies that assist developing countries in the promotion of their economic growth.

Businesses are considered crucial members of society, and corporate social responsibility

(CSR) has become an essential part of all successful companies’ strategies. Stakeholders,

1
Selection of strategic business areas (SBAs) is a process of strategic segmentation used to break down the
future-environment into areas of growth, risk, and profitability prospects with differing success-
opportunities relevant to a specific company industry.

7
including customers, suppliers, employees, shareholders, investors, the community,

special interest groups, non-governmental organization (NGOs), and international

organizations, expect businesses to understand and address relevant social and

community issues. According to Ansoff and McDonnell (1990), a firm’s business

strategy cannot be built on pure financial gains but has to include political and social

considerations along with its commercial ones.

According to Ansoff and McDonnell (1990), the preferred objectives should

reflect the aspirations of the constituencies and their interests in the firm. They

hypothesized that the initiatives for defining the preferred objectives and “rules of the

game” for environment-serving organizations (ESOs) had historically come, and

continued to come, from power centers outside the ESO. They stressed the importance of

legitimacy strategy as a future center-of-management preoccupation to pursue in seeking

to influence the rules of the game and to optimize its profit-seeking activities (Ansoff &

McDonnell, 1990).

Practical Background of the Problem

Political instability and tension continue to overshadow prospects for

socioeconomic growth in conflict zones around the world. The current conflict between

Palestinians and Israelis is an example of just such a challenging problem. It has created

disparities in per-capita gross domestic product (GDP) of more than 20:1 in favor of the

Israelis (Kidder, 2006). This has led to falling levels of per-capita income and brought

widespread poverty in Palestine (United Nations Relief and Works Agency [UNRWA],

2007). The Palestinian economy relies heavily on international aid for financial support.

8
It has generated insignificant growth and developed an increase in dependency on the

Israeli economy, leading to a fiscal collapse. As a result, the Palestinian economy has

declined, with productive sectors declining and the public sector growing, as more of the

population looks for employment and assistance (The World Bank, 2009c).

As global poverty becomes one of the most pressing challenges in the 21st

century, the international community has seen an increase in the growth of the corporate

social responsibility movement. This has been made manifest in a number of ways, one

of which is to form partnerships as a framework of engagement with stakeholders in

order to prompt sustainable socioeconomic change in host countries (Prahalad, 2004).

Multinational companies have become increasingly conscious of their ethical and

economic responsibility to provide products and services that add value to society, to

deploy entrepreneurialism, and to create jobs (Kidder, 2006). There are numerous

examples that multinational companies, NGOs, and local businesses are innovating along

these lines in emerging markets with great vigor, thus making a difference in the quality

of people’s lives (Prahalad & Hart, 2002).

A number of different theoretical frameworks have evolved to analyze the role of

socially responsible businesses. Friedman (1970) claimed a business could not have

responsibilities. The job of a business executive is to create wealth for shareholders. On

the other hand, Drucker (1984) opined that the first social responsibility of business is to

be profitable and create capital. The second responsibility is to convert social problems

into economic opportunities, benefits, productive capacity, human competence, good

jobs, and wealth. Drucker also said that if the first one is not fulfilled, the second one

will not be fulfilled either.

9
 Ansoff (1984) asserted that the firm of the future would become a socioeconomic

institution. He presented management with two basic choices: first, to take Friedman’s

advice focusing on the business of business being profitable and allowing other

stakeholders to shape the role of the firm, and second, to take Barrowclough’s advice to

join the government and the public in determining the future of the firm’s objectives.

Based on these opinions of good corporate behavior, a growing number of

business experts began to argue that both profit and social good could be combined

through innovations aimed at improving the lives of the world’s poorest citizens. In a

2002 article on strategy and business titled “The Fortune at the Bottom of the Pyramid,”

Prahalad and Hart argued that real opportunities for both profit and socially responsible

investments lay in the 4 billion people at the bottom of the economic ladder. Tapping

into this market, they argued, would require multinational corporations to reconsider their

existing profit structures. They also stressed that the bottom of the pyramid should

become part of the firms’ core businesses and should not be left to CSR initiatives for

optimal performance to take on importance.

The current conflict between the Palestinians and Israelis is suitable for such an

economic intervention. According to Kidder (2006), one of the things that businesses do

well is to create jobs, and consequently they have significant potential for promoting

stability, reducing despair, and lowering tensions if initiated in a newly viable Palestinian

State. The escalated conflict in Palestine has left the Palestinian economy mired in an

economic crisis. The interim accords and subsequent agreements between the

Palestinians and Israelis have not yet led to a two-state solution or any other arrangement

agreeable to both parties. Despite the large influx of international aid, the economy has

10
continued to shrink with increasing poverty, and development has been stalled due to the

impeding of the entry of people and goods (World Bank, 2009c). A restriction on the

entry of people and exported goods into Palestine prevented the private sector from

realizing its potential in job creation and sustainable growth.

With these concerns and arguments for and against corporate social responsibility

(CSR), the contribution of this research paper is the investigation of the role of

multinational companies (MNCs) in leading sustainable socioeconomic development in

Palestine. Incorporating strategic CSR into a firm’s core business would improve the

organization’s financial and social performance. Multinational companies’ engagement

with stakeholders would allow for collaboration among their stakeholders, including

customers, investors, suppliers, the public, government, special interest groups, NGOs,

and international organizations, to achieve sustainable development.

Economic and Political Environment

External Political Environment

Palestine has been struggling to gain statehood since the breakup of the Ottoman

Empire in 1917 (Giridhar, 2006). Following the end of World War I in 1918,

Palestinians were faced with an unclear political future. Along with Arab countries,

Palestine was under the British Mandate to administer the affairs of the Arab world.

When Britain pulled out of the area in 1917, Arab countries gained independence,

excepting Palestine. Britain called for a Jewish nation to be created, and the region came

into more conflict due to mass immigration and violence between Palestinians and

Israelis (Gerner, 1994).

11
 Under these circumstances, Britain handed the matter over to the United Nations.

On November 29, 1947, the General Assembly of the United Nations issued UN

Resolution 181-II, which called for a two-state solution: a separate Palestinian State and a

Jewish State (UN, 1947/1964). Two major wars were fought between the Arab world

and Israel in 1967 and 1973, upon which the United Nations Security Council passed

Resolutions 242 and 338 (UN, 1967, 1973). These two resolutions called for a peaceful

resolution of the Arab-Israeli conflict through territorial compromise. Subsequently, the

Oslo Accords between the Palestinians and Israelis was signed on September 13, 1993.

The Oslo Accords called for the formation and recognition of a Palestinian

National Authority (PNA) to carry out administrative responsibilities in the occupied

territories (Watson, 2000). However, the Palestinian National Authority (PNA) has not

yet transformed itself into a state due to stalled negotiations for a permanent solution

between the two parties. Currently, the PNA exhibits a self-rule government lacking

control over the resources of land and water, and most importantly, access to external

markets, jurisdiction over the legal and administrative systems, and geographic continuity

between the West Bank and Gaza.

Since then, the Israeli-Palestinian problem has dominated world politics. The

Palestinians live in areas officially known as “territories,” encompassing the Gaza Strip,

the West Bank, and East Jerusalem. The Palestinian territories face economic and social

hardships that require sustainable economic development (ProCon.org, 2009). Figure 1

reflects the historical divisions of Palestine from the Ottoman Empire to the present time.

12
Figure 1. Historic divisions of Palestine.
Adapted from Historic Divisions of Israel/Palestine by ProCon.org, 2009, retrieved April
17, 2010, from http:www.pipa.gov.ps/country_Profile.asp#gstruct

Geography

According to United Nations Resolution 181-II, the West Bank, Gaza Strip, and

East Jerusalem are part of Palestine (UN, 1947/1964). The West Bank is an area of

extensive tree crops and farming, rangelands, and water resources of 5,607 square-km

(2,165 square-miles). The West Bank has religious sites in Jerusalem, Hebron, and

Bethlehem. The land and its natural resources, as well as numerous archeological sites,

offer great prospects for economic development, including agriculture and tourism, as

well as urban and industrial growth. The Gaza Strip lies on the eastern coast of the

13
Mediterranean Sea. Gaza Strip borders Israel and Egypt. It has a total area of 360

square-km (139 square-miles) and is twice the size of Washington, D.C. Gaza has

occupied a dividing position between the desert of the south and the Mediterranean

climate of the north. This location lent the city the natural role of a prosperous trading

zone for the world’s products. Figure 2 presents the map of Palestine, and Figure 3

shows a comparison of the 1947 partition plan borders and the armistice lines of 1949.

14
Figure 2. Map of Palestine: West Bank, Gaza, and Jerusalem.
Adapted from “The 1967 war,” by Joel Beinin, lecture presented at Stanford University,
November 11, 2002, available from http://www.tomhull.comocston/projects/ajvp/
wp4.php

15
Figure 3. Comparison of the 1947 partition plan borders and the armistice lines of 1949.

Adapted from “The Palestine Papers: The ‘napkin map’ revealed,” in Aljazeera, 2011,
available from http://english.aljazeera.net/palestinepapers/2011/01/20111221142399
40577.html

16
Political System Structure

Pursuant to the Oslo Accords signed in 1993 between Israel and the Palestine

Liberation Organization (PLO), the Palestinian National Authority (PNA) acted as the

executive representation of the Palestinian Liberation Organization. The Oslo agreement

called for a final agreement that would lead to a final status between Israel and Palestine.

To date, a final agreement has not been reached. As outlined in the Declaration of

Principles, the Palestinian National Authority (PNA) is defined geographically as the

self-ruled territories and administratively as the two main organizations of the Palestinian

Legislative Council (PLC) and the Council of Ministers. The Palestinian Legislative

Council is the representative legislative body, or parliament, of Palestine. It is a

unicameral legislative council comprised of the president, who is elected to a 4-year term

by direct popular vote, and 132 members, also directly elected. The Council of Ministers

reports to the Palestine Legislative Council. Due to the geographical separation between

Gaza and the West Bank, each ministry currently maintains two offices and two staffs

(Program on International Policy Attitudes [PIPA], 2009).

External Socio-Economic Environment

Demographics

According to the World Fact Book (Central Intelligence Agency [CIA], 2009),

Palestinian demographic indicators in the West Bank and Gaza revealed an estimated

population of 2,461,267, with a growth rate of 3.4% in the West Bank, and a population

of 1,552,000, with growth rate of 3.9% in the Gaza Strip. The rate of population growth

in the West Bank and Gaza is currently among the highest in the world. Forty-five

17
percent of the Gaza Strip population is under 15 years of age, compared to 38% in the

West Bank (CIA, 2009). The Palestinian-controlled Gaza is one of the most densely

populated areas in the world, with more than 4,000 people per square kilometer.

Palestinians exhibit a high level of literacy; among those 15 years and older, literacy is

97% for males and 88% for females (CIA, 2009). The population in Gaza Strip is mainly

Palestinian Arabs. In the West Bank, 83% are Palestinian Arabs and 17% are Jewish

(CIA, 2009).

Unemployment Rate and Labor Force

Unemployment and underemployment recorded figures were very high in the

Palestinian territories. Unemployment figures reached approximately 45.5% in the Gaza

Strip and 16.3% in the West Bank (International Labor Organization [ILO], 2008).

Jobless Palestinian men, women, and children ventured into unsafe areas along with

Israelis every day, looking for any work they could find. The number of Palestinian

workers in Israel had declined in response to closure policies and reduction in work

permits for non-Israelis, leading to enormous local unemployment (World Bank, 2006).

The labor force participation rate of the working age population (15+ years) stood at

43.5% in the West Bank and 38% in Gaza (Palestinian Central Bureau of Statistics

[PCBS], 2008). Employment in the West Bank and Gaza Strip sectors of the economy

showed that an average of 12.1% of people employed worked in mining, quarrying, and

manufacturing, and an average of 10.8 % of the employed worked in construction (PCBS,

2008) (see Palestinian Labor Force Statistics, Appendix D).

18
Working Conditions in Palestine

According to the International Labor Organization (ILO) (2008), and based on

working conditions, a survey conducted by PCBS (see Appendix D) revealed that 61.1%

of men in private sector employment did not get annual paid leave, compared to 37% of

women. Also, the survey highlighted that 57.1% of men did not have paid sick leave,

compared to 31.4% for women. The survey added that 34.8% of men had written

contracts, compared to 54.8% for women. While health insurance is considered an

important indicator of work security, figures indicated that 58.8% of women employed in

the private sector had no private health insurance compared to 67.5% of male employees.

Further, the survey indicated that 94.1% of women employed in the public sector had no

health insurance, compared to 96.4% of male employees (see Appendix D). The report

cited a preliminary study addressing working conditions in Palestine and concluded that

workers in informal enterprises work long hours for low income, sometimes without a

weekly day off, and they lacked minimum infrastructure support system and occupational

safety procedures (ILO, 2008).

Human Resource Development

According to the United Nations Conference on Trade and Development

(UNCTAD) (1995), the most pressing need confronting Palestine is the high level of

unemployment. The need to create sustainable jobs to absorb the unemployed into

Palestinian economic and social structures requires appropriate action plans (UNCTAD,

1995). The existing labor force largely lacks specific technical skills to meet job

requirements. The report outlined the necessity to assess the extent and nature of training

19
programs as compared to the immediate needs of workers. Briefly, the imperative of

achieving rapid improvement in the living conditions of the Palestinian people cut across

all levels of society and all sectors of economic activity. The report recommended that an

essential ingredient to the long-term success of the Palestinian economic development

effort would be to create a well-educated, technically competent, and diverse labor force

with vigorous participation by women through the framework of entrepreneurship.

Poverty Rate

The socioeconomic situation in the West Bank and Gaza has seen a steady

decline. Palestinians remain under severe economic deprivation and experience rising

levels of unemployment and food insecurity. In Gaza, the most vulnerable, the number

of households below the poverty line is at 51.8%, and this figure continues to grow

despite emergency humanitarian assistance (UNRWA, 2007). Economically, this

translates into a lack of access to markets, lack of raw materials and means of production,

and lack of job opportunities for Palestinians (UNRWA, 2007).

The External Macro-Economic Environment

According to the United Nations (2008), the West Bank and Gaza (WBG) region

showed negative growth, minimal savings, and minimal investment in recent years due to

instability between Israel and Palestine, and there were massive deficits in the balance of

trade. The growth in the Palestinian territories depended on maintaining trade among

neighboring countries, such as Egypt and Jordan. The vast majority of trade flows are

with Israel. In recent history, this has totaled nearly 85% of trade (Palestine Trade Center

20
[PalTrade], 2009). Security closure policies and the blockades they affect disrupt labor

flows, manufacturing, and commerce across the West Bank and have caused complete

closure of the Gaza Strip (PalTrade, 2009). According to the World Fact Book (CIA,

2009), the lack of access to land and resources, as well as import and export restrictions,

had the biggest impact on growth. The May 2007 World Bank report summarized this as

follows:

In economic terms, the restrictions arising from closure not only increase
transaction costs, but create such a high level of uncertainty and inefficiency that
the normal conduct of business becomes exceedingly difficult and stymies the
growth and investment which is necessary to fuel economic revival. . . without
efficient and predictable movement of people and goods, there is very little
prospect for a sustainable Palestinian economic recovery. (p.1)

Since the imposition of restrictions, the private sector lost jobs in the industrial,

commercial, construction, agricultural, and service sectors (UN, 2009). The potential

growth of various industry sectors faces external and internal constraints due to shortages

of investment capital, human capabilities, and open markets. The lack of administrative

capabilities, inadequate infrastructure, deficiencies in public utilities, potable water, and

commercial and international airports posed constraints on the absorption of capital flows

(UN, 2009). The PNA lacked effective taxing authority and money reserves to power a

central bank. Most of the income taxes generated were derived from transfers by the

Israeli authorities.

A lack of appropriate institutions presented the Palestinian Authority with

obstacles. These hindered future economic growth. Local businesses consisted primarily

of small-scale firms lacking technical capacity and limited capital. Research and

development were minimal in the West Bank and Gaza. Most banks operating in the

21
West Bank and Gaza were branches of either Israeli or Jordanian Banks with limited

lending capacity (Segal, 1996). The economic performance of the Palestinian economy

weakened since the uprising in 2000 under the imposition of restriction on movement and

access to the territories. While the Real GDP growth averaged 8.5 during 1995-1999, it

fell virtually to zero over the period from 2000-2008, with the exception of a brief

recovery during 2003-2005 (International Monetary Fund [IMF], 2009). Figure 4 shows

the Real Gross Domestic Product (GDP) from 1997-2008.

Figure 4. Real GDP Palestinian growth.

Adapted from Labor Force Survey Report, by the Palestinian Central Bureau of Statistics
(PCBS), 2008, retrieved September 30, 2010, from http://www.google.com/search?q=
ilo+and+PSCB&sourceid=ie7&rls=com.microsoft:en-US&ie=utf8&oe=utf8&rlz
=1I7ADFA_en

22
 Structure of the Palestinian Economy

Palestine, including East Jerusalem, is considered a small and resource-poor

economy (World Bank, 2008a). However, the composition of the Palestinian economy

by sectors contributing to the GDP was stable throughout the second half of the 1990s.

After the creation of the Palestinian Monetary Authority (PMA) in 1994, the financial

sector grew very rapidly. Between 1994 and 2000, the contribution of financial

intermediation to GDP increased from 1.1% to 4.4%. The communication and

transportation sectors doubled their share of GDP from 4.4% to 8.7% during the same

period. Despite rampant financial crisis, the construction sector increased rapidly during

the late 1990s due to high demand from the fast-growing population and improved access

to financing by the development of a banking system to fund itself. Remarkable

economic progress was achieved by 1999, of which construction accounted for 14.3% of

GDP (compared to only 7% in 1995), but since the uprising in 2000, it has contracted

significantly (Bennett, Nashashibi, Beidas, Reichold, & Toujas-Bernaté, 2003).

Briefly, the post-Oslo period (1994-2005) witnessed three distinct phases in

economic development: (a) the growth phase in 1994-1999, which extended into the

outbreak of the Intifada in September 2000; (b) the regression phase in 2000-2002; and

(c) the relative recovery phase in 2003–2005. UNCTAD (2009a) showed the average

annual rate of growth of GDP more than doubled following the Oslo Agreement, but the

rate subsequently fell to a negative 8% over 2000-2002 to record a similar rebound in

2003-2005, and then continued to fall again between 2006-2008.

Figure 5 shows Palestinian establishments by economic activity, ownership, size,

and legal status, reflecting that 90.7% of all businesses are private sector establishments,

23
characterized by largely family-based, small-sized, low-capacity businesses, and a labor-

intensive sector that needs to be modernized to link up with the rest of the international

economy due to detachment and isolation for decades (Samhouri, 2007).

Figure 5. Palestinian establishments.

Adapted from Labor Force Survey Report, by the Palestinian Central Bureau of Statistics
(PCBS), (2008, April-June), retrieved September 30, 2010, from http://www.google.com/
search?q=ilo+and+PSCB&sourceid=ie7&rls=com.microsoft:en-S&ie=utf8&oe=utf8&rlz
=1I7ADFA_en

24
 Infrastructure in Palestine

The infrastructure of Palestine is comprised of water and power systems,

sanitation, roads, and telephone networks in need of substantial upgrades and expansion.

According to the World Bank (2008b), the infrastructure of Palestine has improved

greatly over the past few years. The Palestinian Authority (PA) depends on Israel for

electricity (World Bank, 2008b). The lack of adequate physical infrastructure for electric

power and insufficient water supply affects business operations in the West Bank and

Gaza.

Palestinian Financial Sector

Pursuant to the signing of the Oslo Accords in 1993 and the Paris Protocol in

1994, a formal financial sector emerged and provided Palestinians the authority to

administer monetary and fiscal affairs that would support expected economic growth.

Despite the difficult environment, a financial sector was established, composed of banks,

a securities exchange market, insurance companies, a payment system, housing finance

companies, a micro-finance institution, and financial leasing companies. With this

infrastructure in place, there is great potential for the West Bank and Gaza economy to

enjoy remarkable growth if closure policies cease (World Bank, 2008c).

The Palestinian Security Exchange (PSE) (2010) has a future plan to modernize

the structure of private sector companies, moving away from a family-owned model to a

more formal one, as in being “listed” on an exchange. There are five main sectors on the

PSE: (a) banking, (b) insurance, (c) investment, (d) industry, and (e) services, with the

heaviest trading (by volume) occurring in the investment sector, while services has the

25
highest market capitalization (The Palestinian Securities Exchange, 2010). Figure 6

presents the Palestinian Security Exchange (PSE) sectors.

Figure 6. Palestinian Security Exchange (PSE) sectors.

Adapted from The Portland Trust [Economic Feature], by the Palestinian Securities
Exchange (PSE), 2010, retrieved October 1, 2010, from http://www.mondovisione.com/
pdf/Palestine%20Securities%20Exchange-1.pdf

Investment Climate

Palestine has a strategic location, and the infrastructure’s future development is an

untapped emerging market with great investment potential (Institute of International

Finance [IIF], 2010). The economy is market-based with the private sector playing a

leading role. The West Bank and Gaza have abundant high quality, skilled labor (albeit

with deficits in the high tech sector). The Palestinian economy is export-oriented and

outward-looking with the potential to integrate with regional and international economies

through a network of free trade agreements and trade associations.

26
 The Palestinian Authority (PA) encourages foreign investment in the WBG to

promote growth, reduce unemployment, and support reconstruction efforts. The current

investment laws guarantee repatriation of foreign capital and prohibit expropriation and

nationalization of approved foreign investments. The investment law provides

exemptions from income taxes, and other regulations provide exemptions for exports of

machinery (PIPA, 2009).

According to the International Finance Corporation (IFC), the protection of

investors based on the Organization for Economic Cooperation and Development

(OECD) average indicated a strength of investor protection index of 7 above the OECD

average indexes (IFC, 2011). Among the important factors that negatively influence

Foreign Direct Investment (FDI) in the near-term are the continuation of violence, border

crossing, and cessation of negotiations in the West Bank and Gaza (United States Agency

for International Development [USAID], 2002). According to USAID (2002),

franchising investments such as Kentucky Fried Chicken, Pizza Hut, Kinko’s, and

partnerships such as Pepsi and Coco-Cola, as well as public-private partnerships that

enhance the infrastructure in the West Bank and Gaza, are just a few of the significant

FDI investments in the West Bank and Gaza.

Free Trade Zones

USAID (2002) addressed the proliferation of free zones and special economic

zones in the Middle East and the North Africa region (MENA) as a general trend to avoid

the regulatory and bureaucratic inefficiencies and attract FDIs. The free zone regimes

attract FDI where there exist a higher-quality infrastructure and a grouping together of

27
industries that have the needed services. The PA, Israel, and the international donor

community outlined a plan to establish industrial zones in Palestine to stimulate growth

and economic activity. Efforts focus on pilot zones to house export-oriented industries.

According to the Industrial Market Research Commercial Guide for the West

Bank and Gaza, the International Donor Countries will help to establish several free

zones to contain 200,000 to 600,000 square-meters of industrial and construction space to

employ tens of thousands of workers and will offer tax exemptions and incentives. This

will help create jobs and increase employment and prompt economic growth in Palestine.

Due to closure policies, a supply chain to transport products and raw material

needs to be identified for successful implementation of the shared interest and to ensure

stability and building capacity between the two borders (Sneh, 2007). Few countries

have taken the initiative to strategically plan manufacturing plants in free zones.

Germany, for instance, has laid a conceptual plan for a joint industrial zone in the West

Bank, while Turkish industrialists work to rebuild another industrial zone in the northern

Gaza Strip. Japan has initiated an agro-industry park for processing agricultural products

(Sneh, 2007).

Foreign Direct Investment (FDI) Statistics

According to USAID (2002), the West Bank and Gaza had successfully attracted

FDI from the United States, Europe, and Japan, and major firms—including Coca-Cola,

Pepsi, Procter and Gamble, and Siemens—joined the fray. UNCTAD (2009b) statistics

showed FDI amounted to USD 45 million in 2008, which was down from USD 129

28
million in 2006. There were limited foreign investment flows in 1994-1995, with the

majority coming from Palestinian investors.

The Palestine Development and Investment Company (PADICO) invested over

USD 500 million in the economy and was a major holder of shares in the Palestinian

Exchange stock market. Key PADICO investors include diaspora Palestinians from

Jordan, Great Britain, and the Gulf. For instance, PADICO (the largest single non-

resident investor company owned by Palestinians from outside Palestine) has made

significant investments in telecommunications, housing, and the establishment of the

Palestinian Securities Exchange (PSE) (2010). The Palestinian Authority has taken steps

since 1995 to increase foreign trade. Several free trade agreements were signed with the

European Union, the European Free Trade Association (EFTA), the United States,

Canada, and Turkey, and other trade agreements with Russia, Jordan, Egypt, the Gulf

States, Morocco, and Tunisia have been finalized. The PA participated in the 2005 and

2009 World Trade Organization (WTO) ministerial meetings as an ad hoc observer.

Palestinian Reform and Development

Plan (PRDP)

Due to prevailing political instability, which effectively has prevented the

development of a robust economy, the Palestinian National Authority (PNA), with the

help of international community donors, has outlined a reform development plan for a

Palestinian State. The Palestinian Reform Development Plan (PRDP) set out a strategy to

implement this future union (PNA, 2007). This strategy represents a 3-year plan that

reflects an assessment of the PNA’s capacity to absorb project development. The plan

29
mentions several very important premises for implementation. The key national priorities

outlined are (a) to bring the rule of law to the occupied territory and to combat violence,

(b) to manage Palestinian internal administrative affairs, and (c) to implement

institutional reforms in the PNA. The proposal acknowledged Gaza and its 1.5 million

people as an integral part of the future Palestinian state and suggested reform and

development in Gaza as an essential part of the plan for bringing stability and prosperity

to all Palestinians. The roles of the international community in supporting Palestinian

development and the role of Israel in taking immediate steps to facilitate movement of

people and goods were issues emphasized in the document.

Many sectors of development were mentioned in the PRDP. Establishing good

governance, justice, security, and the rule of law were some of the first issues named in

the document. Fiscal reform, local government reform, and social development in areas

such as education, health, and social protection; economic and private sector

development; agriculture, tourism, industrial development, service provision, housing

projects, public infrastructure development, and many other sectors of development were

identified. An international conference in Paris in December 2007 by the world

community pledged $7.4 million to aid the Palestinian Authority and support Palestinian

reformation (Anderson, 2007).

Despite the pledge from the international community to support the Palestinian

Authority, the situation regarding implementation of the PRDP plan had not changed.

Excluding Gaza from the plan has led to the creation of two separate economies: one in

the West Bank, which is showing some progress; and the other in Gaza, where

restrictions are not confronted in parallel with the development plan. According to the

30
World Bank (2009a), because there is no movement of people and products due to

security closure policies, the PA is hindered, if not entirely prevented, from reviving the

Palestinian economy. There were three constraints to the Palestinian economic stimulus:

First, there was limited access to economies of scale that hindered Palestinian businesses

in their attempts to achieve critical mass for additional investment and business growth;

second, there were limits on access to natural resources, which stifled growth

opportunities; and third, limited access to an investment horizon brought financial talks

where vital connections are made to a standstill (World Bank, 2009a).

According to the International Bank for Reconstruction and Development (IBRD)

(World Bank. IBRD, 2008), assessment of the investment climate in the West Bank and

Gaza yielded three major areas where the creation of an investment climate to help the

Palestinian private sector existed: (a) restoring movement and access, (b) developing

Palestinian private enterprise capabilities, and (c) continuing to measure and improve the

investment climate.

External Legal Environment

According to the Worldwide Governance Indicators (1996-2008) (World Bank,

2009c), six aggregate governance sectors were described that reflected the governance in

Palestine as compared to the Organization for Economic Cooperation and Development

(OECD), which is made up of 34 developed countries. The report displayed the

country’s performance for all available years between 1996 and 2008 in six dimensions:

(a) voice and accountability, (b) political stability and lack of violence/terrorism, (c)

government effectiveness, (d) regulatory quality, (e) rule of law, and (f) control of

31
corruption. The value dimensions reflected low scores on governance indicators in

Palestine as compared to the OECD rating. The Palestinian Reform and Development

Plan (PRDP) outlined key national priorities essential to bringing the rule of law to the

occupied territory, to managing Palestinian internal administrative affairs, to

implementing institutional reforms in the PNA, and to the creation of a supportive foreign

investment climate for companies seeking foreign direct investment (FDI) in Palestine.

Figure 7 outlines the governance indicators in Palestine that are important for investment

consideration. The lower bars correspond to OECD, while the upper bars correspond to

Palestine.

90th-100th Percentile 50th-75th Percentile 10th-25th Percentile

75th-90th Percentile 25th-50th Percentile 0th-10th Percentile

Figure 7. Governance indicators in Palestine.

Adapted from Worldwide governance indicators (1996-2008), by World Bank, 2009c,
retrieved April 26, 2010, from http://info.worldbank.org/governance/wgi/sc_chart.asp#

32
 Palestine Country Strengths/Weaknesses/Opportunities/
Threats (SWOT) Analysis

Based on the researcher’s assessment of the Palestinian business environment,

Table 1 presents the SWOT analysis of Palestine, showing the strengths, weaknesses,

threats, and opportunities that are helpful for investment considerations.

Table 1

Palestine Country SWOT Analysis

Strengths Weaknesses

 Highly educated workforce  High poverty and unemployment

 Strategic location  Underdeveloped infrastructure
 Active civil society, NGOs, and  Geographic disconnection between Gaza
international aid organizations and West Bank
 New Reform and Development Plan to  Rule of law/corruption/weak institutions
promote foreign investment climate,  Different laws in Gaza and West Bank
rebuild government institutions with help  Lack of stability and security
of international community donors  High dependence on Israeli economy
 Private sector adaptability to change  Private sector lack of capabilities

Opportunities Threats

 MNC economic intervention through peace  Instability and chaos

process to prompt economic growth in  Economic dependence on Israel
Palestinian territories  Lack of progress of redevelopment plan by
 Regional and international cooperation the PA and commitment of International
 Opening new markets for exports donors to rebuild government institutions
 Establishing free zones for manufacturing and infrastructure
 Natural gas resources in Gaza  No control over resources and borders,
 Huge development projects for electricity, seaports and airports
housing, airports, and infrastructure

33
 Multinational Companies (MNCs)

Multinational companies (MNCs) have played an important role in global

economic, social, and political changes (Held & McGrew, 2000). The United Nations

defined MNC as “an enterprise which controls assets, factories, mines, sales offices and

the like in two or more countries” (Bartlett, Ghoshal, & Birkinshaw, 2003). However,

the scope has changed to comprise two crucial qualifications: First, MNCs have

substantial direct investment in foreign countries, not just an export business; and second,

MNCs are engaged in active management of offshore operations rather than passive

investment in a financial portfolio (Bartlett et al., 2003).

MNCs are important because they engage in foreign direct investments (FDIs)

around the world (Dunning, 2001). According to the United Nations Conference on

Trade and Development (UNCTAD, 2009b), there is a total of more than 889,416

multinational companies (MNCs) around the world, of which 82,053 are parent

corporations and 807,363 are affiliates. In 2008, the 100 largest MNCs’ sales combined

mounted to nearly $8.5 trillion. The Multilateral Investment Guarantee Agency (MIGA),

an agency that promotes FDI in developing countries, has reported that FDI surged to

record levels in developed and emerging markets despite the recent economic downturn

(MIGA, 2009). Corporate investors maintained a positive outlook on business prospects

in emerging markets and signaled improved investor confidence with the willingness to

take risks for potential returns in emerging market assets (MIGA, 2009).

Multinational companies operating in emerging markets had been plagued with

political, economic, environmental, and social instability. According to PCBS statistics,

FDI amounted to USD 45 million in 2008, down from USD 129 million in 2006, but even

34
129 million is negligible compared to the funding other areas in the Middle East region

receive. According to the Economic Commission for Western Asia (ESCWA), Palestine

barely benefited from increased FDI inflows to the region (as cited in PCBS, 2008).

Several principal factors explained the considerable gaps in FDI inflows to Palestine.

These factors included the slow pace of economic and investment reforms, the

assessment of political risks by potential investors, access to inexpensive production

factors (land, energy, physical and human capital), and integration into regional and

global markets (UN ESCWA, 2008).

The strategic posture of multinational companies has been addressed through

numerous international business (IB) journals. Flores and Aguilera (2007) addressed

economic and non-economic factors pertinent to MNC foreign location choices and

found that the host country’s GDP had become a less important deciding factor in the

attraction of FDI. Dunning (1998) argued that instead, market size factors drive MNC

location choice. Populations, Dunning argued, are a critical factor.

Prahalad and Lieberthal (2003) suggested that MNCs should target countries with

large populations regardless of the per capita income. Henisz and Delios (2001) argued

that both country-level political and legal institutions influence cross-cultural practices

with the effect that a host country’s government policy might cause MNCs to steer away

from foreign investment. Loree and Guisinger (1995) indicated that equity FDI is

positively linked to political stability. Physical infrastructure is an overarching construct

that captures infrastructure quality, roads, ports, airports, and telecommunication (Flores

& Aguilera, 2007). Empirical research has indicated that physical infrastructure

influences MNC decisions in that it forms the basis of calculations regarding the expected

35
costs of moving raw materials and finished goods to and from a MNC home base (Loree

& Guisinger, 1995; Root & Ahmad, 1978).

Another key determinant of MNC location choice deals with labor costs and

wages. Flores and Aguilera (2007) believed that countries with lower wages were more

likely to be considered by MNCs, as they represented potential reduced costs to the firm.

Kumar (1994) found a direct relationship between the host country wage rates and the

attraction of FDI in various countries. Prahalad and Hart (2002) argued that transaction

governance capacity (TGC) was a fundamental dimension of a transparent market for

capital, land, labor, commodities, and knowledge, which further set the stage for a

supportive investment climate. Prahalad and Hart defined TGC as the capacity of a

society to guarantee transparency in the processes of economic transactions and the

ability to enforce commercial contracts with specifications that create transparency and

eliminate uncertainty and risk in commercial transactions and added that processes for

changing the laws governing property rights should be clear and unambiguous, with a

system of regulations that accommodate complex transactions and institutions that allow

these laws to be implemented fairly and with transparency.

According to the International Market Research for West Bank and Gaza (2000),

present-day rights and protections for private ownership need updating. For instance, the

right to private ownership in Gaza is controlled by British Mandate Law. The West Bank

is under Jordanian law for areas under the jurisdiction of the Palestinian Civil Authority

and under the Israeli Civil Administration for areas located outside the Palestinian

population centers.

36
 In summary, a supportive investment environment for companies seeking

FDI in Palestine needs a transparent, stable, and predictable investment climate

(International Market Research for West Bank and Gaza, 2000). This will consist of

proper contract enforcement, updated property rights, and adequate infrastructure

embedded with sound macroeconomic policies and institutional reforms.

Statement of the Problem

Foreign direct investment (FDI) in conflict-prone countries has increased in the

emerging markets (IIF, 2010). These emerging markets have been plagued with political,

economic, environmental, and social instability, thus exerting more externalities on

firms’ strategic behaviors. This research looked at integrating CSR into firms’ core

business as part of MNCs’ strategic corporate social responsibility posture, which in turn

would optimize the firms’ financial and social profitability. A new paradigm shift of

MNCs’ strategic behavior to integrate societal change with their core business has been

the work of many organizations (IFF, 2010). This new form of engagement would

promote economic development, create employment, ameliorate poverty, and promote

stability in host countries.

The study examined the relationships among MNCs’ environmental turbulence,

MNC strategy aggressiveness, MNC capability responsiveness, MNC corporate social

responsibility (CSR) posture, and the overall performance of MNCs operating in

Palestine. There currently is no research on this topic. This study hypothesized that

organizational performance is improved when MNC strategy aggressiveness and MNC

capability responsiveness are aligned with MNC issue turbulence level.

37
 Contribution of the Study

It is posited that good social responsibility is good business. This study

contributes to the field of strategic management by empirically testing and validating

hypotheses regarding the relationships between environmental turbulence, MNC strategy

aggressiveness, and MNC capability responsiveness for MNCs operating in a conflict-

prone zone such as Palestine. The study provides researchers and professionals with

tools for aligning the business environment with the political environment and for

maximizing stakeholder legitimacy strategy and CSR for optimal financial and social

performance.

38
 Chapter 2A

GENERAL THEORETICAL FRAMEWORK

The general theoretical framework for this study was presented in two parts.

Chapter 2A presents the global model of multinational companies (MNCs) operating in

Palestine. The global model shows several constituencies that are affected by the firm’s

decision-making behavior. The global model reflects analysis of the environment,

legitimizing forces, threats, and opportunities perceived by management of the firm. The

global model shows MNC business strategy and MNC social responsibility strategy as an

integral part of the overall MNC business strategy. The strategic posture of the

organization provides a framework for optimal financial and social performance of the

MNC.

Chapter 2B presents the research domain of the study relative to MNC social

responsibility (CSR) strategy variables and a summary of these variables.

Global Model

As a strategy concept, social responsibility and moral ethical values have been

addressed by many pioneers since the 1960s. According to Ansoff (1965), there are non-

economic influences that affect the objectives of the firm. These non-economic

influences comprise philanthropy, social responsibility, ethics, social status, and

reputation. Ansoff argued that in order to understand these non-economic influences,

there was a need to single out those with a strong bearing on the firm’s objectives and to

39
assess them as to their effects on the master list of the firm. The idea of corporate social

responsibility (CSR) has been addressed by many authors attempting to integrate ethics

and strategy without drawing attention to means they’ve employed that contribute to

competitive advantage of their firms. The present study was based on the concept that

corporate social responsibility (CSR), as part of the core business of multinational

companies (MNCs), is integral to sustainable socio-economic development in Palestine.

Ansoff and McDonnell (1990) provided a strategic management approach to

optimize the organizational performance and postulated that for a firm to optimize its

competitiveness and profitability, the firm had to match its strategy and capability with

the environment. Ansoff (1984) developed a strategic success paradigm for firms to do

this. This paradigm has been researched, tested, tried, and proved in many industries

around the world.

The global model outlined in Figure 8 presents the environment with a complex

set of relationships among the multinational company (MNC) and its various

stakeholders. This is characterized by interrelationships among MNC corporate

management, employees, civil society, NGOs, international organizations, customers,

suppliers, governments, and special interest groups. According to Ansoff (1984), each

constituency had its own objectives. Ansoff added that the preferred objectives of these

constituencies should be analyzed according to a legitimacy strategy based on a

bargaining process. Based on Ansoff’s approach, the environment was a determining

factor for the firm’s strategy and its capability profile. Part of the business firm

environment was the “rules of the game,” defined by Ansoff (1979) as a set of constraints

under which the business could conduct, but must limit, its activities.

40
Figure 8. The global model.

41
 The left side of Figure 8 depicts the strategic posture of the MNC organizational

management based on the strategic success paradigm. This forms the basis of Ansoff’s

model of strategic management at the corporate MNC level. The center side of Figure 8

depicts the corporate social responsibility (CSR) posture, where CSR strategy is

addressed as an integral part of business strategy in the research study. According to

Ansoff (1979), the firm’s adaptation to its external environment was hinged on how

strategic information perceived and understood by management. Ansoff argued that

when threats or opportunities first appeared on the horizon, they should be brought for

further analysis to the firm by the environmental surveillance forecasting system. The

signals that came through to stakeholders should be processed by a surveillance filter and

further through two additional filters where decisions were made (Ansoff, 1979). These

were the mentality and the power filters where skilled managers would identify

environmental discontinuities that had major implications in the decision-making

processes (Ansoff, 1979).

Ansoff (1984) developed the concept of environmental turbulence to describe the

different environments. He classified different environments upon which firms operate

according to five distinct turbulence levels. Ansoff identified a concomitant level of

success for every level of turbulence. Ansoff and McDonnell (1990) defined four

characteristics that define environmental turbulence. Table 2 reflects these levels of

environmental turbulence. The four characteristics are the following: (a) complexity,

where the business environment becomes more complex and the pace of change

increases, resulting in an increase of turbulence level; (b) familiarity of events; (c)

rapidity of change, and (d) visibility of the future.

42
 Ansoff and McDonnell (1990) described two factors for the business’s strategic

approach: strategy aggressiveness and capability responsiveness. Strategy aggressiveness

was characterized by the firm’s application of tools, techniques, and know-how to enable

it to position itself in the environment. Ansoff described a firm’s strategy aggressiveness

according to two characteristics: first, the degree of discontinuity of the firm’s successive

strategic moves, such as between successive products that the firm introduces to the

market; and second, the timeliness of introduction of the firm’s new products.

Timeliness in this case ranges from reactive to anticipatory and to innovative and

proactive. On the other hand, organizational responsiveness was characterized as the

firm’s ability to respond, and it included the manager’s capabilities and those of the

organizational system as a whole.

Ansoff (1984) characterized organizational responsiveness according to the

manner in which a firm handles change. The correct strategy is matching capabilities to

turbulence for different environmental turbulence levels. Different types of environments

require different sets of capability-strategy that are appropriate for different levels of

environmental turbulence in which companies operate. Ansoff and McDonnell (1990)

characterized the firm’s responsiveness as the degree to which its organization is either

introverted or extroverted and identified three organizational components for the firm’s

capability responsiveness:

1. Managers: mentality, power, competency, and capacity

2. Climate: culture, risk propensity, time perspective, and change triggers

3. Competence: problems-solving skills, information technology, organizational

structure, rewards, and total headcount

43
 Table 3, Matching Aggressiveness and Responsiveness to Turbulence, describes

the appropriate strategy aggressiveness and responsiveness levels that are necessary for

success through each turbulence level. Ansoff (1984), on one extreme, outlined the

stable, placid environment where nothing changes, which is also known as the “repetitive

environment”; on the other extreme, he outlined the creative environment, also known as

the “surpriseful and unpredictable environment,” which is characterized by major

technological breakthroughs and sociopolitical upheavals.

To summarize Ansoff’s (1984) strategic success paradigm, the optimal

performance of an organization is where strategy aggressiveness and organizational

capability responsiveness match the level of environmental turbulence in which the firm

operates. Realizing that there are different types of environments, different strategy-

capability couplings are required for successful operation of the firm (Ansoff &

McDonnell, 1990). The levels of environmental turbulence are described in Table 2, and

Table 3 describes the matching turbulence-aggressiveness-responsiveness.

44
Table 2

Levels of Environmental Turbulence

Level 1 2 3 4 5

Turbulence
Characteristics Repetitive Expanding Changing Discontinuous Surprising l

Complexity National + Regional + Global

Familiarity of Familiar Extrapolable Discontinuous Discontinuous

Events Novel

Rapidity of Change Slower than Response Comparable to Faster to Response

Response

Visibility of Future Recurring Forecastable Predictable Partially Unpredictable

predictable

45
Table 3

Matching Turbulence-Aggressiveness-Responsiveness

Environmental Repetitive Expanding Changing Discontinuous Surpriseful

Turbulence Repetitive Slow incremental Fast Discontinuous Discontinuous
predictable Unpredictable

Strategy Stable Reactive Anticipatory Entrepreneurial Creative

Aggressiveness Stable based on Incremental based on Incremental based on Discontinuous Discontinuous novel
precedents experience extrapolation New based on based on creativity
observable
opportunities

Capability Stability seeking Efficiency driven Market driven Environmental driven Environment creating
Responsiveness Rejects change Adapts to change Seeks familiar change Seeks related change Seeks novel change

Closed System Open System

LEVEL 1 2 3 4 5

46
 At Turbulence Level 1 is the “repetitive environment,” where the environment is

stable and is based on precedents and predictable change. Companies in this environment

do not change their products and services unless they are forced to do so. Company

executives work according to precise job descriptions (Ansoff, 1984).

At Turbulence Level 2, “expanding environment-slow incremental” can be found

in the segment of the economy that is growing rapidly. In this environment, demand

usually exceeds supply, and customers’ needs are basic and undifferentiated. Price is the

main determinant in the purchase decision, and production efficiency is the key success

factor (Ansoff, 1984).

At Turbulence Level 3, “changing environment-fast incremental,” customer

demands are differentiated by different buying power and product preferences. The key

success factor shifts from production efficiency to marketing effectiveness (Ansoff,

1984).

At Turbulence Level 4, “discontinuous environment – predictable,” rapid shifts in

customer needs and attitudes are seen with an influx of technological substitution, social

change, and foreign competition. An entrepreneurial approach of strategic management

is a key success factor. The majority of companies today are operating in this complex

and discontinuous environment (Ansoff, 1984)

At Turbulence Level 5, “surpriseful environment- unpredictable,” technological

leadership is the key success factor. New technologies and new industries develop

rapidly and customers are prepared to pay for the most advanced technology. In the

environments of Turbulence Levels 4-5, profits do not follow growth, extrapolation of the

past into the future is dangerous, surprises are frequent, historical strengths can become

47
weaknesses, and what were successful strategies in the past might not be successful in the

future (Ansoff, 1984).

This research study was based on Ansoff’s success model and supporting

empirical research. The perception of the environment in Palestine is currently

characterized by political instability and severe socio-economic development that

influences the strategic behavior and the decision-making of MNC activities. The region

has seen frequent and even unpredictable and surprising exercise of uprising and

blockage of movement of people and goods. It has impeded internal and local cross-

border trade and reduced ability of Palestinians to hold their jobs, thus raising the level of

unemployment, deepening poverty and assuring insignificant growth and fiscal collapse

(World Bank, 2009c). According to the World Bank (2006), the overall impact of the

security regime on the current cost of doing business was substantial due to higher

transport fees and longer delivery times.

The use of CSR instruments as part of the research would facilitate the integration

of sustainability concerns as part of the company operations and create economic, as well

a social-organizational performance. For example, engaging stakeholders in the decision-

making process would help define the preferred objectives of MNCs operating in

Palestine through a legitimacy strategy.

As indicated in the global model in Figure 8, it was hypothesized that the

integration of the (CSR) strategy as an integral part of the firm’s business strategy would

lead to optimal economic and social organizational performance. The corporate social

responsibility (CSR) aggressiveness and corporate social responsibility (CSR)

responsiveness would lead to overall corporate philosophy that has the capacity to

48
respond to changes in the environment. Corporate social responsibility (CSR) was

central to the research study and was believed to have a significant effect on the overall

organizational performance of MNCs operating in Palestine.

CSR Change Management Framework

Ansoff and McDonnell (1990) defined a change management sequence of three

major components to deal with discontinuous change and defined discontinuous change

as a novel change, where the past does not prepare the organizations for the future,

requiring major revisions in the culture, power structure, reward/incentive systems,

organizational structures, and relationships with the external environment. The three

major components are the following: (a) a change strategy to introduce new products and

services; (b) changes in the systemic competence of the firm’s systems, structure, skills,

and knowledge; and (c) a behavioral change including norms, perceptions, values,

models, and distribution of power (Ansoff & McDonnell, 1990).

Ansoff and McDonnell (1990) recommended a managed resistance change

strategy that looks like an accordion, where each panel is a separate project/module that

builds the final process. Each module consisted of two parts, one comprising capability

and the other, strategy projects. On one hand, there lay the capability that focuses on the

reduction of resistance to skill development and simultaneously lays down strategy that

focuses on direction, plans, and strategic positioning. The uniqueness of the process is

that each module can be modified based on inputs from previous modules and new

information from the external environment. Ansoff and McDonnell listed three areas that

49
needed to be addressed before and during the application of change management: (a)

strategy choice, (b) building the launching platform, and (c) launching the transformation.

Another framework for embedding CSR into business strategies and practices has

also been recommended by the United Nations Economic and Social Commission for

Asia and the Pacific (ESCAP) (2009). The framework consists of three major categories:

(a) designing, (b) execution, and (c) mainstreaming. Figure 9 outlines three areas that

require specific CSR design, including (a) preparing for CSR embarkation to raise CSR

awareness inside the company, (b) assembling a CSR team, and (c) stakeholder

engagement in the CSR process. The second category is the execution of the CSR

strategic plan that outlines the implementation of the CSR integrated strategy, followed

by monitoring and evaluation of the CSR plan. The last category outlines internalizing

CSR into organizational systems, as well as corporate culture and values.

50
Figure 9. CSR change management.

51
 Leadership Capabilities and Competencies

The United Nations Economic and Social Commission for Asia and the Pacific

(ESCAP) (2009) recommended a framework for embedding CSR into core business

strategies and practices. The framework it proposed is composed of three stages:

designing, executing, and mainstreaming. Eight steps were included in the framework:

(a) preparation of CSR instruments, (b) stakeholder engagement, (c) development of CSR

plans, (d) implementation, (e) monitoring, (f) evaluation, (g) institutionalization, and (h)

communication. CSR requires time to reach maturity before it becomes part of

mainstream business practice.

The speed of achieving CSR is dependent on CSR knowledge through

management training, leadership development, and organizational capabilities that

integrate CSR policy into the firm’s core business. The role of leaders to guide business

towards sustainable social responsibility practices requires a unique array of leadership

skills. D’Amato, Henderson, and Florence (2009) defined responsible leaders as people

of the highest integrity, who embody deep understanding of the difficult concept that is

sustainable development. Pruzan and Miller (2006) portrayed leaders in the business

world first as true planetary citizens because they have globally relevant skills and

strengths that can affect local economies, as well as entire societies or even continents.

According to Schraa-Liu and Trompenaars (2006), in a challenging, ambiguous,

and uncertain environment, the challenge for leaders was to perform effectively to

reconcile diversity of interests and the demands of multiple stakeholders. Bossink (2006)

addressed the need for a charismatic leadership style to communicate an innovative

vision that accelerated the CSR process and empowered employees to become innovative

52
leaders. Jones (2000) stressed the need for a transformational and visionary leadership

style together with a need for transparency. The Department of Trade and Industry

(2004) outlined the following six characteristics to help integrate CSR into business

decision-making across the full spectrum of business operations:

1. Understanding society: Understanding the role of each stakeholder in the

society.

2. Building capacity: Creating strategic networks and alliances.

3. Questioning business-as-usual: Being open to new ideas and adapting to new

ways of thinking.

4. Stakeholder relations: Identifying stakeholders, building relations with

internal and external stakeholders, engagement, and balancing competing interests.

5. Strategic view: View the environment in a strategic way.

6. Harnessing diversity: Respecting diversity and adjusting to different

situations.

CSR and Accountability

CSR accountability is complex and yet is required by all leaders, organizations,

stakeholders, and individuals seeking to insure integrity in their decision-making

(D’Amato et al., 2009). Dolan (2004) illustrated the factors that influence the

effectiveness of corporate accountability and sustainable leadership. He introduced the

following general principles:

1. The need for a leader to consider the business as part of a larger,

interconnected web of relationships that affect the company’s business long-term.

53
 2. The need to realize the business culture that leaders create in reacting to

sustainable challenges.

3. The need to understand that leaders must see people as sources and not

resources of sustainability and acknowledge their contribution.

4. The need for a proactive stance to realize sustainability in the business process.

Frame (2005) addressed the need for behavior changes in donor organizations that

engendered cohesive processes for the evaluation of competitive bids that influenced the

supply chain towards achievement of CSR measures and promulgated company

disclosures regarding socially responsible investments.

Partnering With Stakeholders

Blowfield and Googins (2006) stressed that today’s business environment is

comprised of a multitude of business “actors,” each with a new role. The authors used

CSR as an umbrella term for various theories and practices that could encompass the

following:

1. Companies should have a responsibility for their impact on society beyond

legal compliance and liability for individuals.

2. Companies should have a responsibility for the behavior of other stakeholders

with whom they are doing business.

3. Businesses should manage their relationships with wider society for reasons of

commercial viability and to add value to society.

54
 Hee (2007) showed that corporate leadership should have a holistic approach to

engaging with stakeholders and that the vital link between business and stakeholders was

leadership.

CSR Implementation and Organizational

Challenges

Lewicka-Stralecka (2006) identified opportunities for CSR implementation, as

well as limitations that required cooperation between business representatives and

stakeholders at all levels in order to mitigate. The author identified obstacles, such as (a)

the widespread negative image of business, (b) dysfunctional legal history, (c) corruption,

(d) companies in financial straits, (e) lack of ethical standards, and (f) high

unemployment. Successful CSR implementation requires transformational efforts by

government authorities, business leaders, and non-governmental organizations. Hatcher

(2002) voiced the need for business to speak up for business, push for greater

transparency, venture beyond mere compliance with national regulatory systems, fashion

new regulatory and trading environments, and shoulder the burdens of shaping a

modernized agenda. Integration of these elements into core business strategy would

greatly further the cause of CSR implementation at MNCs doing business in Palestine.

Performance Monitoring

Wood (1991) defined corporate social performance (CSP) for business

organizations as a system of principles, processes, programs, and observable policies as

they relate to the societal relationships of the firm. The author described three principles

55
of corporate social responsibility: (a) legitimacy, or authority, to define the relationship

between business and society; (b) public responsibility related to a company’s behavior;

and (c) managerial discretion. Wood further conceptualized processes of corporate social

responsiveness as comprised of environmental assessment, stakeholder management, and

issue management, which serve to minimize surprises emanating from a turbulent

environment and to facilitate apt response to changes in that environment (as cited in

Ansoff, 1984).

The outcome of the management system framework included corporate

expediting of social policies and development of social programs to achieve social

impacts. Steg et al. (2003) identified performance variables for their ability to model

sustainable development, which included three dimensions: economic, social, and

environmental. Economic performance refers to profitability and growth in the market.

Steg et al. described sustainable economic performance as consisting of value-added,

value chain, and economic externalities. Social performance focuses on relationships

with stakeholders. Steg et al. defined the social impact of performance variables on

stakeholders to include the well-being of employees, customers, community, suppliers

and competitors and listed specific performance indicators to measure a firm’s outcomes

in this arena.

The Global Reporting Initiative (GRI) (2006) devised by the United Nations

(UNGC, 2007) recommended an alternative framework to assess corporate social

performance. The (GRI) provides economic, social, and environmental sustainability

guidelines for measurement and reporting purposes. These guidelines recommend that

five sections be included in the reporting mechanism: (a) the vision and strategic view of

56
sustainability; (b) a profile of the company’s organization and how it is organized, its

operations, and stakeholders; (c) its governance structure; (d) its GRI content index, and

(e) environmental, social, and governance (ESG) performance indicators for

sustainability. Sharfman (1996) identified a widely known and accepted measure of

corporate social performance called the Kinder, Lydenberg, and Domini (KLD) (2010)

Social Performance Index. The author demonstrated construct validity of the KLD and

encouraged researchers to have confidence in the measure. The purpose of the KLD

index is to influence corporate proactive behavior towards sustainability. The KLD

Index is a rich source for the evaluation of social performance because it is based on a

wide range of data sources, including company surveys, expert panel assessments, and

disclosures made to the public. The index includes companies that have positive

environmental, social, and governance (ESG) records based on various standard

measures, such as (a) environmental stewardship, (b) community relations, (c) diversity,

(d) employee relations, (e) human rights, (f) product quality, (g) safety, and (h) corporate

governance.

Company performance measurements are based on the KLD’s evaluation of

attributes in terms of strengths (+) and concerns (-) that are further converted to scores

(KLD, 2010). For example, social ratings include the following: (a) the strength that is

an innovative giving program that supports non-profit organizations and that dedicates a

significant figure to charitable giving, (b) support for education, (c) support for

public/private partnerships pertinent to housing initiatives for the economically

disadvantaged, (d) retirement benefits, (e) health and safety programs, (f) innovative

initiatives primarily related to labor rights in its supply chain, (g) commitment to

57
management systems through ISO 14001 certification, and (h) reporting on a wide range

of social and environmental performance measures to increase transparency.

The KLD Social Concerns rating, which outlines weaknesses in corporate social

programming, on the other hand, provides a look at the negative social impacts of a

company’s activities in contrast to its social performance positives. The social

performance measure is determined by taking the net score of total social strengths and

total social concern and is labeled the “net KLD social score.”

The Global Reporting Initiative (GRI) (2006) is a non-binding and globally

recognized reporting tool. It is managed by an international NGO, and its certification is

managed by third parties. Some complain that GRI reports do not reflect an adequate

picture of progress towards sustainability but rather are a purchasable service to boost a

firm’s image. By contrast, the KLD is a socially responsible investment index, and its

judgments are based on past performance that projects future performance. According to

Ansoff and McDonnell (1990), extrapolation of performance by organizational units in

turbulent environments is unreliable. They added that to optimize a firm’s return on

investment (ROI), both the firm’s strategy and its responsiveness must match the

turbulence of the environment. Bowman and Haire (1975) explained that “while there is

not a one-to-one relationship between CSR and financial performance, nevertheless, CSR

is ‘a signal of the presence of a style of management that exceeds broadly across the

entire business function and leads to more profitable operation’” (p. 54).

Bruyn (1987) predicted a positive link between social performance and economic

performance. He dismissed the notion that there might be a tradeoff between them and

stated that the relationship between CSR and traditional performance was a synergistic

58
one. He added that social considerations in the investment process could enhance the

possibilities of economic returns, and the social and economic realms could be

maximized together. Porter and Kramer (2011) stated that the purpose of the corporation

must be defined as creating shared value that involved creating economic value for

society by addressing its needs and challenges. He added that a shared value perspective

should focus on improving growing techniques for better resource utilization and

strengthening a local cluster of supporting stakeholders to increase efficiency and yield

product quality and sustainability. Strategic CSR is integral to a company’s profitability

and competitive position. It leverages the unique resources and expertise of the company

to create economic value by creating social value.

Hillman and Keim (2001) found that CSR is positively related to shareholders’

values if activities are concerned with stakeholders who are directly related to the

organization (for instance, employees and customers, as opposed to mere participation in

social issues like community development or the environment). Goll and Rasheed (2002)

concluded that a positive relationship is dependent upon the business environment in

which the firm is operating. Lorton (2006) stated that performance on environmental

issues is greater in organizations where the environmental management system (EMS)

aggressiveness and EMS responsiveness were closely aligned with the level of

environmental issue turbulence experienced by the organization. Loebbaka (2008)

further promulgated that a significant positive relationship exists between an

organization’s safety management system (SMS) aggressiveness, its SMS

responsiveness, and the safety management system (SMS) posture and its performance on

safety issues.

59
 Environmental Turbulence of MNCs

MNCs are faced with diverse stakeholder environments across their international

operations. Multiple constituencies with various objectives affect the firm’s strategic

behavior in addressing the final preferred objectives and rules of the game (Ansoff,

1984).

According to Ansoff (1984), determination of the preferred objectives is meant to

help a firm adapt through a legitimacy strategy that is part of the societal strategy. He

added that the legitimacy strategy analysis should bring together three ingredients: (a)

Stakeholder’s objectives are analyzed, (b) the legitimacy strategy analyses constraints,

and (c) the power field environment is analysed. Various researches have addressed gaps

in the business environment through forming alliances and interpersonal ties to manage

the firm boundaries. Prahalad (2004) stressed the involvement of multiple players in an

MNC’s strategic management of CSR issues, including local government authorities,

non-governmental organizations (NGOs), financial institutions, development agencies,

private enterprise, and civic organizations.

PCBS (2008) outlined the percentage of establishments in Palestine by ownership

as previously mentioned in Figure 5: NGOs 3.3%, central government 4.9%, local

authority .7%, and UNRWA and international organizations .4%. The remaining 90.7%

is constituted by private sector establishments. Figure 10 presents a prototypical MNC

with multi-stakeholders and provides the extent of their influence on the corporation’s

governance.

60
 Host Country Gov. Customers and Stockholders Israeli policies of
(Palestine) users pose a Socially responsible closure regime and
Policies & continuing investment (SRI) restriction of
Regulations challenge to and engagement movement of people
(Investment laws) & business strategy activism and goods in West
PRDP Bank & Gaza

Multilateral Local civil society

institutions (World organizations and
Bank, IMF, etc.) to social and special
support lending interest groups
partnerships activism
MNC
Corporate
Int’l civil society Other companies
Organizations, leading CSR
NGOs aimed at benchmarks for
affecting MNCs sustainability in the
behavior market place

National & Int’l Suppliers Employee Local Unions and labor

Industry associations, Collaborate with Company HRM and & Int’l Labor
Chambers of suppliers for product work practices and Organization (ILO)
Commerce, WBCSD, design and services commitment to relations
code of conduct sustainability sustainability New regulations

Figure 10. MNC company governance and stakeholders.

61
 Figure 10 depicts the multinational company (MNC) and its key stakeholders.

Key stakeholders include consumers, governments, international aid organizations, civic

groups, national and international industry associations, suppliers, employees, the

International Labor Organization (ILO), special interest groups, and other companies

acting as CSR leaders. Advocates and activists believe that the goal of any economic

actor should not be limited to economic gains but should aim to further the social welfare

of the host countries in which the MNCs operate. The significance of stakeholders’

engagement is to build social capital as a foundation for a company’s “license to

operate.” Stakeholders’ involvement can reduce risk by providing feedback such as early

warning signs of product safety issues, human rights violations, or environmental

concerns.

Some companies use the engagement process to identify ideas for new products

and services (United Nations Economic and Social Commission for Asia and the Pacific

[ESCAP], 2009). According to Jonker and Foster (2002), stakeholders could be

identified based on categories and the interests and concerns that come out of their

categories. This would facilitate incorporation of these interests and concerns into the

corporate strategy and avert misallocation of resources to non-stakeholders with

illegitimate interests and concerns. Jonker and Foster presented a table based on

categorization developed by CSR Asia, which outlined strategic stakeholder criteria.

They argued that for most companies it was best to avoid having too many stakeholders

in the process. This criterion defines the significance and effect of actions taken by

stakeholders. Table 4, below, displays strategic stakeholder criteria.

62
Table 4

Strategic Stakeholder Criteria

Broad Type Category Criteria

People or organizations that have already

Interest identified themselves as company
stakeholders by expressing an interest in the
company or concern about its activities.

Stakeholders who are likely to have a big

Reflective Stakeholders Impact impact on a company’s decision making and
potential performance (such as government
regulations and stockholders)

Stakeholders who are identified to make

Inclusive sure that the company’s coverage of
organizational issues is complete and ensure
all social expectations are addressed.

Stakeholders who are able to influence other

Influence stakeholders and the company’s
management and are therefore important to
help reach objectives.

Stakeholders who have particular

knowledge about a company, industry or
Strategic Stakeholders Informative
issues central to performance now and in
the future.

Stakeholders who are themselves highly

informed leaders to the extent that they are
able to identify and comment on future
Inclusive
trends, priorities, and critical events (i.e.,
other business leaders).

Adapted from Creating Business and Social Value: The Asian Way to Integrate CST Into
Business Strategies, by United Nations (UN), Economic and Social Commission for Asia
and the Pacific (ESCAP), 2009, p. 74, retrieved June 25, 2010, from http://www.unescap.
org/tid/publication/indpub2565.pdf

63
 Understanding the impact of stakeholders’ issues and concerns helps MNCs

articulate their values, mission, strategy, and commitments and indicates how they

implement regulatory approvals processes, participation in measurement and reporting,

crises management, and their proactive involvement in their network of relationships (UN

ESCAP, 2009).

Factors Influencing FDI

This section cites research studies that explored the relationship between entry

barriers and foreign direct investment (FDI). Kahler (1983) summarized major strategies

for MNCs entering international markets. The commonly employed strategies are the

following:

1. Foreign licensing entry mode, wherein a firm in one country agrees to permit a

firm in another country to use the manufacturing, processing, know-how and trademark

or other skills provided by the licensor.

2. Joint venture entry mode, wherein an enterprise’s assets are pooled and

wherein shared ownership and control over property rights and operations are shared.

3. Wholly-owned subsidiary entry mode, wherein a company is completely

owned by the parent firm.

4. Turnkey operations entry mode, wherein a contractor handles all the details of

a project and hands over a facility as ready for operation. The contractor agrees to design

and build the physical plant and train local personnel in management of the company’s

processes.

64
 Robock and Simmonds (1989) presented alternative approaches by which MNCs

could penetrate the market. The alternative approaches they outlined dealt with licensing

and full-scale production and marketing. Harrigan (1984) presented another strategy of

entry mode pertinent to strategic partnership or the strategic alliance of two or more

multinationals. This strategic entry mode allows new ventures to combine technologies

and increase research capability, while offering cost reduction through joint production.

According to Business International Corporation (1980), the best choice of entry

mode depends upon both external and internal factors. The external factors address host-

country policies and controls, as well as size of markets and competitive conditions in

foreign markets. Concomitantly, the internal factors are comprised of characteristics-

related technology and products, minimum economic size-to-produce units, and company

willingness to assume risk.

In another study by the National Industrial Conference Board (1962), major

investment obstacles were addressed, such as shortages of managerial level employees,

unsatisfactory employment regulations and tax policies, unstable exchange rates,

inadequate infrastructure, and price controls. The study alluded to the idea that some

investors abandon plans due to lack of skilled labor, although labor is abundant. By

contrast, other investors reported that the low cost of labor compensated for any loss of

productivity due to skill level. According to the World Bank (2006), the Palestinian

territories faced closure policies due to the high cost to foreign investors per transaction.

The closure policies ruled out participation of foreign investment in Palestinian territories

in the following three distinct ways:

65
 1. Workers’ remittance

2. Current movement of goods and services

3. Future capacity to export

The closure policies had their biggest impact in the area of foreign investment.

They prevented producers from attaining minimum efficient scale, increased

transportation and other costs, and limited access to strategic planning, marketing, and

technology transfer mechanisms. All were important concerns and amounted to serious

impediments to the creation of an investment climate that encouraged foreign investment

(World Bank, 2006). Based on the above concerns, the PNA outlined a reform plan for

investment guarantees and incentives for foreign investors. It was derived from the

Investment Promotion Law No. 1 of 1998. The law guarantees foreign investors the

following:

1. The right to freely transfer financial resources outside Palestine, including

profits, capital, dividends and capital profits, wages and salaries, debt payments, interest,

management fees, and compensation for cancellation of licenses.

2. Investment Promotion Law: Article 22 of the Investment Promotion Law,

providing specific fixed asset exemptions (Israel/Palestine Center for Research and

Information [IPCRI], 2009).

According to the International Bank for Reconstruction and Development (IBRD)

(World Bank. IBRD, 2008), assessment of the investment climate in the West Bank and

Gaza identified and addressed three major areas necessary to the creation of an

investment climate to help the Palestinian private sector. These entailed the following:

66
(a) restoring movement and access, (b) developing Palestinian private enterprise

capabilities, and (c) monitoring the performance of the investment climate.

In the article “Businesses for Middle East Peace-Building: A Framework for

Engagement,” Kidder (2006) argued that socially responsible MNCs could leverage their

participation for mutual economic advancement and encourage all sides to cooperate in

business dealings that promoted cross-border knowledge creation along the supply chain.

Kidder added that a carefully crafted coalition of international businesses, NGOs, and

prominent businesses could be organized to improve economic conditions for the two

nations. While the government lacked the financial ability to fund projects, MNCs were

likely to possess the capital required to design projects that were viable for the area.

According to Kidder (2006), the key argument for corporate involvement was the

prospect that significant investment in the region would reap substantial financial returns.

Where socially responsible businesses understood the stakes in creating sustainable

development in the region, there were profits to be made. Kidder added that businesses

wishing to support socioeconomic development could design strategies that ranged from

building and operating manufacturing facilities between the two borders to helping

Palestinians develop cottage industries to provide services, produce products, or assemble

parts for global corporations (Kidder, 2006).

Political Risk Factors and FDI

Schmidt’s research study (1986) explored the impact of political risk on foreign

investment. The study defined political risk as the application of host government

policies that constrained the business operations of a given foreign investor. He

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subdivided risk into three main categories: (a) transfer risk, concerned with capital

payments; (b) operational risk, concerned with threats over local source or content; and

(c) ownership control risk, concerned with the possibilities of expropriation or

confiscation. Kennedy (1988) defined political risk as the risk to strategic, financial, and

social policies or events related to political instability (terrorism, riots, coups, civil war,

and insurrection).

Political risk was a top concern for corporate foreign investors when venturing

into emerging markets (MIGA, 2009). For developing countries, political risk was a

major factor in the investment decision-making of foreign investors (Okoroafa, 1986).

Due to financial crises, market volatility, and shrinking of FDI investment in developing

countries, the prominence of political risk would increase in the coming years.

According to MIGA survey reports, the major constraints to foreign investment in

emerging markets were the following:

1. Increased government intervention

2. Limited market opportunities

3. Infrastructure capacity

4. Access to qualified staff

5. Corruption

6. Access to financing

7. Macroeconomic instability

8. Political risk

Corporate investors who were surveyed for this report ranked political risk among

their top three concerns when investing in developing countries; the other two included

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macroeconomic stability and access to financing (MIGA, 2009). The report cited that

sustained need to manage risk through informal mitigation mechanisms, such as

government and local community intervention, was present. The study suggested that

most investors regarded political risk in their investment destinations as manageable;

however, a much larger proportion of investors seemed to seek political risk insurance

(PRI) when venturing into markets considered the riskiest.

El-Said and El-Hennawi (1982) found that favorable conditions for profit

repatriation and capital had a positive impact on management decisions to invest in

developing countries. In his research The Private Sector and Conflict Prevention

Mainstreaming: Risk Analysis and Conflict Impact Assessment Tools for Multinational

Corporations, Campbell (2002) addressed five main factors that affected the investment

and operational decisions of MNCs. They were as follows:

1. Geographic impact of conflict

2. Severity of conflict

3. Attitudes and policies of the government and opposition

4. Sector of industry

5. Investment structure

According to MIGA (2009), the relationship supported the view between political

risk variables and FDI that multinational companies did take into account political risk in

their investment decisions.

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 Strategy and Social Responsibility

As a strategic concept, social responsibility and ethical values have been

addressed by business pioneers and authors since the 1950s. Bowen published his

influential book Social Responsibility of the Businessman in 1953, marking the beginning

of social responsibility as an entity in academic literature. Bowen explained that social

responsibility referred to the obligation of business people to pursue policies, make

decisions, and follow those actions and objectives that relate to the values of a given

society. Andrews (1971) acknowledged that there was no way to divorce the decision

determining the most sensible economic strategy from the personal values of those who

made the choice. According to Andrews, corporations should act in accordance with

ethical norms that embraced social responsibility as those mores would reflect the beliefs

of societal leaders as to what was right and what was wrong.

Ansoff (1965) also purported that there are non-economic, socially-based

influences that affect the objectives of the firm. These non-economic influences are

comprised of philanthropy, social responsibility, ethics, social status, and reputation.

Ansoff argued that in order to understand these non-economic influences, evaluators and

CSR decision-makers should single out those influences that have strong bearing on the

firm’s objectives and assess the extent of their effects on the master list of the firm’s CSR

goals.

The social responsibility concept has been accepted by many companies, with just

as many critical voices holding forth against it. Friedman (1970) claimed a business

could not have responsibilities: The job of a business executive was to create wealth for

shareholders and do whatever the shareholders wanted, i.e., to make money. Friedman

70
reduced to one the social function of business: to benefit shareholders, but he did not

deny the role of ethics in an organizational operation (i.e., avoid fraud and honor

contracts). On the other hand, Drucker (1984) believed that the first social responsibility

of business was to be profitable and form capital, and the second responsibility of a

business was to transform social problems into economic opportunities. He also claimed

that if the first one was not fulfilled, the second would not be fulfilled either. He argued

that the second social responsibility included turning social problems into economic

opportunities and benefits, productive capacity, human competence, good jobs, and

wealth.

While the notion of corporate social responsibility was abstract and generic when

it began in the 1950s, it began to be replaced by corporate social responsiveness or CSR

(Ansoff, 1984). This raised the questions of whether, how exactly, and with what

consequences companies could and should adapt to specific societal goals (Ackermann &

Bauer 1976; Frederick, 1978). When the concept of corporate social performance (CSP)

emerged, Sethi (1975) differentiated between corporate social performance and corporate

social responsiveness. He argued that behind the idea of social responsiveness was the

concept that businesses must not only respond to but anticipate public concerns.

A comprehensive framework that included corporate social responsibility and

corporate social responsiveness was integrated into the concept of corporate social

performance (Jamali, 2007). In 1979, Carroll differentiated between four types of

corporate social responsibilities: economic, legal, ethical, and discretionary. In 1991, he

revisited this definition of CSR and organized it into a conceptual pyramid of multiple

corporate social responsibilities. He added that economic and legal responsibilities were

71
“socially required” (i.e., mandatory), ethical responsibility was socially expected, and

philanthropy was socially desired. Each of these responsibilities comprised an essential

component of the total social responsibility of the business (Jamali, 2007). Early models

of corporate social performance focused on differentiating between different dimensions

of the CSR concept, such as the prospective, perspective, and dimension content of CSP.

Wood (1991) revised Carroll’s model and looked into previously unexamined aspects of

corporate responsible behavior. She differentiated CSP into principles and processes,

where CSR was expected to create positive outcomes through socially responsible

behavior:

1. Principles of corporate social responsibility, including legitimacy (on the

institutional level), public responsibility (on the organizational level), and managerial

discretion (on the individual level).

2. Processes of corporate social responsiveness, such as environmental

assessment, stakeholders’ management issues.

3. Outcomes of corporate behavior, ranging from social policies and social

programs to social impacts.

According to the Rhetoric and Realities in CSR (RARE) (2005) project approach

to analyzing CSR in Europe, two different forms of CSR processes exist (p. 18). RARE

holds that the two legs it forms of CSR are the “built-in” and “bolt-on.” When CSR is

“built-in,” it constitutes an integral part of the company’s operations and includes efforts

to (a) make corporate processes more sustainable; (b) improve the social properties of

products and services; (c) promote sustainable marketing; (d) manage raw material

extraction and “greening” of material sources; (e) create sustainable production and

72
distribution processes; and (f) promote fair trade practices and consumer information and

compliance with ILO labor standards, including the renunciation of child labor. The

instrument of CSR is defined as a tool to facilitate the incorporation of sustainability

concerns into a company’s operation.

On the other hand, when CSR is “bolt-on,” companies engage in socially

beneficial initiatives and activities beyond their core business operations by collaborating

with external stakeholders to integrate the objectives of the company as part of their

mission statement.

Other authors detailed economic and environmental outcomes and impacts into

their analysis that extended far beyond the social ones (Steg et al., 2003; Swanson, 1995).

The Triple Bottom Line approach, where a firm’s performance is measured by not only

its financial results but also its societal and environmental impact, is one of the firm’s

accountability paradigms to consider (Elkington, 1998). On the other hand, the

stakeholder theory made an important contribution to CSR discourse by challenging the

stockholder paradigm made famous by Milton Friedman (1970), who considered the

maximization of financial returns to stockholders a major social responsibility of a

company. According to Freeman (1984), putting the stakeholder theory into practice is

the most responsible and effective management of any company, as it requires balanced

consideration and attention to the legitimate interests of all stakeholders.

Based on these doctrines of what constitutes good management behavior, a

growing number of business experts have begun to argue that profit and social good can

be integrated into a company’s mission. The business will “do well by doing good”

through innovating practices and products aimed at improving the lives of the world’s

73
poorest citizens. In a 2002 article on strategy and business titled “The Fortune at the

Bottom of the Pyramid,” Prahalad and Hart argued that real opportunities for both profit

and socially responsible investment lay in the 4 billion people at the bottom of the

economic ladder. Tapping into this market, they argued, would require multinational

corporations to reconsider their existing profit structures. Further, they stressed that the

bottom-of-the-pyramid markets ought to become part of a firm’s core business, and these

markets could not be left solely to corporate social responsibility (CSR) initiatives that

were after the fact.

Strategic Corporate Social Responsibility (CSR)

Multinational companies face massive challenges in their business operations, a

number of which are classified under “sustainable development.” Based on the literature,

there is an increasingly intense expectation that businesses could contribute to sustainable

development by changing their strategies and decision-making processes with regard to

socially responsible practices. The United Nations Conference on Environment and

Development (UNCED) (1992), also known as the Earth Summit, which took place in

Rio de Janeiro, Brazil, discussed solutions for global problems pertaining to sustainable

development, such as poverty, war, and preservation of natural resources. The

conference stressed that multinational corporations can play a role in the preservation of

natural resources by taking effective measures to prevent environmental degradation. For

example, the Organization for Economic Cooperation and Development (OECD) (2006),

an organization that acts as meeting grounds for 30 countries, proposed guidelines

pertinent to the disclosure of information, employee relations, environmental

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management, and bribery and competition, and then endorsed comprehensive self-

policing rules to investigate violations of these rules.

Gugler and Shi (2008) addressed corporate social responsibility for developing

multinational corporations in developing regions and explored the practical gap between

them and the developed countries in relation to CSR. They concluded in their study that

corporations ought to instigate innovative restructuring processes and technological

upgrades in order to enhance productivity and efficiency. These upgrades compensate

for the initial costs of such innovations and lead to competitiveness; hence, CSR becomes

strategic in nature. The Global Competitiveness Report confirmed that CSR is an

important component of a firm’s sophistication (World Economic Forum [WEF], 2006).

One of the well-known pioneers in strategic CSR is Michael Porter. His studies

were the first to link CSR and the profitability potential of companies that interlaced

social goals with financial ones. Porter and Kramer (2006) wrote that for CSR to be

strategic, it should contribute to the firm’s value chain practices and/or improve the

context of competitiveness. Porter (1990) identified 10 cost drivers vital to value chain

activities. Some of these drivers are economies of scale, capacity utilization, and the

firm’s policy of cost differentiation, wherein a firm develops its cost advantage by

controlling these drivers better than its competitors. According to Porter, two dimensions

for competitiveness should be addressed: a macroeconomic dimension that deals with the

political, legal, and social context of generating prosperity; and the ability of a firm to

create valuable goods and services using efficient methods. Porter added that the

microeconomic foundations of productivity rest on three interrelated areas: (a) the

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sophistication of, (b) the capabilities of, and (c) the quality of the microeconomic

business environment in which they operate.

Burke and Logsdon (1996) explored what it means for CSR to be strategic. They

conceptualized five dimensions of strategic CSR that represent possible features, results,

and outcomes from CSR behavior: (a) centrality, (b) specificity, (c) proactivity, (d)

voluntarism, and (e) visibility. They postulated that CSR activities are of strategic

importance to the firm, and CSR initiatives should satisfy the criteria of the dimensions

presented as follows:

1. Centrality: Strategic CSR initiatives should be close to the firm’s mission and

objectives and linked with organizational goals to yield expected benefits.

2. Specificity: Strategic CSR initiatives are expected to be designed specifically

to benefit the firm and should be able to capture and assimilate benefits from CSR

initiatives concerned with social and environmental issues.

3. Proactivity: Strategic CSR initiatives should anticipate the dynamics of

stakeholders’ expectations of changed socioeconomic, political, and technological trends

and opportunities. Pro-activity refers to the propensity of a company to take measures in

advance to counter future social and environmental issues.

4. Voluntarism: A strategic CSR initiative denotes the willingness to engage in

pro-active social responsibility.

5. Visibility: A strategic CSR initiative refers to the extent to which internal and

external stakeholders can view and recognize CSR.

Porter and Kramer (2006) addressed the link between competitive advantage and

the corporate social responsibility (CSR) to embed a social dimension into the core

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business strategy. They offered inside-out and outside-in approaches to map the social

impact of the value chain and shift from reactive-defensive posture to a proactive-

integrated posture. This would help to identify positive and negative social impacts in

the value chain process. These inside-out links might range from hiring policies, layoffs,

and health benefits to employee retention. In addition to understanding the social

ramifications of the value chain, effective CSR requires better understanding of the

company’s competitive context to improve productivity and execute strategic CSR.

According to Porter and Kramer (2006), responsive CSR depends on addressing

the social harm the business creates. They argued that companies should address social

harm issues and capture opportunities that make real differences to society by integrating

them into their core businesses. According to RARE (2005), management carries out a

strategic approach when companies proactively integrate sustainability management

issues into their operations.

The need to focus on CSR in developing countries has been strenuously debated.

Visser (2007) questioned the role of business in tackling these critical issues and the

rationale for focusing on CSR in developing countries. These countries potentially have

rapidly expanding economies and represent lucrative growth for business (IMF, 2006),

where globalization, economic growth, investment, and business are likely to have the

most dramatic social impacts (United Nations Development Programme [UNDP], 2006;

World Resources Institute [WRI], 2005) and where a distinctive set of CSR challenges

face these countries.

London and Hart (2004), in their article “Reinventing Strategies for Emerging

Markets: Beyond the Transnational Model,” suggested that firms entering the markets of

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developing countries might not be able to rely on strategies that are, like traditional

models, based on overcoming limitations in the business environment, but rather are

based on social context. They recommended that multinational companies reinvent their

strategies by developing relationships with host countries.

Porter and Kramer (2011) wrote that the most important thing a corporation could

do was to contribute to a prosperous economy because with that contribution, the

corporation could change the state of affairs with regard to social welfare. Porter and

Kramer added that CSR was not about making philanthropic contributions to local

charities or lending a hand during disasters, but about efforts to find shared values in

operating practices and in the social dimensions of the competitive context. They added

that NGOs, governments, and companies must stop thinking in terms of corporate social

responsibility and start thinking in terms of corporate social integration, which fosters

economic development; the difference in the former is about periodic social rescue and

the latter is about being a constant, reliable, big-picture presence.

Proactive and Reactive Corporate Social

Responsibility (CSR)

The United Nations Research Institute for Social Development (UNRISD) (2008)

proposed four CSR approaches: (a) in-active, (b) reactive, (c) active, and (d) pro-active

(cf. Preston & Post, 1975; Tulder & Zwart, 2006). The continuum of CSR business

strategies was conceptually related to what was required and what was desired, or

between the “morality of duty” and the “morality of aspiration” (Michaelson, 2006). The

four approaches are summarized herein:

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 1. The in-active approach reflects the classical notion of Friedman that the only

responsibility companies can have is to generate profits. This is an inward-looking

(inside-in) business perspective. The firm’s behavior is concerned with “doing things

right.” CSR thus amounts to “Corporate Self Responsibility.”

2. The re-active approach focuses on efficiency but with particular attention to

the mitigation of wrong-doings. This approach requires an outside-in orientation. It aims

at minimizing any economic impact, bad labor conditions, corruption, human right

abuses, and the management of primary stakeholders. Management in this case takes the

reactive approach to protect the firm’s reputation and restore corporate legitimacy (Lodge

& Wilson, 2006). CSR thus translates into “Corporate Social Responsiveness.”

3. An active approach to CSR is inspired by ethical values and virtues.

Management’s perspective is strongly outward-looking (inside-out), with a premium on

positive contribution to societal good and substantial philanthropic initiatives as an

integrated core activity. For instance, companies create jobs with appropriate wages,

which in turn helps to alleviate poverty in order to penetrate new markets. CSR takes the

form of “Corporate Social Responsibility.”

4. The pro-active CSR approach is characterized by interactive business

practices, where the management involves external stakeholders’ rights from the

beginning of an issues life-cycle. The “inside-out” and the “outside-in” approaches

define trends, threats, and opportunities in and to the firm’s business environment

(Ansoff & McDonnell, 1990). This form of corporate social responsibility creates

strategic networks of entrepreneurial partnerships between government organizations,

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NGOs, civil society social organizations, and local business enterprises. The CSR

approach implies medium-term profitability and long-term sustainability.

Tulder and Zwart (2006), in their book International Business-Society

Management: Linking Corporate Responsibility and Globalization, discussed “linking

social responsibility” and listed four approaches that a company could adopt when

responding to management issues. They suggested that the occurrence of events to be

managed was bound to context and time: that which could be considered a problem in

one societal system might not be a problem in another societal setting or another moment

in time. They added that an MNC’s management should diagnose the environment based

on “inside-out” and “outside-in” approaches and proactively respond to societal

challenges through dialogue with stakeholders.

In the case of sustainable development in Palestine, the drivers for CSR are needed

for political stability, socioeconomic priorities, and governance. This is where an MNC

with stakeholder engagement can take leadership in the definition of the societal needs

pertinent to its location in Palestine through a social agenda that is part of the core

business strategy. With a substantially responsive CSR program, a company chooses to

be a good corporate citizen and serve social concerns for stockholders, and it might help

mitigate existing or anticipated adverse effects from its business activities along with its

value chain. Porter and Kramer (2006) proposed a framework that could help companies

strategize societal concerns that fall into three categories:

1. Generic issues that are important to society but either could affect the

company’s operations or influence their long-term profitability.

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 2. Value chains that are significantly affected by the company’s activities in the

ordinary course of business.

3. The social dimensions of a competitive context that relates to the external

environment, which would affect the underlying drivers of competitiveness in locations

where the company operates.

There is an increasing political and business debate about a proactive role for

companies, governments, and communities wherein they would mutually develop a

process aimed at balancing economic growth with environmental sustainability and social

cohesion. According to the World Business Council on Sustainable Development

(WBCSD) (2010), the new meaning of corporate social responsibility embraces the

integration of social and environmental values within a company’s core business

operations, with engagement of its stakeholders in the process, to improve the welfare of

societies.

From a business perspective, CSR has different meanings depending on the

MNC’s strategic behavior in terms of forming its responses to its environment. In this

research, CSR is defined as a means to respond to sustainability challenges. Ansoff and

McDonnell (1990) postulated that an MNC’s strategic behavior could take the course of

either a responsive-reactive or a strategic-proactive way to respond to the environment

based on its turbulence level. In the responsive-reactive approach, companies perceive

sustainability issues as risks that should be mitigated to maintain the firm’s reputation for

appropriate behavior and be worthy of its license to operate. On the other hand, when

companies proactively integrate a strategic issue management system into their

operations, management would perceive it as an opportunity rather than a risk to their

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reputation or operations. The strategic and systematic integration of CSR into the

company’s strategy allows companies to respond to societal needs while satisfying

company and stakeholder financial goals. From the perspective of stakeholders,

proactive CSR can be viewed as a specific form of socioeconomic relationship wherein

social and financial goals are negotiated in an ongoing way between the company and its

stakeholders (Ansoff, 1984). According to Porter and Kramer (2006), companies should

design their affirmative corporate social agenda to extend beyond harm avoidance to

embrace programs for social progress.

According to Kidder (2006), a carefully crafted coalition of international

businesses, NGOs, and prominent businesses could be organized to improve economic

conditions for the two nations (Israel and Palestine), irrespective of the political conflict

shadowing the region. The Palestinian-Israeli business region is ripe for such socially

responsible behavior, where MNCs could have significant impact through pro-social

programs. Such programs would create jobs, lower despair, reduce tension, and promote

stability in the region. Kidder argued that socially responsible MNCs could leverage

their participation for economic advancement and encourage Palestinians and Israelis to

cooperate in business dealings to promote cross-border cooperation along the supply

chain. He supported partnerships for manufacturing, development of cottage industries to

provide products and services, and creating micro-lending enterprises for local

entrepreneurs to promote economic growth and create jobs as a form of sustainable

development in Palestine.

The case of the National Beverage Company (NBC), a local franchise of Coca-

Cola and one of the few franchises of a foreign multinational with a branch in the West

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Bank/Gaza, exemplifies a corporate social responsibility initiative in practice. A report

conducted by Harvard’s Kennedy School, entitled the Harvard Kennedy School:

Corporate Social Responsibility Initiative: Business Partnership for Development: The

Case of National Beverage Company in the West Bank and Gaza (Murphy & Nelson,

2009), detailed NBC’s contribution to local sustainable development in Palestine.

Specifically, it discussed the company’s contribution to job creation, investment in

human capital, the production of safe and affordable products, their support of local

enterprise development, and, mainly, their ability and willingness to sustain operations in

a conflict-affected zone. The report also advocated the development of partnerships of

this pro-social nature between other additional local corporations, NGOs, local and

international donors, and government. Again, the alliance is formed around a

combination of financial strategies and programs for social good that benefit the

community.

Complex and constantly changing, the situation on the ground poses both

challenges and opportunities for companies seeking to do business in Palestine. Despite

the business climate shaped in part by political instability, weak institutions, security

concerns, challenged access to resources, and restrictions on the movement of people and

goods, a number of private firms achieved financial success and, in parallel, facilitated

local development outcomes through innovative strategies. Murphy and Nelson (2009)

emphasized that supporting the creation and growth of enterprises could bolster

employment and build local capacity, both essential to the development of a private

sector and to the strength of a community.

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 Micro-enterprises are those with four or fewer employees, as defined by the

World Bank (2009b). They are informally organized or firm-owned businesses, and they

number around 110,000 in the area around Palestine. The employment impact of NBC

on the community seemed to have made a blueprint for other companies to follow, with

NBC’s outright employment of 350 and an indirect employment of 3,000 more in the

company’s three Palestinian plants. On the other hand, the United States Department of

State (2008), in its West Bank and Gaza Investment Climate Report (Murphy & Nelson,

2009), indicated that the Israeli-Palestinian conflict, coupled with internal Palestinian

issues, had a significant negative impact on the development of the Palestinian economy.

The restricted transport of goods and people raises transaction costs and limits economies

of scale for firms operating in Palestine. For instance, because of check-point

restrictions, NBC’s logistics cost is reported to be three times that of other bottlers in the

Middle East.

To respond to challenges regarding product safety and sustainability in its value

chain, NBC was able to implement Coca-Cola quality control global standards and

processes for the production of safe and affordable products. NBC was able to secure

and execute more than 30 monitoring programs along its production lines that included

daily testing of physical, chemical, and microbiological conditions, thus transferring

technical knowledge to local managers. The company invested in local consumer

research that led to the introduction of new products, including water and juice that are

more affordable. NBC decreased production cost-per-case by an average of 25% due to

efficiency practices and innovations in manufacturing and logistics and by fleet updating.

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NBC responded to the challenges of closure policies to create distribution by innovating

along its supply chain.

The company employed satellite depots outside main cities that could respond to

changes in road blocks and delivery routes and that further maintained drivers’

autonomy. These measures improved the bottom line and enabled the company to serve

consumers and thus sustain employment. The company increased the heights of its

warehouses to allow for stockpiling, which is better utilization of storage space, and built

its own water wells to maintain operations in a region where water is scarce. According

to the Harvard Kennedy School report (Murphy & Nelson, 2009), NBC is one of the

smallest of Coca-Cola bottlers in the Middle East and the most profitable. NBC’s

profitability and financial success demonstrate that it is possible to be financially

successful under these challenging conditions in Palestine and yet respond to societal

needs to support local economic and social development.

NBC’s corporate social responsibility initiative is a prime example of the “built-

in” and “bolt-on” processes as legitimate forms of CSR. Where CSR is “built-in,” NBC’s

efforts make processes more sustainable, improve social properties, and promote

sustainable marketing, sustainable resource management in raw material extraction, and

the greening of sourcing decisions, as well as production and distribution processes

resulting in success on all the important levels. The company supported philanthropic

activities to meet local humanitarian needs, developed local human capital by focusing on

training and vocational programs, provided benefits and incentives for its employees,

paid employees in Gaza irrespective of their ceased operation, and provided equal

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opportunity for women. The instrument of CSR was defined as a tool to facilitate the

incorporation of sustainability concerns into a company’s operation.

On the other hand, where NBC’s CSR policies were “bolt-on,” the company

engaged in socially beneficial initiatives and activities beyond its core business

operations by cooperating and collaborating with external stakeholders. Murphy and

Nelson (2009) stated that lack of access to capital is one of the most difficult issues

facing Palestine, and this lack of access is due in large part to the struggles MNCs face

when attempting to establish branches in undeveloped, strife-torn countries.

To combat reluctance of investors to put financial resources in unstable regions,

aid agencies and private investors have created programs to reduce political risk and

uncertainty. For instance, in partnership with the non-profit Middle East Investment

Initiative (MEII), the Overseas Private Investment Corporation (OPIC) established three

initiatives to leverage public and private funding. These initiatives established a political

risk insurance policy that covers losses from trade disruption and political violence and a

loan guarantee program for increasing access to affordable home mortgages. According

to the Palestinian Reform and Development Plan, the private sector is the engine for

sustainable development and a critical source for the stable employment that is the

foundation of a productive economy in the West Bank and Gaza (2008-2010).

To conclude, this study investigated the role of multinational companies in

sustainable socioeconomic development in Palestine. It explored the role of

multinational corporations in the socioeconomic welfare of their host countries, as

evidenced by their corporate social responsibility policies.

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 Chapter 2B

RESEARCH MODEL AND SUPPORTING

LITERATURE

This chapter presents the research model and a literature review. The research

questions and associated hypotheses, as well as conceptual and operational definitions of

the variables relevant to the research study are also provided. The primary framework of

this research study was based on Dr. Igor Ansoff’s Strategic Success Paradigm and on

Michael Porter’s Corporate Social Responsibility Strategy Integration and Stakeholder’s

models.

Research Model

Generally speaking, a multinational corporation’s social responsibility program

should be an integral part of the overall strategic management of the organization. The

research model was identified as part of the Global Model shown in Figure 8 and

illustrated the close relationship between legitimacy and social responsibility programs.

The legitimacy strategy is based on the stakeholders’ intent to provide a bargaining

approach to deal with environmental needs and to define the preferred objectives of the

firm by way of pro-social activities. Corporate social responsibilities (CSRs) are the

result of the constant interplay between the needs of the business and its stakeholders and

the needs of the society in which the company operates, in this case, a “host country,”

87
where ostensibly the culture and everything that springs from it is different from the

country where the company is headquartered.

Based on an MNC’s perception of turbulence, a range of strategies exist from

which the firm can select to overcome the turbulence and even thrive as the turbulence is

embraced. The success of the CSR strategy depends on the internal CSR capabilities of

the firm, which are functional, such as research and development, marketing, production,

or general management capability. As the environmental turbulence level changes

quantitatively and qualitatively, so does the firm’s strategy—capability couplings have to

change to fit the turbulence level for optimal organizational performance.

The research model reflects MNC strategy “aggressiveness” and MNC capability

“responsiveness,” both of which influence the strategic CSR posture of the MNC. The

research model describes two gaps, the MNC strategy aggressiveness gap and the MNC

capability responsiveness gap. These are defined respectively as the difference between

the perceived level of environmental turbulence and the reactive-to-proactive nature of

MNC CSR posture to MNC activities. This study hypothesized that as the absolute value

of MNC strategy aggressiveness gap decreased, performance of the MNC increased.

Similarly, as the absolute value of MNC capability responsiveness gap decreased,

performance of the MNC increased. The MNC CSR strategic posture is, then, theorized

to have a significant relationship to the overall performance of MNC.

This research aimed to answer some fundamental questions regarding the needs of

the Palestine region in terms of business development in the 21st century. It also aimed to

provide a very current picture of why the area is ripe for CSR policy and why and how

88
multinational companies that move into the market there can enact change that will be

both good business and good corporate social behavior.

The social, political, and business environment in Palestine is characterized by

instability and severely challenged socioeconomic development that influences every

facet of MNC strategic behavior, from stakeholder relations to human resources to

environmental impacts. The region has seen the frequent, unpredictable, and surprising

occurrence of uprisings and blockades that make the business environment complex,

constantly changing, and volatile. The level of environmental turbulence in the West

Bank/Gaza region is reflected in the complexity of the business environment. Change is

often reactive rather than proactive due to the constancy of chaos. Successful, that is,

proactive rather than reactive, corporate responsibility strategy requires its integration

into MNC’s core business strategy. Multinational corporations’ responsibilities (CSRs)

are illustrated in Figure 11, The Research Model, below.

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Figure 11. The research model.

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 Strategic Success Paradigm

Ansoff and McDonnell (1990) formulated the Strategic Success Paradigm (SSP)

to define the relationships between a firm’s performance and its environmental

turbulence and between strategy aggressiveness and capability responsiveness, as they

ultimately relate to strategic posture. The Strategic Success Paradigm provides a

framework for diagnosing the future prospects of a given firm. This model has been

empirically validated through the work of several authors, including Lewis (1989),

Moussetis (1996), Abu-Rahma (1999), Lorton (2006), Kelly (2008), and Loebbaka

(2008). This research study evaluated the role of sustainable corporate social

responsibility programs (CSRs) as related to Ansoff’s Strategic Success Paradigm.

MNC Issue Turbulence

The level of “environmental turbulence” describes the types of opportunities,

threats, and trends in the environment that an MNC faces in its international operations.

Palestine is characterized by, and encumbered by, a small market and an uncertain

political and business environment, which creates multifaceted threats, surprising trends,

and bountiful opportunities. MNCs must vigilantly watch and measure these conditions

for relevance to their processes and policies. On the other hand, the continuation of

violence, border crossing, and security procedures all hamper the free movement of

goods and people. Consequently, MNCs require review of their economic viability, as

well as their political risk, such that they protect their FDI.

There are also important issues that must be resolved by the Palestinian Authority

(PA), such that MNCs continue to attract FDI and to promote a confident investment

91
climate. In addition, there are key national priorities that the PA outlines in its PRDP

plan that promote a viable climate for investors. These are comprised of contingencies,

such as (a) bringing the rule of law to the Palestinian territories, (b) combating violence,

(c) managing the Palestinian internal administrative affairs, (d) implementing institutional

reforms, and (e) developing a supportable infrastructure and economy.

According to Ramirez, Selsky, and Heijden (2008), CSRs serve as a platform for

common grounds where organizations and their stakeholders can realize both their

corporate objectives and societal needs. Their findings suggested that turbulence might

be mitigated with the help of CSR, if CSRs were implemented in a manner that ensured a

positive, stabilizing influence. Ramirez et al. added that stakeholders used the channels

of CSR to promote their societal objectives. For instance, stakeholders might exert

influence on the firm from within, influencing investors in socially responsible

investments (SRIs). Employees might exert pressure on the firm for better working

conditions and better pay. Non-governmental organizations (NGOs) might exert pressure

on the firm that challenges corporate legitimacy through boycotts. Society at large might

exert pressure in one form or another, if the members’ interests were not taken up

adequately by the political system.

The delivery of shareholder value, while also promoting societal value for doing

well while doing good, is a desirable scenario for businesses in developing countries. In

developing countries, CSRs tend to be weak, with serious macroeconomic constraints

that might concentrate company attention onto issues of basic viability and on securing

shareholders’ returns (Jamali, 2007). To respond to high levels of turbulence in the

environment, Ansoff and McDonnell (1990) developed a “real time” issue management

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response system to deal with fast-moving discontinuities that surface and affect a firm’s

ability to operate. This issue management system helps organizations rapidly detect and

respond to changes in the socio-political environment as they emerge. The turbulence

characteristics of these trends may crystallize into an issue that elicits the attention of

organizational management and stakeholders, such that leadership decision-making

processes get underway. The characteristics of MNC environmental turbulence presented

in Table 5 are drawn from Lorton (2006) and Loebbaka’s (2008) environmental

management systems dissertations and Ansoff and McDonnell’s Strategic Success

Paradigm. The five levels of MNC issue turbulence correspond to the spectrum of

strategic behaviors that are applicable to this research study.

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Table 5

MNC Issue Turbulence

Level 1 2 3 4 5

Turbulence Repetitive Expanding Changing Discontinuous Surprising

Characteristics

Complexity of Not at all Slightly Moderately Usually very Always

Issues complex complex complex complex highly
complex

Pace of Rare Time to Must respond Must catch up Always

Change respond quickly to change changing

Predictability Changes are Easily Usually Predictable, Unpredictable

of Change rare predictable predictable but some
surprises

The complex way organizations understand themselves in relation to stakeholders

sometimes requires major transformations with respect to policies and, in this case, to

policies specific to sustainable development (D’Amato, Henderson, & Florence, 2009).

According to Berkhout (2005), corporate social responsibility can be a strategic engine

for long-term corporate profit and responsible social development, even where there are

complex, dire issues to be dealt with. While there are challenges to daily operations

under the principles of CSR, companies can still balance their social and environmental

responsibilities with their responsibility to earn a profit (Berkhout, 2005).

To date, there has been little discussion about transformational efforts to build an

MNC role in sustainable socioeconomic development around the world (Boyle &

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Boguslaw, 2007). This research, which studied the role of MNCs in sustainable

socioeconomic development, specifically in the troubled region around Palestine, is

unique as it hypothesized strategic CSR integration with core MNC business strategies

with the larger goal of creating sustainable development that further leads to a secure,

peaceful, sustainable world.

MNC Strategy Aggressiveness

This study examined the advantages of integrating strategic CSR into a firm’s

core business strategy. Successful corporate responsibility involves policy development

between an MNC and its stakeholders. The CSR management system aggressiveness

concept represents the mindset that MNC managers conceive to enact an overall CSR

perspective more strategically into their business operations. To not do so, for instance,

failure to satisfy consumer demands or provide acceptable pricing for safe products,

affects consumer confidence. To counter this requires organizational capability

responsiveness that meets the changing demands of various stakeholders, as well as

consumers. According to Clarkson (1995), an organization’s capability of satisfying

stakeholders’ demands is a key factor that determines the organization’s competitive

advantage.

Process Dimension of CSR “Built-in” and “Bolt-on”

According to the RARE project’s Rhetoric and Realities: Analyzing Corporate

Social Responsibility in Europe, CSR sustainable management systems take two different

forms: the “built-in approach” and the “bolt-on” approach. The “built-in approach” deals

95
with building responsible behavior into the process. In addition, it includes efforts to

make corporate processes more sustainable, thereby improving the social properties of

the products and services tailored to host countries. Specifically, it strives to promote

sustainable consumption, sustainable extraction of raw material, greening of production

and distribution processes, fair trade practices, and consumer information. Additionally,

it works to enforce compliance with ISO 26000 guidelines for corporate social

responsibility with respect to human rights and with the ILO’s labor standards, especially

as regards renunciation of child labor, and it supports efforts to increase women’s

participation on different management levels. Through a CSR management system,

“change management” becomes an integral part of a firm’s strategic posture and can

create a bottom line impact.

The second form, the “bolt-on” approach, deals with company engagement with

pro-social initiatives beyond its core business operations and strategically can be linked

to the scope of business as the very raison d’être of the company. It is comprised of

strategic philanthropic activities, partnerships, and, most importantly, policies to manage

negative externalities in cooperation with external stakeholders.

The two processes can be considered as a continuum with management systems

“building in” responsibilities beyond compliance with regard to both goals and measures

followed by codes of conduct and reporting activities, while contributing at the same time

to sustainable development. The CSR management system aggressiveness requires that

the firm’s top management craft a CSR plan to transform the firm’s behavior. The

elements that contribute to CSR sustainable management system aggressiveness are

derived from the elements of strategic aggressiveness in Ansoff’s Strategic Success

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Paradigm (Ansoff & McDonnell, 1990). Table 6 summarizes the five levels of CSR

management system aggressiveness that correspond to the five levels of MNC issue

turbulence.

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Table 6

CSR MNC Management System Aggressiveness Verses MNC Issue Turbulence

Turbulence Level

1 2 3 4 5

Turbulence Static/ Repetitive Slowly changing Rapidly changing Discontinuous Surpriseful

Characteristics

CSR Company Fiduciary duty Corporate Corporate communications Strategic issue management Strategic CSR
Approach management reputation Business ethics leadership
Profit Philanthropy Strategic philanthropic
Maximization Public affairs Corporate identity activities
Public relations

CSR Stakeholder Stakeholder Stakeholder Stakeholder dialogue and Interactive strategic Partnerships and
Approach information with debate informal contacts stakeholder dialogue alliances
no interaction

Use of Technologies Use only current Adapt to new Implement Implement Seek novel
existing technologies and periodic/incremental continuous/incremental technologies
technologies quality control technologies creative technologies
management
systems

(table continues)

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Table 6 (continued)

Turbulence Level

1 2 3 4 5

Change Management Reject change and Welcome change Adapt to change for new Change for potential risk and Integrate creative
seek stability for existing CSR instruments opportunity change
instruments

Maintain Strategic CSR as

Maintain profit Strategic issue management
CSR Strategy Maintain CSR financial a form of
maximization with limited and strategic philanthropic
Integration Mindset strategy isolation responsibility to engagement with
philanthropic activities activities
shareholders stakeholders

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 CSR Capability Responsiveness

CSR management system responsiveness represents the ability of the CSR

management system to respond to stakeholders’ demands regarding societal needs while

optimizing the MNC’s economic performance. Ansoff and McDonnell (1990) defined

the general management capability of an organization as consisting of two key factors,

the capabilities of the general managers and the capabilities of the management

organization. According to Ansoff and McDonnell, levels of strategic aggressiveness and

capability responsiveness appropriate to the level of environmental turbulence are

required for business success.

Basically, the CSR management system represents the capabilities of the top

management to craft the CSR initiatives. This includes the formation of a socially

diverse CSR team that represents different departments. Such a team makes clear the

organizational mindset and goal-setting, which can then implement state-of-the-art

technologies and maintain continuous knowledge of globally, accepted CSR instruments.

D’Amato, Henderson, and Florence (2009) cited that leadership competencies included

courage, business acumen, and a vision of the company’s legacy. They added that a

leader should be remembered as a person who designed, not just a company, but a society

that is educated and economically sustainable.

Ansoff and McDonnell (1990) stressed that business strategy should be aligned

with organizational strategy. Based on this concept, sustainability and CSR should be

aligned and integrated with organizational business strategy. The design structures and

systems should address sustainability and CSR societal needs, implement CSR change

management, overcome organizational resistance to change, empower team engagement

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with stakeholders, and support performance to build a new culture to support the CSR

implementation process.

The hypothesis presented in this research was that MNC performance was

optimized when MNC strategy aggressiveness and MNC capability responsiveness were

aligned with MNC issue turbulence. In the research model, the difference between MNC

issue turbulence and MNC strategy aggressiveness was named MNC strategy

aggressiveness gap. Similarly, the difference between MNC issue turbulence and MNC

capability responsiveness was named MNC capability responsiveness gap. The research

model also indicated the CSR strategic posture reflecting the influence of MNC issue

turbulence, CSR management system aggressiveness, and CSR management system

responsiveness for MNC CSR continuum.

Table 7 outlines the five levels of CSR management system responsiveness that

correspond to the five levels of MNC issue turbulence.

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Table 7

CSR MNC Management System Responsiveness Verses MNC Issue Turbulence

Turbulence Level

1 2 3 4 5

Turbulence
Static/Repetitive Slowly Changing Rapidly Changing Discontinuous Surpriseful
Characteristics

No commitment to
Focuses on risk Creates awareness Creates new form of
Top Management address CSR issues Implements CSR
mitigation and harm and understanding of engagement with
Involvement in CSR Political change management
avoidance CSR issues stakeholders
Public relations

Charismatic and
Leadership Skills Political
transformational

Forms cross-
Explores CSR added Plans for new CSR Acts as CSR agents
Primary roles and functional CSR
CSR Team roles and roles and to implement change
responsibilities teams within
responsibilities responsibilities management
departments

(table continues)

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Table 7 (continued)

Turbulence Level

1 2 3 4 5

CSR Policies, CSR policies,

Programs, Policies, programs standards, and
International and standards are not programs are
Standards, and part of organization formalized to
Guidelines stakeholders

Staff Knowledge of Expert Knowledge of

Effective knowledge
CSR Policies, Knowledge of Some knowledge of Moderate knowledge new CSR policies,
of CSR policies,
Programs, existing internal CSR policies, of CSR policies, programs and
programs, and/or
International policies programs and/or programs, and/or international
standards
standards and/or standards/guidelines standards/guidelines standards and/or
and guidelines
Guidelines Guidelines

Seek novel and

Reject Accept familiar risks Seek familiar risks Seek unfamiliar risks
CSR Risk Propensity creative risks and
and opportunities And opportunities and opportunities
opportunities

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 CSR Management System Strategic
Posture

Ansoff and McDonnell (1990) referred to the combination of the firm’s strategic

aggressiveness, its capability responsiveness, and its change management as the

“strategic posture” of the firm. The strategic posture of the firm is derived through

diagnosing the future levels of environmental turbulence and the desired strategic

aggressiveness and capability responsiveness of the firm, based on the gap analysis

approach. They stated that the outcome of the gap analysis and the closure of these gaps

are the basis for implementing change management and further establishing the strategic

aggressiveness and general management responsiveness required for optimum

performance. According to Ansoff and McDonnell, the general management capability

responsiveness includes the general management and the supporting organization. The

closure of the gaps in general management capability responsiveness that supports

strategy aggressiveness requires significant change in organizational behavior in order to

overcome resistance (Ansoff & McDonnell, 1990).

Table 8 depicts the attributes of general management capability.

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Table 8

The Attributes of General Management Capability

Attribute Managers Organization

Climate Mentality Culture

Will to Respond Power Position Power Structure

Competence Talents Structure

Ability to Respond Skills Systems
Shared Knowledge

Capacity Personal Organizational

Volume to Response

Based on research of Palestine, the drivers of CSR include the following: (a)

socioeconomic priorities, (b) governance gaps, (c) market access, (d) political stability

and reform, (e) investment incentives, (f) supply chain factors, (g) stakeholder activism,

and (h) international standardization. The firm’s CSR strategic posture should

specifically target the impact of the MNCs’ activities in the workplace; that is, labor

standards, human resources, organizational development, and the marketing that defines

the MNC to its customers, including product manufacturing and quality, distribution

access, and selling practices should be transparent to employees, as should concerns

about the sustainability of company technologies. The CSR should address the

socioeconomic development challenges facing Palestine. This would include generating

employment to alleviate poverty; capacity building; health-care provision; infrastructure

development; peace-building; helping to rebuild weak government institutions; political

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reforms; and human rights, as well as challenging governance gaps regarding social

services and anti-corruption issues.

Prahalad and Hart (2002) argued that companies could assume this role based on

CSR and bottom-of-the-pyramid strategies. The International Standard Organization

(ISO) 26000 guidelines set forth general principles regarding utilization of “outside-in”

and “inside-out” frameworks that strategically position organizations in the marketplace

and map the social impact of the value chain (Porter & Kramer, 2006).

According to ESCAP (2009), the following three components maintain corporate

sustainability:

1. Economic sustainability, where companies must guarantee sufficient cash flow

to ensure liquidity and above-average returns for their shareholders.

2. Environmental sustainability, where socially responsible businesses do not

engage in activities that degrade ecosystems.

3. Social sustainability, where company operations not only depend on financial

and natural resources but also on social resources such as human capital.

The human capital aspect is concerned with skills, motivation, loyalty of

employees, and business partners. Social capital also includes quality of public services,

the education system, infrastructure, and a supportive entrepreneurial culture.

ESCAP (2009) further outlined CSR approaches to achieve sustainability in a

five-fold process:

1. Adopting global principles of business practices pertinent to economic,

environmental, and social sustainability constructs. For instance, the United Nations

Global Compact set forth 10 core principles in the areas of human rights, labor standards,

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environmental and anti-corruption measures. These address natural resources, human

capital, societal capital, and financial sustainability.

2. Setting out guidelines of practices to support a precautionary proactive

approach to environmental challenges.

3. Contributing to corporate sustainability by providing moral arguments as to

why socially responsible business behavior should be integrated into core strategy.

4. Aiming to engage internal and external stakeholders by addressing needs, such

as a safe workplace, quality goods, services at a fair price, and job creation.

5. Encouraging more accountability in business practices by defining the

relationship of the company to the rest of society.

In the case of the West Bank and Gaza, post-conflict reconstruction and

development would present unwieldy multilateral alliances. According to the World

Bank Operations Evaluation Department (WBOED) (1998), there were 50-plus bilateral

and multilateral active donors for post-conflict reconstruction that could form alliances

with multinational companies and the government. The report added that one aspect of

successful post-conflict rebuilding was the necessity of interdependent and mutually

reinforcing political, economic, and military pillars to consolidate the peace. The

deterioration of these pillars would be detrimental to the survival of the peace process. A

strong economic recovery could not be built on a fragile peace, and a strong peace could

not be built on a fragile economy (WBOED, 1998).

MNC strategic posture planning requires integration of international instruments

in framing the CSR plan. ESCAP (2009) defined general international initiatives to help

develop standards for CSR instruments and sustainability- related reporting. For

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instance, the United Nations Global Compact defined internationally agreed upon norms

and standards for responsible business conduct: (a) The International Labor Organization

Standards (ILO) addressed abolition of child labor and right of workers, anti-corruption

laws, and economic responsibility; (b) ISO 26000 aimed to provide practical guidance on

a range of methods and options to implement social corporate responsibility (CSR); (c)

the Global Reporting Initiative (GRI) (2006) developed globally applicable CSR

sustainability reporting guidelines that encompass economic, environmental, and social

dimensions; and (d) the Accountability Principles Standards AA1000 addressed standards

for CSR accountability performance. In addition, a new instrument called Kinder,

Lydenberg, and Domini (KLD) rating method assesses environmental, social, and

governance aspects of corporations using a “propriety” framework with positive and

negative indicators. It assigns strengths and concerns relative to these issues by rating

seven (7) major qualitative issue areas: (a) environment, (b) community, (c) corporate

governance, (d) diversity, (e) employee relations, (f) human rights, (g) product quality,

and (h) safety (KLD, 2010).

Samaratunge (2009) explored the reasons for less-than-optimal levels of social

responsibility among companies doing business in developing countries and found that

corruption, patron-client relationships, and weak judiciary and legal systems were the

most corrosive problems undermining economic and social development. The author

added that adoption of responsible practices by MNCs would allow them to take the lead

as role models by their compliance with standards, obedience to laws, and, in general,

setting good examples for local companies to follow.

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 According to the U.S. Department of State (2008), Palestinian community leaders,

media, and non-governmental organizations have been working together to raise public

awareness and promote anti-corruption initiatives. According to the Dow Jones

Sustainability Index (DJSI) (2010), there are more corporations worldwide that are

integrating sustainability strategies into their core businesses. The dimension of strategic

CSR, this index cited, includes new principles for codes of conduct, a wider scope of

social programs, more extensive environmental performance measurement, increases in

corporate governance, and increased sustainability in annual reporting.

Dyllick and Hockerts (2002) asserted that a profitable business could be sustained

even as it shifted from profit maximization to value creation maximization. They added

that corporate sustainability could be accordingly defined as meeting the needs of a

firm’s direct and indirect stakeholders without compromising its ability to meet

stakeholder’s future needs. According to the Institute for Corporate Culture Affairs

(ICCA) (2007) survey of the top 100’s MNC activities (2005-2007), there are benefits

associated with the implementation of CSR programs and initiatives. These positive

effects of CSR are summarized as follows:

1. Enhanced capabilities in managing social, environmental, legal, economic, and

other risks.

2. Improved competitiveness and market positioning through product

differentiation and increased ability to attract trading partners.

3. Enhanced operational efficiencies and cost-savings through efficient resource

usage and effective human resource management.

4. Enhanced ability to respond to regulatory, economic, and social changes.

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 5. Effective and efficient supply chain.

6. Secured license to operate globally through improved relations with

government and local communities.

7. Improved access to capital through transparency and effective management of

social and environmental issues.

8. Increased customer satisfaction.

9. Improved employee morale, productivity, and loyalty.

10. Improved management of brand reputation and equity.

According to the CSR Middle East Survey conducted by the Sustainability

Advisory Group (SAG) (2010), about 90% of respondents thought credible CSR

programs could enable companies to build and maintain company reputation; 80%

believed that CSR could attract new customers and foster innovation; and over 70%

believed that CSR could create new markets and market shares. However, the survey

report added that these positive findings were tempered by worrying signs that businesses

were complacent about critical issues facing the Middle East region. High numbers of

businesses rated water conservation, climate change, waste, and poverty alleviation as

unimportant to their businesses (SAG, 2010).

The Grant Thornton (2008) International Business Report survey found that 71%

of privately held businesses rated the active promotion of workforce health and well-

being as one of the most salient CSR initiatives, followed by 67% for provision of

apprentices and work experience, and 64% for promotion and diversity in the workplace.

The European Competitiveness Report (ECR) (2008), which provides an overview of the

links between CSR and competitiveness, addressed six determinants of firm-level

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competitiveness that included (a) cost structure, (b) human resources performance, (c)

customer innovation, (d) risk, (e) reputation management, and (f) financial performance.

The report cited an Economist Intelligence Unit (2008) research program that stated that

the benefit of pursuing sustainable practices outweighed the costs (Economist

Intelligence Unit, 2008). Mendibil, Hernandez, Espinach, Garriga, and Mcgregor (2007),

described how in practice innovation and social responsibility appear to come together

through strong engagement with employees and external stakeholders. The report added

that CSR needs to be part of core business strategy if it is to be a competitive

differentiator.

The Research Questions and

Research Hypotheses

The questions focused primarily on management issues that relate to improved

MNC financial and social performance. The following list of research questions was

constructed based on the above information:

Research Question 1. What is the relationship between the MNC strategy

aggressiveness gap and the MNC’s financial performance?

Hypothesis 1. There is a reliable relationship between MNC strategy

aggressiveness gap and MNC financial performance.

Research Question 2. What is the relationship between the MNC strategy

aggressiveness gap and the MNC’s social performance?

Hypothesis 2. There is a reliable relationship between MNC strategy

aggressiveness gap and MNC social performance.

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 Research Question 3. What is the relationship between the MNC capability

responsiveness gap and the MNC’s financial performance?

Hypothesis 3. There is a reliable relationship between MNC capability

responsiveness gap and MNC financial performance.

Research Question 4. What is the relationship between the MNC capability

responsiveness gap and the MNC’s social performance?

Hypothesis 4. There is a reliable relationship between MNC capability

responsiveness gap and MNC social performance.

Research Question 5. What is the relationship between the MNC’s strategy

aggressiveness and the MNC’s social responsibility (CSR) posture?

Hypothesis 5. There is a reliable relationship between MNC strategy

aggressiveness and MNC social responsibility (CSR) posture.

Research Question 6. What is the relationship between the MNC’s capability

responsiveness and the MNC’s social responsibility (CSR) posture?

Hypothesis 6. There is a reliable relationship between MNC capability

responsiveness and MNC social responsibility (CSR) posture.

Research Question 7. What is the relationship between the MNC’s CSR posture

and the MNC’s financial performance?

Hypothesis 7. There is a reliable relationship between MNC CSR posture and

MNC financial performance.

Research Question 8. What is the relationship between the MNC’s CSR posture

and the MNC’s social performance?

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 Hypothesis 8. There is a reliable relationship between MNC CSR posture and

MNC social performance.

Research Question 9. What is the relationship between the MNC’s financial

performance and the MNC’s social performance?

Hypothesis 9. There is a reliable relationship between MNC financial

performance and MNC social performance.

Research Variables: Conceptual and Operational

Definitions

Definitions of the independent, intervening, controlled, and dependent variables

are based on the research model. MNC issue turbulence is an independent variable, and

it is measured to evaluate Hypotheses 1, 2, 3, and 4. MNC strategy aggressiveness and

MNC capability responsiveness are independent variables and are measured to evaluate

Hypotheses 5 and 6, respectively, where MNC CSR posture acts as the dependent

variable in this case of the research study. An MNC’s CSR posture is an independent

variable, and it is measured to evaluate Hypotheses 7 and 8, where financial and social

performance act as dependent variables.

MNC aggressiveness gap is an intervening variable, and it is measured to evaluate

Hypotheses 1 and 2. MNC capability responsiveness gap is an intervening variable, and

it is measured to evaluate Hypotheses 3 and 4.

MNC financial performance is a dependent variable, and it is measured to

evaluate Hypotheses 1, 3, and 7. MNC social performance is a dependent variable, and it

is measured to evaluate Hypotheses 2, 4, and 8. MNC financial performance and MNC

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social performance are dependent variables and are measured to evaluate Hypothesis 9,

where social performance acts as the independent variable, in this case of the research

study.

Industry type of business classification, business sector, and activity are control

variables, and they are held constant and will not form a part of any hypothesis in this

research. These data were collected to support future investigation and research.

Independent Variables

MNC Issue Turbulence

MNC issue turbulence was measured through a series of questions to examine the

pace, predictability, and complexity of the business environment in Palestine. The

conceptual definition measured the company’s response relative to changes in the

business environment that entailed factors pertaining to (a) achieving national

governance; (b) development of viable infrastructure; (c) enhancing government

institutions; (d) investment climate; (e) political stability; (f) viable national economy; (g)

predictability of changes in the economic, political, and closure policies; and (h)

complexity of the regulations and financial framework policies that affect the firm’s

organizational activities in Palestine.

The operational definition of MNC issue turbulence is measured through an

arithmetic mean calculation from each respondent for the following questions: 1, 2, 3, 4,

5, 6, 7, and 8, using a 5-point numerical (Likert) scale.

Question. What is your company’s perception of the pace of change in the

business environment in Palestine (six factors listed below)? (1 means change is much

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slower than the speed of the organization response; 5 means change is much faster than

the organization’s response.)

Q1. Achieving national governance

Q2. Development of viable infrastructure

Q3. Enhancing government institutions

Q4. Investment climate

Q5. Political stability

Q6. Viable national economy

Q7. How predictable are the changes in economic, political, and security closure

policies that affect your company’s investment activities in Palestine?

1. Changes are usually rare and we do not worry about them.

2. We know what changes are coming well ahead of time.

3. We can usually anticipate changes that will occur but not always when.

4. Changes are usually predictable but occasionally surprising.

5. Changes are unpredictable and usually surprising.

Q8. How complex and difficult are the regulations and financial framework

policies that affect your organizational activities in Palestine?

1. Not at all difficult or complex

2. Slightly difficult and complex

3. Moderately difficult and complex

4. Usually very difficult and complex

5. Always highly difficult and complex

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MNC Strategy Aggressiveness

CSR aggressiveness was measured through a series of questions to examine

implementation of strategic CSR. The conceptual definition measured the MNC’s

behavior toward the integration of CSR as an integral part of its core business operations,

the company’s approach to change on issues pertaining to CSR, the top management’s

mindset and CSR goals, whether CSR is conceived of in the organization as a new form

of engagement with stakeholders, and how receptive the company is to new technologies

for the production of high quality and safe products.

The operational definition of MNC aggressiveness is measured through

calculating the arithmetic mean from each respondent for the following questions: 9, 10,

11, 12, and 13, using 5-point Likert scales.

Q9. What is your company’s approach to change on issues pertaining to

corporate social responsibility (CSR)?

1. Reject change and seek stability.

2. Welcome change only for existing instruments (principles, policies,

guidelines, and programs).

3. Adapt to change for new CSR instruments (principles, policies,

guidelines, and programs).

4. Change for potential risk and opportunity.

5. Integrate creative change.

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 Q10. How important do you rate corporate social responsibility (CSR) as a

central component of your company’s core strategy? (1 means CSR is not important to

our company’s core strategy; 5 means CSR is an extremely important aspect of

company’s core strategy.)

Q11. What is the overarching corporate social responsibility (CSR) goal and

mindset of your organization?

1. Maintain financial responsibility to shareholders.

2. Maintain profitability and engage in limited philanthropic activities.

3. Look at CSR as a positive contribution to societal good with substantial

philanthropic activities.

4. Look at CSR as a strategic issue management and value creation to our

organizational culture.

5. Look at CSR as strategic and a new framework of engagement with

stakeholders.

Q12. How receptive is your company to the implementation of innovative

technologies to produce high quality and safe products as part of its operation?

1. We use our existing technology.

2. We adapt to new technologies and quality control management systems

to improve our product line.

3. We implement periodic/incremental technologies that add value to our

product line.

4. We implement continuous/incremental steady streams of new products.

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 5. We create periodic/discontinuous novel technologies to produce

products .

Q13. How would you characterize your company's CSR approach for interacting

with stakeholders?

1. We think about stakeholder demands and concerns.

2. We react to our stakeholder demands and concerns.

3. We anticipate the desires of internal and external stakeholder demands

and concerns.

4. We are proactive to address internal and external stakeholder demands

and concerns.

5. We developed creative and effective engagement process to respond to

stakeholder demands and concerns.

MNC Capability Responsiveness

MNC responsiveness was measured through a series of questions that examined

top management’s involvement in CSR issues, organizational leadership that supports

CSR initiatives, and CSR policies and programs developed for stakeholders.

Additionally, MNC responsiveness looks at management’s knowledge of international

standards, initiatives, and various factors that MNCs consider when contemplating

investment in Palestine. These factors included (a) access to resources, (b) availability of

political risk insurance, (c) restrictions on flow of foreign currency, (d) tax incentives and

exemptions, (e) opportunity to innovate products and services tailored to host country

needs, (f) building production capacity, (g) leadership and managerial skills, and (h)

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investment in human resources. The conceptual definition of MNC responsiveness is

characterized by the ability of management and its organizational system to respond to

CSR issues in the business environment.

The operational definition of MNC responsiveness is measured by calculating the

arithmetic mean for the following questions: 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25,

and 26, using 5-point Likert scales.

Q14. How would you characterize your organization’s top management

involvement in corporate social responsibility (CSR)?

1. No involvement or commitment to address CSR issues.

2. We focus on mitigating risk and harm to our organization.

3. We created awareness and understanding of CSR issues and initiatives

throughout the organization.

4. We integrated CSR strategy as part of core business activities to

address stakeholders’ preferred objectives.

5. We implemented CSR change management into organizational systems

to meet societal needs.

Q15. To what extent are corporate social responsibility policies, standards, and

programs disseminated to stakeholders? (1 means no CSR policies, standards, and/or

programs built-in our organization; 5 means policies, standards, and programs are

disseminated to all employees and outside stakeholders, N/A means not applicable.)

Q16. What is management’s overall level of knowledge of CSR international

standards, guidelines, and initiatives? (1 means minimal knowledge, relying on

consultants; 5 means expert knowledge; N/A means not applicable.)

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 Question. How important are the following to your organization's decision-

making regarding investment in Palestine? (1 means not important at all, 2 Means

somewhat important, 3 means important, 4 means very important, 5 means extremely

important, and N/A means not applicable.)

Q17. Access to resources

Q18. Availability of cheap labor

Q19. Availability of political risk insurance coverage

Q20. Free inflow and outflow of foreign currency

Q21. Opportunity to innovate products/services tailored to host country

Q22. Tax incentives and exemptions

Q23. Increase production capacity

Q24. Leadership skills (inspiring and empowering employees to insure the firm's

direction and manage change)

Q25. Managerial skills (creating knowledgeable employees to enhance

productivity and efficiency of firm’s operations)

Q26. Investment in human resources

MNC CSR Posture

The MNC’s posture was measured through a series of questions pertinent to the

firm’s strategic aggressiveness, its capability responsiveness, and its change management

stance. The conceptual definition of MNC posture articulates the two approaches, the

“built-in,” which deals with building responsible behavior in the organization; and the

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“bolt-on,” which deals with company engagement using pro-social initiatives that extend

beyond the core business operations.

The operational definition of MNC posture is measured by calculating the

arithmetic mean for the following questions: 27, 28, 29, 30, 31, 32, 33, 34, 35, and 36,

using 5-point Likert scales.

Q27. What is your management staff ’s main CSR focus?

1. Focus on corporate self responsibility and conduct business as usual.

2. Focus on corporate social responsiveness to minimize economic

impact.

3. Focus on the needs of stakeholders inside the organization (i.e.,

production employees).

4. Focus on the shared interests of stakeholders outside the organization.

5. Focus on strategic alliances and partnerships with stakeholders.

Q28. Of the methods of investment opportunities in Palestine, your organization

has committed to launching operations using different entry mode to penetrate the

market. Which entry modes are best suited for your organization to enter the market (or

other method of entry)? (Please specify.)

1. No appropriate mode of entry exists.

2. Enter into agreement to develop cottage industries to provide services,

produce products, or assemble parts for global corporations.

3. Enter into a franchise agreement.

4. Set up a production facility in a free zone located on the borders and

jointly owned.

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 5. Set up a wholly owned production facility in West Bank and Gaza.

Q29. Does your company’s CSR strategic posture include the whole business and

its supply chain? Please select one answer only.

1. There is no plan at all.

2. There is no immediate plan, but we are thinking of developing one.

3. We are developing a plan.

4. Yes, our plan covers the business, but not the supply chain.

5. Yes, our plan covers the whole business and supply chain.

Question. For each of the following factors, please rate the importance of your

cooperation with stakeholders operating in Palestine? (1 means not important at

all, 2 means somewhat important, 3 means important, 4 means very important, and 5

means extremely important, don’t know.)

Q30. Collaboration among multinational companies (MNCs)

Q31. Non-governmental organizations (NGOs)

Q32. Not-for-profit (NFP) and aid agencies

Q33. Local private enterprises n

Q34. Civic organizations and local government

Q35. Incorporating CSR as part of core business strategy

Q36. Creating transparency in commercial transactions

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 Intervening Variables

MNC Aggressiveness Gap

The conceptual definition of the MNC aggressiveness gap is a measure of how

much an organization’s MNC aggressiveness differs from its issue turbulence. The

operational definition of the MNC aggressiveness gap is calculated as the absolute

difference between the scores of MNC aggressiveness and MNC issue turbulence from

each respondent. The MNC aggressiveness gap can range in value from 0 to 4.

MNC Responsiveness Gap

The conceptual definition of the MNC responsiveness gap is a measure of how

much an organization’s MNC responsiveness differs from its MNC issue turbulence. The

operational definition of the MNC responsiveness gap is calculated as the absolute

difference between the scores of MNC responsiveness and MNC issue turbulence of each

respondent. The MNC responsiveness gap can range in value from 0 to 4.

Dependent Variables

The conceptual definition of overall MNC performance is that it is a measure of

the financial and social performance of the CSR management system. This includes the

MNC’s impact on stakeholders and the firm’s finances. The operational definition of the

financial performance was calculated as the arithmetic mean from each respondent for

Question 37. The operational definition of the social performance was calculated as the

arithmetic mean from each respondent for the following questions: 38, 39, 40, 41, 42, 43,

44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, and 55. The financial performance measures the

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MNC’s return on investment of its operations. The social performance measures

important programs that affect stakeholders for the following questionnaire:

Q37. Please indicate your company’s average return on equity (ratio of income to

shareholder's equity) or (ROE) of operations over the last 3 years percentages.

(respondents to input percentages in the boxes).

1. Positive (ROE) %

2. Negative (ROE) %

Question. Has your organization implemented programs that would contribute to

the CSR performance of your organization? How well have the following programs

contributed to employee social needs? (1 means not well, 5 means very well, and N/A

means not applicable.)

Q38. Employee retirement, pension plan, and/or after service plan

Q39. Employee health benefit plan (package for health, dental and life)

Q40. Employee disability benefit plan

Q41. Employee training programs (leadership, managerial and technical)

Q42. Enforcement of % minimum wage within labor law regulations

Q43. Enforcement of child labor prohibition

Q44. Integration of women in the workforce

Q45. Security and safety programs

Question. For each of the following factors, please rate the importance of your

company’s contribution to socioeconomic developments in Palestine. (1 means not

important at all, 2 means somewhat important, 3 means important, 4 means very

important, 5 means extremely important, and N/A means not applicable.)

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 Q46. Sustainable job creation.

Q47. Provide funding and managerial support to build the capacity of

government services.

Q48. Support NGOs active in reconciliation & peace building efforts.

Q49. Sponsor research on issues of local importance to business start-ups.

Q50. Support the creation of charity bank that uses partially contributed funds to

provide low-interest loans to start ups in the region.

Q51. Support internal and cross border business-to-business forums.

Q52. Support work of humanitarian and government development efforts.

Q53. Build capacity of local civic society organizations.

Q54. Support initiatives to attract foreign direct investment to post-conflict areas.

Q55. Support local education, health, and enterprise development programs.

Control Variables

Industry type, business sector, and business activity are control variables, and they

are held constant and will not form a part of any hypothesis in this research. The data

were collected to support future investigation or research. The conceptual definition of

industry type is a measure to categorize business classification, sector, and activities of

the MNC’s operations. Types of MNC business classification are identified in Question

56, type of MNC business sector is identified in Question 57, and type of MNC business

activity is identified in Question 58 of the attached survey questionnaire. The

operational definition of industry type, sector, and business activity was measured

through the responses to Questions 56, 57, and 58.

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 Q56. Which one of the following describes the business classification that is most

appropriate for your organization?

1. Multinational company

2. Small to medium enterprise (SME)

3. Consortium (MNC-government and international organizations)

4. Other (please specify)

Q57. Which the following describes the business sector to which your

organization belongs?

1. Manufacturing

2. Wholesale/retail

3. Information systems/networking

4. Consultants

5. Construction

6. Telecoms

7. Banking/finance/investing

8. Real estate

9. Government

10. Healthcare/pharmaceutical

11. Other (please specify)

Q58. What type of business activity does your organization operate in Palestine?

1. Consortium with government and international organizations

2. Technology transfer of products and/or services

3. Franchise business

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4. Fully owned multinational company in a free zone

5. Other (please specify)

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 Chapter 3

RESEARCH METHODOLOGY

This chapter describes the research methods and procedures used to evaluate the

proposed hypotheses in Chapter 2B. The chapter is composed of the research strategy,

data sources, data collection procedures, data analysis methodology, assumptions,

probable limitations in reliability and validity, and delimitations.

Research Strategy

The methodology for this research study was based on the Strategic Success

Paradigm presented by Ansoff and McDonnell (1990). This methodology was

operationalized in this study through the relationship between MNC environmental

turbulence, MNC aggressiveness, and MNC capability responsiveness. Specifically, the

study hypothesized that organizational performance was improved when MNC strategy

aggressiveness, MNC capability responsiveness, and MNC CSR strategic posture were

aligned with MNC issue turbulence. The environmental turbulence was the driving

variable that determined whether the firm’s strategic behavior would succeed in an

environment. As part of the MNC’s strategy, CSR was considered an integral part of the

overall core business strategy to optimize economic and social performance for

companies operating in Palestine.

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 This study evaluated four independent variables: (a) MNC issue turbulence, (b)

MNC strategy aggressiveness, (c) MNC capability responsiveness, and (d) MNC CSR

strategic posture. The MNC strategy aggressiveness gap and the MNC capability

responsiveness gap were the two intervening variables. The two dependent variables

were the MNC’s financial performance and the MNC’s social performance. The data for

each variable were evaluated based on interval scales. The research consisted of

statistical hypothesis testing using a descriptive correlation approach.

Data Sources

The target population for this research included multinational corporations

(MNCs) and domestic Small and Medium Enterprises (SMEs) that had operations in or

were contemplating undertaking FDI investment in Palestine. The intended survey

respondents must have had the knowledge and expertise regarding the political and

socioeconomic challenges in the Middle East, mainly of a conflict-prone region such as

Palestine.

Two multiple sets of samples were downloaded into a Microsoft Excel

spreadsheet from two Web site sources: the Palestinian Trade Center (PalTrade) and

Palestine Stock Exchange (PSE), respectively. PalTrade is a national trade development

organization that has 339 memberships for Palestinian leading businesses of various

industry sectors in the West Bank and Gaza (see Appendix A). There are 43 companies

listed on the Palestine Stock Exchange in various industries, and they are actively traded

on the PSE market (see Appendix B). These companies are mainly located in the West

Bank, except for one company, which is located in Gaza. Company names, contact

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persons, industry sectors, e-mail addresses, and telephone and fax numbers were

tabulated.

Instrument and Procedure

The questionnaire was set up online using SurveyMonkey.com, and a link to

survey was e-mailed to listed companies on Pal Trade and PSE to participate in the

survey. An introductory page that briefly described the purpose of the study, with

information required by the Institutional Review Board (IRB) and instructions for

completing the survey, was attached to survey. Massar International, a private

consulting firm working to promote sustainable development in Palestine was consulted

to communicate with companies in Palestine to either participate through on-line

SurveyMonley.com and/or provide companies with a printed questionnaire in pdf

format downloaded from the Survey Monkey Web site on both sides of 8½ x 11-inch

white paper (http://www.massar.com/).

Research Variables

This research investigated the independent, intervening, and dependent variables

that comprised the data under analysis in the study. The issues under investigation were

MNC issue turbulence, MNC strategy aggressiveness, MNC capability responsiveness,

and MNC corporate social responsibility (CSR) posture. The survey included the

intervening variables of the MNC strategy aggressiveness gap and the MNC capability

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responsiveness gap. The dependent variables were first, financial performance correlated

with strategy aggressiveness gap, and second, social performance correlated with

capability responsiveness gap.

Independent Variables

MNC Issue Turbulence

Calculation: (Q1 + Q2 + Q3+ Q4 + Q5 + Q6 + Q7 + Q8) / 8

Questions 1 through 8 measured MNC issue turbulence. Questions 1 through 6

measured the perception of rate of change in the business environment in Palestine.

Question 7 measured the predictability of change in the economic, political, and security

closure policies relative to foreign direct investment activities. Question 8 measured the

complexity of the host country’s regulations and financial policies that affected the firm’s

behavior.

The MNC issue turbulence was calculated through averaging the scores on a

Likert scale of 1-5 for a series of questions: where 1 means changes are rare and we don’t

worry about them; 2 means when changes come, we usually react easily; 3 means when

changes come, we usually react in time; 4 means when changes come, we are usually

trying to catch up; and 5 means changes are extremely fast and chaotic, and we struggle

to keep up. Mainly, turbulence in the business environment requires new strategic

responses, and management capability must be developed to assure the firm’s successful

operations (Ansoff & McDonnell, 1990).

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MNC Strategy Aggressiveness

Calculation: (Q9 + Q10 + Q11 + Q12 + Q13) / 5

Questions 9 through 13 measured MNC strategy aggressiveness. Question 9 was

designed to measure the company’s approach to change on issues pertaining to corporate

social responsibility (CSR). Question 10 was designed to measure the importance of

CSR as an integral part of the firm’s core business strategy. Question 11 measured the

corporate social responsibility (CSR) mindset and goals of the organization. Question 12

measured the firm’s receptivity to new technologies for development of high quality and

safe products. Question 13 measured MNCs’ approaches or their interaction with

stakeholders.

Survey respondents rated each aspect of MNC strategy aggressiveness as they

corresponded to five choices for each question. The scores for possible answers for each

question ranged from 1 to 5. If a question was not answered, the score was based on the

average of the remaining questions.

MNC Capability Responsiveness

Calculations: (Q14 + Q15 + Q16 + Q17 + Q18 + Q19 + Q20 + Q21 + Q22 + Q23

+ Q24 + Q25 + Q26) / 13

Questions 14 through 26 measured MNC capability responsiveness. Question 8

measured top management’s involvement in corporate social responsibility; this question

was based on five choices for a respondent to answer, scored from 1 to 5. Questions 15

and 16 measured the extent to which CSR policies, standards, and programs were

disseminated to stakeholders and the overall management-staff’s level of knowledge of

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international CSR standards, guidelines, and initiatives. Questions 17 through 26

measured 10 elements of importance to the firm’s decision-making regarding investment

in Palestine.

The scores for possible answers for these questions ranged from 1 to 5.

Unanswered questions were not included in the arithmetic mean calculation for this

variable.

MNC Corporate Social Responsibility

(CSR) Posture

Calculations: (Q27 + Q28 + Q29 + Q30 + Q31 + Q32 + Q33 + Q34 + Q35 + Q36)

/ 10

Questions 27 through 36 measured MNC corporate social responsibility (CSR)

posture. These questions measured the company’s CSR posture as follows:

1. Question 27 measured the managerial staff’s CSR focus.

2. Question 28 measured appropriate investment modes of entry into Palestine.

3. Question 29 measured strategy of the firm’s operations to include the whole

business and its supply chain.

4. Questions 30 through 36 measured the importance of cooperation by

stakeholders operating in Palestine for success in the marketplace.

Question 27, 28, and 29 were based on five choices, and the scores for possible

answers for each question ranged from 1 to 5. Question 28 included a box for

respondents to answer the questions with “Other,” which further allowed them to briefly

state other answers than those provided. Questions 30 through 36 allowed the respondent

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to rate the importance of stakeholder engagement. Questions 27 through 36 were

calculated through averaging the possible scores for each question. The value for MNC

CSR posture was calculated as follows for each respondent: (Q27 + Q 28 + ... + Q35 +

Q36) / 10.

Intervening Variables

MNC Strategy Aggressiveness Gap

Calculation: │MNC issue turbulence – MNC strategy aggressiveness │

The MNC strategy aggressiveness gap was an intervening variable with scores

ranging from 0 to 4. It measured the alignment between MNC environmental turbulence

and strategy aggressiveness. The MNC strategy aggressiveness gap was calculated by

taking the absolute value of the difference between MNC strategy aggressiveness and

MNC issue turbulence for each respondent.

MNC Capability Responsiveness Gap

Calculation: │MNC issue turbulence – MNC capability responsiveness │

The MNC capability responsiveness gap was an intervening variable with scores

ranging from 0 to 4. It measured the alignment between MNC environmental turbulence

and management responsiveness. The MNC capability responsiveness gap was

calculated by taking the absolute value of the difference between MNC capability

responsiveness and MNC issue turbulence for each respondent.

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 Dependent Variables

MNC Financial Performance

Calculation: (Q37)

Question 37 measured the MNC’s financial performance and the average firm’s

return on equity (ROE) over the last 3 years’ percentage of MNC operations (ratio of

income to shareholder’s equity). The respondents filled out the ROE percentage in the

box to input whether it was positive or negative ROE.

MNC Social Performance

Calculations: (Q38 + Q39 + Q40 + Q41 + Q42 + Q43 + Q44 + Q45 Q46 + Q47 +

Q48 + Q49 + Q50 + Q51 + Q52 + Q53 + Q54 + Q55) /18

Questions 38 through 45 measured important elements of MNC social

performance that contributed to the firm’s stakeholders. These measured the firm’s

social performance, as evidenced by implementation of beneficial programs to the firm’s

employees. Questions 46 through 55 measured the important elements and their

contributions to socioeconomic development in Palestine. Responses were based on

scores ranging from 1 to 5. The value of MNC social performance was calculated by

averaging these scores for each respondent. Unanswered questions and questions marked

N/A were not included in the arithmetic mean calculation for this variable.

MNC Overall Performance

The overall performance of the MNC desired result was that society at large is

lifted in a lasting and meaningful way and that the company is financially successful.

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The “overall performance,” then, is a cycle of successful policies in which all

stakeholders are invested.

Validity and Reliability

The survey questionnaire was built on an extensive review of the literature

pertinent to the business environment in Palestine. Additionally, a comprehensive

investigation of corporate social responsibility (CSR) concepts, policies, international

initiatives, guidelines, and standards directed this research study. Research on the

business environment in Palestine was modeled on research done by multiple,

recognizable, international organizations of repute. The dissertation committee members

provided helpful resources, experience, and recommendations and have been

instrumental in guiding this research study. Previous research questions designed by

committee chairperson Dr. Greg Lorton and committee member Dr. Kevin Loebbaka

served as a guide in structuring the research questions in this study.

Suggestions and recommendations on the survey validity were sought from a third

party, Massar International, which has extensive knowledge about the business

environment in Palestine.

Data Analysis

The data collected through the questionnaire were coded into a Microsoft Excel

spreadsheet, which included data collected for MNC issue turbulence, MNC strategy

aggressiveness, MNC capability responsiveness, MNC corporate social responsibility

(CSR) posture, and financial and social performance of each MNC. Data were

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statistically analyzed using the SPSS program to test the hypotheses of the research study.

A probability value was generated based on the statistical analysis of the hypotheses of

the research study. A threshold value of 5% was used for the sample size to assess

statistical significance of the null hypothesis.

Assumptions

The methodology of the research model, measurements, and data analysis

included the following assumptions:

1. The research method and procedures are suitable for this study.

2. Respondents to the questionnaire understand and are able to answer the

questions with honesty and transparency.

3. Respondents are familiar with the business environment and familiar with their

organization’s CSR involvement.

Limitations

One of the limitations to this research study was that a limited number of

multinational companies operated in the West Bank and Gaza territory. The private

sector establishments constituted 90.7% of total businesses. These were largely family-

based, small-sized, and low-capacity businesses. Consequently, CSR was new to

Palestine, but MNCs doing business there are importing CSR policies that are well-

established in developed countries.

Local domestic companies and MNCs operating in Palestine were sought for this

research study. Although there were not enough MNCs operating in Palestine, the study

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might require multiple respondents from the same organization to fine-tune the research

strategy and get a significant sample size to test the hypotheses in the research study.

Table 9 presents the research questions paired with the research hypotheses, and

Table 10 presents a summary of research hypotheses statistical tests.

Table 9

Research Questions and Research Hypotheses

Research Question Research Hypothesis

Q1. H1.

What is the relationship between the MNC There is a reliable relationship between MNC
strategy aggressiveness gap and the MNC’s strategy aggressiveness gap and MNC financial
financial performance? performance.

Q2. H2.

What is the relationship between the MNC There is a reliable relationship between MNC
strategy aggressiveness gap and the MNC’s strategy aggressiveness gap and MNC social
social performance? performance.

Q3. H3.

What is the relationship between the MNC There is a reliable relationship between MNC
capability responsiveness gap and the MNC’s capability responsiveness gap and MNC
financial performance? financial performance.

Q4. H4.

What is the relationship between the MNC There is a reliable relationship between MNC
capability responsiveness gap and the MNC’s capability responsiveness gap and MNC social
social performance? performance.

(table continues)

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Table 9 (continued)

Research Question Research Hypothesis

Q5. H5.

What is the relationship between the MNC’s There is a reliable relationship between MNC’s
strategy aggressiveness and the MNC’s social strategy aggressiveness and the MNC’s social
responsibility (CSR) posture? responsibility (CSR) posture.

Q6. H6.

What is the relationship between the MNC’s There is a reliable relationship between MNC
capability responsiveness and the MNC’s capability responsiveness and MNC social
social responsibility (CSR) posture? responsibility (CSR) posture.

Q7. H7.

What is the relationship between the MNC’s There is a reliable relationship between MNC
CSR posture and the MNC’s financial CSR posture and MNC financial performance.
performance?

Q8. H8.

What is the relationship between the MNC’s There is a reliable relationship between MNC
CSR posture and the MNC’s social CSR posture and MNC social performance.
performance?

Q9. H9.

What is the relationship between the MNC’s There is a reliable relationship between MNC
financial performance and the MNC’s social financial performance and MNC social
performance? performance.

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Table 10

Summary of Statistical Tests

Research Hypothesis Null Hypothesis Statistical Test

There is a reliable relationship There is no relationship Correlation

H1 between MNC strategy between MNC strategy (Spearman's rho)
aggressiveness gap and MNC aggressiveness gap and MNC
financial performance. financial performance.

There is a reliable relationship There is no relationship Correlation

H2 between MNC strategy between MNC strategy (Spearman's rho)
aggressiveness gap and MNC social aggressiveness gap and MNC
performance social performance

There is a reliable relationship There is no relationship Correlation

H3 between MNC capability between MNC capability (Spearman's rho)
responsiveness gap and MNC responsiveness gap and MNC
financial performance financial performance.

There is a reliable relationship There is no relationship Correlation

H4 between MNC capability between MNC capability (Spearman's rho)
responsiveness gap and MNC social responsiveness gap and MNC
performance. social performance.

There is a reliable relationship There is no relationship

Correlation
between MNC strategy between MNC strategy
H5 (Spearman's rho)
aggressiveness and MNC social aggressiveness and MNC
responsibility (CSR) posture. social responsibility (CSR)
posture.

There is a reliable relationship There is no relationship

Correlation
between MNC capability between MNC capability
H6 (Spearman's rho)
responsiveness and MNC social responsiveness and MNC
responsibility (CSR) posture. social responsibility (CSR)
posture.

There is a reliable relationship There is no relationship

Correlation
between MNC CSR posture and between MNC CSR posture
H7 (Spearman's rho)
MNC financial performance. and MNC financial
performance.

(table continues)

140
Table 10 (continued)

Research Hypothesis Null Hypothesis Statistical Test

There is a reliable relationship There is no relationship Correlation

H8
between MNC CSR posture and between MNC CSR posture (Spearman's rho)
MNC social performance. and MNC social performance.

There is a reliable relationship There is no relationship

Correlation
H9 between MNC financial between MNC financial
(Spearman's rho)
performance and MNC social performance and MNC social
performance. performance.

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 Chapter 4

RESEARCH FINDINGS

This chapter presents the results of the data analysis of the nine original

hypotheses, results of additional findings, and an overall summary of the survey

information collected. The research study was designed to investigate the role of

multinationals (MNCs) and domestic local companies and their impact on sustainable

socioeconomic development in Palestine. The study looked at integrating CSR into

firms’ core business as part of MNCs’ strategic CSR posture to optimize the firms’

financial and social profitability based on Strategic Success Paradigm (SSP) framework

developed by Ansoff and McDonnell (1990).

The reactive to proactive nature of the firm’s CSR management systems

strategies was evaluated through the measured variables of MNC environmental

turbulence, MNC strategy aggressiveness, and MNC capability responsiveness, and MNC

CSR posture, financial and social performance of companies operating or contemplating

to engage in foreign direct investment (FDI) in Palestine. Two gap variables, the MNC

aggressiveness gap and MNC responsiveness gap, were calculated from the data for each

company. These variables represented the difference between aggressiveness or

responsiveness and MNC environmental turbulence, respectively. A reactive to proactive

Likert scale ranging from 1 to 5 was used to measure and evaluate all the variables in this

study, excepting the two gap variables, which were calculated as an absolute value on a

scale of 0 to 4. Table 11 presents the descriptive statistics of the study’s research

142
variables. The relationships among these variables were evaluated in SPSS, utilizing

Spearman’s rho statistical analysis to compare the variables. All study results were tested

at a 5% significance level for a 2-tailed distribution.

Table 11

Descriptive Statistics of the Research Variables

Variable Scale Mean Range SD

MNC Environmental
Turbulence 1–5 3.17 2.13–4.50 .714

MNC Strategy
Aggressiveness 1–5 3.23 2.20–4.00 .598

MNC Capability
Responsiveness 1–5 3.66 2.77–4.38 .559

MNC CSR Posture 1–5 3.26 2.60–4.60 .567

MNC Aggressiveness Gap 0–4 .55 .03–1.47 .489

MNC Responsiveness Gap 0–4 .61 .02–1.79 .549

Social Performance 1–5 3.41 2.45–4.17 .526

Financial Performance percent 8.12 -.10–+27.0 12.38

Note. N = 11.

Hypothesis 1 (Not Supported)

Hypothesis 1 predicted a reliable relationship between the MNC strategy

aggressiveness gap and MNC financial performance. Hypothesis 1 was not supported

([r] = .137, p = .689), indicating there wasn’t a reliable relationship between the MNC

143
aggressiveness gap and MNC financial performance. This hypothesis was based on

Ansoff’s Strategic Success Paradigm (SSP), which predicted that financial performance

would increase as the absolute gap between MNC aggressiveness and MNC

environmental turbulence decreased.

Hypothesis 2 (Not Supported)

Hypothesis 2 predicted a reliable relationship between the MNC strategy

aggressiveness gap and MNC social performance. Hypothesis 2 was not supported ([r] =

.191, p = .574), indicating there wasn’t a reliable relationship between the MNC

responsiveness gap and social performance. Hypothesis 2 was supposed to confirm that

as the gap between MNC aggressiveness and MNC environmental turbulence decreased,

social performance of MNC increased, but this was not the case.

Hypothesis 3 (Not Supported)

Hypothesis 3 predicted a reliable relationship between the MNC capability

responsiveness gap and MNC financial performance. Hypothesis 3 was not supported

([r] = .534, p = 0.09), indicating there wasn’t a reliable relationship between the MNC

responsiveness gap and MNC financial performance. Hypothesis 3 did not confirm that

as the gap between MNC capability responsiveness and MNC environmental turbulence

decreased, financial performance of MNC increased.

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 Hypothesis 4 (Not Supported)

Hypothesis 4 predicted a reliable relationship between the MNC capability

responsiveness gap and MNC social performance. Hypothesis 4 wasn’t supported ([r] =

.424, p = .194), indicating there wasn’t a reliable relationship between the MNC

responsiveness gap and social performance. Hypothesis 4 didn’t confirm that as the gap

between MNC capability responsiveness and MNC environmental turbulence decreased,

social performance of MNC increased.

Hypothesis 5 (Not Supported)

Hypothesis 5 predicted that a reliable relationship existed between MNC strategy

aggressiveness and MNC CSR posture. Hypothesis 5 wasn’t supported ([r] = .385, p =

.243), indicating there wasn’t a reliable relationship between the firms’ MNC strategy

aggressiveness and the MNC CSR posture. Hypothesis 5 did not confirm that as MNC

strategy aggressiveness increased and became more proactive, the firm’s MNC CSR

posture became more proactive.

Hypothesis 6 (Supported)

Hypothesis 6 predicted a reliable relationship existed between MNC capability

responsiveness and MNC CSR posture. Hypothesis 6 was supported ([r] = .642, p =

.003), indicating there was a reliable relationship between the firms’ MNC capability

responsiveness and the MNC CSR posture. Firms that scored high on MNC capability

responsiveness tended to score high on MNC CSR posture. This hypothesis confirmed

145
that as MNC capability responsiveness increased and became more proactive, the firm’s

MNC CSR posture became more proactive.

Hypothesis 7 (Supported)

Hypothesis 7 predicted that a reliable relationship existed between MNC CSR

posture and MNC financial performance. Hypothesis 7 was supported ([r] = .735, p =

.01), indicating there was a reliable relationship between the firms’ MNC CSR posture

and financial performance. Firms that scored high on MNC CSR posture tended to score

high and increase their financial profitability, and as the firm’s MNC CSR posture

became more proactive, the firm’s MNC financial performance increased.

Hypothesis 8 (Supported)

Hypothesis 8 predicted that a reliable relationship existed between MNC CSR

posture and MNC social performance. Hypothesis 8 was supported ([r] = .642, p = .033),

indicating there was a reliable relationship between the firms’ MNC CSR posture and

social performance. Firms that scored high on MNC CSR posture tended to score high

and increase their social profitability, and as the firm’s MNC CSR posture became more

proactive, the firm’s MNC social performance increased.

Hypothesis 9 (Supported)

Hypothesis 9 predicted that a reliable relationship existed between MNC social

performance and MNC financial performance. Hypothesis 9 was supported ([r] = .665, p

= .026), indicating there was a reliable relationship between the firms’ MNC financial

146
performance and MNC social performance. Firms that scored high through proactive

implementation of CSR posture and engagement with pro-social activities to meet

societal needs tended to score high on financial performance. As the firm’s MNC social

performance became more proactive, the firm’s MNC financial performance increased.

Summary of Results

The statistical analyses of the hypotheses and additional findings for this research

were conducted with Spearman’s rho (r) correlation. Spearman’s rho (r) is a non-

parametric measure of correlation. It assesses how well a monotonic function could

describe the relationship between two variables, without the assumption of frequency

distribution of the variables (Laerd Statistics, 2011).

All results were tested at a significance of < 0.05. MNC strategy aggressiveness

gap to financial and social performance Hypotheses 1 and 2, respectively, were not

supported. Also, MNC capability responsiveness gap to financial and social performance

Hypotheses 3 and 4, respectively, were not supported. Hypotheses 5, relating MNC

strategy aggressiveness to MNC CSR posture, was not supported. Hypotheses 6, relating

MNC capability responsiveness to MNC CSR posture, was supported. Hypothesis 7 and

8, relating MNC CSR posture to financial and social performance, were supported.

Hypothesis 9, relating financial to social performance, was supported. The statistical

outcomes of this study are presented in Table 12.

147
Table 12

Summary of Statistical Results

Hypotheses Statistical (rho) Value p Value Supported

Test

H1 Relationship between MNC Spearman’s .137 .689 Not

Strategy Aggressiveness rho Supported
Gap and MNC financial
performance

H2 Relationship between MNC Spearman’s .191 .574 Not

Strategy Aggressiveness rho Supported
Gap and MNC social
performance

H3 Relationship between MNC Spearman’s .534 .09 Not

Capability Responsiveness rho Supported
Gap and MNC financial
performance

H4 Relationship between MNC Spearman’s .424 .194 Not

Capability Responsiveness rho Supported
Gap and MNC social
performance

H5 Relationship between MNC Spearman’s .385 .243 Not

strategy aggressiveness and rho Supported
MNC corporate social
responsibility (CSR) posture

H6 Relationship between MNC Spearman’s .642 .033 Supported

capability responsiveness rho
and MNC corporate social
responsibility (CSR) posture

H7 Relationship between MNC Spearman’s .735 .01 Supported

CSR posture and MNC rho
financial performance

(table continues)

148
Table 12 (continued)

Hypotheses Statistical (rho) Value p Value Supported

Test

H8 Relationship between MNC Spearman’s .642 .033 Supported

CSR posture and MNC rho
social performance

H9 Relationship between MNC Spearman’s .665 .026 Supported

financial performance and rho
MNC social performance

Note. N = 11.

149
 Chapter 5

SUMMARY CONCLUSIONS AND

RECOMMENDATIONS

Chapter 5 summarizes this research study investigation of the role of

multinational companies (MNCs) in sustainable socioeconomic development when

strategic CSR is integrated into the overall business strategy of the company. The study

examined the relationships among MNCs’ environmental turbulence, MNC strategy

aggressiveness, MNC capability responsiveness, MNC corporate social responsibility

(CSR) posture, and the financial and social profitability of MNCs operating in Palestine.

This chapter analyzes the global and research models developed to investigate corporate

social responsibility as an integral part of the overall MNC business strategy. It reviews

the research questions, hypotheses, and the resulting statistical outcomes of the research

study. Chapter 5 also elaborates on the study’s additional findings and recommends areas

for further research.

Background of the Problem

Multinational companies (MNCs) are considered crucial members of society, and

corporate social responsibility (CSR) has become an essential part of successful

companies’ strategies. In essence, MNCs have become increasingly conscious of their

ethical and economic responsibility to provide products and services that add value to

150
society, to deploy entrepreneurialism, to create jobs, and to assist developing countries in

the promotion of their economic growth.

Based on the opinions of good corporate behavior, a growing number of

businesses have argued that both profit and social good could be combined through

innovations aimed at improving the lives of the world’s poorest citizens. Stakeholders

expected businesses to understand and address relevant social and community issues

within CSR framework to prompt sustainable economic development. The turbulent

political environment in Palestine, coupled with severe socioeconomic conditions,

presented multinational companies with external societal challenges. One of the things

that businesses did well was to create jobs, which, consequently, could have significant

potential for promoting stability, reducing despair, and lowering tensions if initiated in a

newly viable Palestinian State. This research investigated the role of multinational

companies (MNCs) in sustainable socioeconomic development when they integrated

strategic CSR into the overall business strategy to optimize the financial and social

profitability of their operations.

Statement of the Problem

Foreign direct investment (FDI) in conflict-prone countries had increased in

emerging markets. Ansoff and McDonnell (1990) argued that the survival of a firm in a

competitive business environment required companies to evaluate the environmental

turbulence by defining the trends, threats, and opportunities facing the organization.

Palestine had been plagued with political, economic, environmental, and social

instability, thus exerting more externalities on firms’ strategic behaviors. With this

151
challenging business environment in Palestine, the research looked at integrating CSR

into firms’ core business as part of MNCs’ strategic CSR posture to optimize the firms’

financial and social profitability. A new paradigm shift of MNCs’ strategic behavior to

integrate societal change with their core business would create a new form of engagement

to promote economic development, create employment, ameliorate poverty, and promote

stability in Palestine.

Purpose of the Study

The study examined the relationships among MNCs’ environmental turbulence,

MNC strategy aggressiveness, MNC capability responsiveness, MNC corporate social

responsibility (CSR) posture, and the financial and social performance of MNCs

operating in Palestine. This study hypothesized that organizational performance is

improved when MNC strategy aggressiveness and MNC capability responsiveness are

aligned with MNC issue turbulence level.

Expected Contributions

It is posited that good social responsibility is good business. This study

contributed to the field of strategic management by empirically testing and validating

hypotheses regarding the relationships between environmental turbulence, MNC strategy

aggressiveness, and MNC capability responsiveness for MNCs operating in a conflict-

prone zone such as Palestine. The study provided researchers and professionals with

tools for aligning the business environment with the political environment and for

152
maximizing stakeholder legitimacy strategy and CSR for optimal financial and social

performance.

Global Model

The Global Model outlined in Figure 8 presented the environment with a complex

set of relationships among multinational companies (MNCs) and their various

stakeholders that influenced their strategic behavior. The global model established a

strategy landscape from which to analyze the research objectives of this study. Corporate

social responsibility (CSR) embedment was shown as an integral part of the core business

strategy. Ansoff and McDonnell (1990) provided a strategic management approach to

optimize the organizational performance and postulated that for a firm to optimize its

competitiveness and profitability, the firm had to match its strategy and capability with

the environment. The environment was a determining factor for the firm’s strategy and

its capability profile. The engagement of stakeholders in the firm’s decision-making

process would help define the preferred objectives of MNCs operating in Palestine

through a legitimacy strategy based on a bargaining process. Part of the business firm

environment was the “rules of the game,” defined as a set of constraints under which the

business could conduct, but must limit, its activities.

The strategic posture of the MNC organizational management was based on the

strategic success paradigm (SSP). This formed the basis of Ansoff’s model of strategic

management at the corporate MNC level. According to Ansoff and McDonnell, the

firm’s adaptation to its external environment hinged on how strategic information was

perceived and understood by management. The corporate social responsibility (CSR)

153
aggressiveness and corporate social responsibility (CSR) responsiveness would lead to an

overall corporate philosophy that had the capacity to respond to changes in the

environment and to financial and societal results of economic development in Palestine.

The use of CSR instruments as part of this research would facilitate the integration of

sustainability concerns as part of the company operations and create economic, as well a

social-organizational performance.

Figure 12, below, shows the role of MNC in sustainable socioeconomic

development in Palestine.

Figure 12. The role of MNC in sustainable socioeconomic development: The case of
Palestine.

154
 Strategic Success Paradigm (SSP)

The strategic success paradigm stated that the optimal performance of an

organization was where strategy aggressiveness and organizational capability

responsiveness matched the level of environmental turbulence in which the firms

operated. Ansoff and McDonnell (1990) outlined significant variables that were related

to successful strategic behavior and were environment driven. The first driver was

“environmental turbulence,” an effective response to the environment and a key to a

long-term strategic success. The second category of contingent driver was success

factors that must be done to produce success strategies in the future environment.

Realizing that there are different types of environments, different strategy-capability

couplings are required for successful operation of the firm.

Ansoff and McDonnell (1990) developed the concept of environmental turbulence

to describe the different environments according to five distinct turbulence levels. They

identified a concomitant level of success for every level of turbulence. The

environmental turbulence is defined by four characteristics. The four characteristics are

the following: (a) complexity, where the business environment becomes more complex

and the pace of change increases, resulting in an increase of turbulence level; (b)

familiarity of events; (c) rapidity of change, and (d) visibility of the future.

Table 13, below, reflects these levels of environmental turbulence.

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Table 13

Levels of Environmental Turbulence

Level 1 2 3 4 5

Turbulence
Characteristics Repetitive Expanding Changing Discontinuous Surprising

Complexity National + Regional + Global

Familiarity of Familiar Extrapolable Discontinuous Discontinuous

Events Novel

Rapidity of Slower Comparable Faster to

Change than to Response Response
Response
Visibility of Recurring Forecastable Predictable Partially Unpredictable
Future predictable

MNC Environmental Turbulence

MNCs are faced with diverse stakeholder environments across their international

operations. Multiple constituencies with various objectives affect the firm’s strategic

behaviour in addressing the final preferred objectives and rules of the game. Ansoff and

McDonnell (1990) outlined three ingredients to help analyse a firm’s legitimacy strategy:

(a) there was a need to analyse stakeholders’ objectives, (b) the legitimacy strategy

analyses and constraints, and (c) the analysis of power field environment. To manage the

firm’s boundaries, various researches had addressed gaps in the business environment

through forming alliances and interpersonal ties for successful operations.

156
 Figure 13 presents a prototypical MNC with multi-stakeholders and provides the

extent of their influence on the corporation’s governance. Stakeholders’ involvement

could reduce risk by providing feedback such as early warning signs of product safety

issues, human rights violations, or environmental concerns. Understanding the impact of

stakeholders’ issues and concerns helps MNCs articulate their values, mission, strategy,

and commitments and indicates how they implement regulatory approvals processes,

participation in measurement and reporting, crises management, and their proactive

involvement in their network of relationships (ESCAP, 2009).

157
 Host Country Gov. Customers and Stockholders Israeli policies of
(Palestine) users pose a Socially responsible closure regime and
Policies & continuing investment (SRI) restriction of
Regulations challenge to and engagement movement of people
(Investment laws) & business strategy activism and goods in West
PRDP Bank & Gaza

Multilateral Local civil

Special society
Interest
institutions (World organizations
Groups and
Bank, IMF, etc.) to social and special
support lending interest groups
partnerships Activism
MNC
Corporate
Int’l civil society Other companies
Organizations, leading CSR
NGOs aimed at benchmarks for
affecting MNCs sustainability in the
behavior market place

National & Int’l Suppliers Employee Local Unions and labor

Industry associations, Collaborate with Company HRM and & Int’l Labor
Chambers of suppliers for product work practices and Organization (ILO)
Commerce, WBCSD, design and services commitment to relations
code of conduct sustainability sustainability New regulations

Figure 13. MNC company governance and stakeholders.

158
 MNC Strategy Aggressiveness

Ansoff and McDonnell (1990) described two factors for the business’s strategic

approach: strategy aggressiveness and capability responsiveness. Strategy aggressiveness

was characterized by the firm’s application of tools, techniques, and know-how to enable

it to position itself in the environment. Ansoff described a firm’s strategy aggressiveness

according to two characteristics: first, the degree of discontinuity of the firm’s successive

strategic moves, such as between successive products that the firm introduces to the

market; and second, the timeliness of introduction of the firm’s new products.

Timeliness in this case ranged from reactive to anticipatory and to innovative and

proactive.

MNC Capability Responsiveness

Organizational responsiveness was characterized as the firm’s ability to respond,

and it included the manager’s capabilities and those of the organizational system as a

whole. Ansoff and McDonnell (1990) characterized organizational responsiveness

according to the manner in which a firm handles change. They characterized the firm’s

responsiveness as the degree to which its organization is either introverted or extroverted

and identified three organizational components for the firm’s capability responsiveness:

1. Managers: mentality, power, competency, and capacity

2. Climate: culture, risk propensity, time perspective, and change triggers

3. Competence: problems-solving skills, information technology, organizational

structure, rewards, and total headcount

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 Table 14, Matching Aggressiveness and Responsiveness to Turbulence, describes

the appropriate strategy aggressiveness and responsiveness levels that are necessary for

success through each turbulence level. Ansoff and McDonnell (1990) on one extreme

outlined the stable, placid environment where nothing changes, which is also known as

the “repetitive environment”; on the other extreme, they outlined the creative

environment, also known as the “surpriseful and unpredictable environment,” which is

characterized by major technological breakthroughs and sociopolitical upheavals.

Table 14

Matching Turbulence-Aggressiveness-Responsiveness

Environmental Repetitive Expanding Changing Discontinuous Surpriseful

Turbulence Repetitive Slow Fast Discontinuous Discontinuous
incremental predictable Unpredictable

Strategy Stable Reactive Anticipatory Entrepreneurial Creative

Aggressiveness Stable Incremental Incremental Discontinuous Discontinuous
based on based on based on New based on novel based on
precedents experience extrapolation observable creativity
opportunities

Capability Stability Efficiency Market Environmental Environment

Responsiveness seeking driven driven driven creating
Rejects Adapts to Seeks Seeks related Seeks novel
change change familiar change change
change

Closed Open
System System

LEVEL 1 2 3 4 5

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 Strategy and Strategic CSR

From a business perspective, CSR has different meanings depending on the

MNC’s strategic behavior in terms of forming its responses to its environment. In this

research, it is defined as a means to respond to sustainability challenges. Ansoff and

McDonnell (1990) postulated that an MNC’s strategic behavior could take the course of

either a responsive-reactive or a strategic-proactive way to respond to the environment

based on its turbulence level. In the responsive-reactive approach, companies perceive

sustainability issues as risks that should be mitigated to maintain the firm’s reputation for

appropriate behavior and be worthy of its license to operate. On the other hand, when

companies proactively integrate a strategic issue management system into their

operations, management would perceive it as an opportunity rather than a risk to their

reputation or operations.

The strategic and systematic integration of CSR into the company’s strategy

allows companies to respond to societal needs while satisfying company and stakeholder

financial goals. From the perspective of stakeholders, proactive CSR can be viewed as a

specific form of socioeconomic relationship wherein social and financial goals are

negotiated in an ongoing way between the company and its stakeholders. According to

Porter and Kramer (2006a, 2006b), companies should design their affirmative corporate

social agenda to extend beyond harm avoidance to embrace programs for social progress.

161
 CSR Change Management Framework

Ansoff and McDonnell (1990) defined a change management sequence of three

major components to deal with discontinuous change. They defined discontinuous

change as a novel change, where the past does not prepare the organizations for the

future, requiring major revisions in the culture, power structure, reward/incentive

systems, organizational structures, and relationships with the external environment. The

three major components are the following: (a) a change strategy to introduce new

products and services; (b) changes in the systemic competence of the firm’s systems,

structure, skills, and knowledge; and (c) a behavioral change including norms,

perceptions, values, models, and distribution of power (Ansoff & McDonnell, 1990).

Ansoff and McDonnell (1990) recommended a managed resistance change

strategy that looks like an accordion, where each panel is a separate project/module that

builds the final process. Each module consists of two parts, one comprising capability

and the other strategy projects. On one hand, there lies the capability that focuses on the

reduction of resistance to skill development and simultaneously lays down strategy that

focuses on direction, plans, and strategic positioning. The uniqueness of the process is

that each module can be modified based on inputs from previous modules and new

information from the external environment. Ansoff and McDonnell listed three areas that

need to be addressed before and during the application of change management: (a)

strategy choice, (b) building the launching platform, and (c) launching the transformation.

Another framework for embedding CSR into business strategies and practices has

also been recommended by the United Nations Economic and Social Commission for

Asia and the Pacific (ESCAP) (2009). The framework consists of three major categories:

162
(a) designing, (b) execution, and (c) mainstreaming. Figure 14 outlines three areas that

require specific CSR design, including (a) preparing for CSR embarkation to raise CSR

awareness inside the company, (b) assembling a CSR team, and (c) stakeholder

engagement in the CSR process. The second category is the execution of the CSR

strategic plan that outlines the implementation of the CSR integrated strategy, followed

by monitoring and evaluation of the CSR plan. The last category outlines internalizing

CSR into organizational systems, as well as corporate culture and values.

In the case of sustainable development in Palestine, the drivers for CSR

embedment are political stability, socioeconomic priorities, and governance. This is

where an MNC with stakeholder engagement can take leadership in the definition of the

societal needs pertinent to its location in Palestine through a social agenda that is part of

the core business strategy. With a substantially responsive CSR program, a company

chooses to be a good corporate citizen and serve social concerns for stockholders, and it

might help mitigate existing or anticipated adverse effects from its business activities

along with its value chain.

163
Figure 14. The three areas that require specific CSR design.

Research Model

The success of the CSR strategy depends on the internal CSR capabilities of the

firm, which are functional, such as research and development, marketing, production, or

general management capability. As the environmental turbulence level changes

164
quantitatively and qualitatively, so does the firm’s strategy—capability couplings have to

change to fit the turbulence level for optimal organizational performance.

The research model reflects MNC strategy “aggressiveness” and MNC capability

“responsiveness,” both of which influence the strategic CSR posture of the MNC. The

research model describes two gaps, the MNC strategy aggressiveness gap and the MNC

capability responsiveness gap. These are defined respectively as the difference between

the perceived level of environmental turbulence and the reactive-to-proactive nature of

MNC CSR posture to MNC activities. This study hypothesized that as the absolute value

of MNC strategy aggressiveness gap decreases, performance of the MNC increases.

Similarly, as the absolute value of MNC capability responsiveness gap decreases,

performance of the MNC increases. The MNC CSR strategic posture is, then, theorized

to have a significant relationship to the social and financial performance of MNC.

This research aimed to answer some fundamental questions regarding the needs of

the Palestine region in terms of business development in the 21st century. It also aimed to

provide a very current picture of why the area is ripe for CSR policy and why and how

multinational companies that move into the market there can enact change that will be

both good business and good corporate social behavior.

The social, political, and business environment in Palestine is characterized by

instability and severely challenged socioeconomic development that influences every

facet of MNC strategic behavior, from stakeholder relations to human resources to

environmental impacts. The region has seen the frequent, unpredictable, and surprising

occurrence of uprisings and blockades that make the business environment complex,

constantly changing, and volatile. The level of environmental turbulence in the West

165
Bank/Gaza region is reflected in the complexity of the business environment. Change is

often reactive rather than proactive due to the constancy of chaos. Successful, that is,

proactive rather than reactive, corporate responsibility strategy requires its integration

into MNC’s core business strategy. The Research Model is presented in Figure 15,

below.

Figure 15. The research model.

166
 Research Variables

The variables studied in this research included MNC environmental turbulence,

MNC strategy aggressiveness, MNC capability responsiveness, MNC CSR posture, MNC

strategy aggressiveness gap, MNC capability responsiveness gap, financial and social

performance. The summary of research study variables are summarized below.

MNC Environmental Turbulence

The level of “environmental turbulence” describes the types of opportunities,

threats, and trends in the environment that an MNC faces in its international operations.

Palestine is characterized by, and encumbered by, a small market and an uncertain

political and business environment, which creates multifaceted threats, surprising trends,

and bountiful opportunities. MNCs must vigilantly watch and measure these conditions

for relevance to their processes and policies. On the other hand, the continuation of

violence, border crossings, and security procedures all hamper the free movement of

goods and people. Consequently, MNCs require review of their economic viability, as

well as their political risk, such that they protect their FDI.

There are also important issues that must be resolved by the Palestinian Authority

(PA), such that MNCs continue to attract FDI and to promote a confident investment

climate. In addition, there are key national priorities that the PA outlines in its PRDP

plan that promote a viable climate for investors. These are comprised of contingencies,

such as (a) bringing the rule of law to the Palestinian territories, (b) combating violence,

(c) managing the Palestinian internal administrative affairs, (d) implementing institutional

reforms, and (e) developing a supportable infrastructure and economy.

167
 The characteristics of MNC environmental turbulence presented in Table 15 is

drawn from Lorton (2006) and Loebbaka’s (2008) environmental management systems

dissertations and Ansoff and McDonnell’s (1990) Strategic Success Paradigm. The five

levels of MNC issue turbulence correspond to the spectrum of strategic behaviors that are

applicable to this research study.

Table 15

MNC Issue Turbulence

Level 1 2 3 4 5

Turbulence Repetitive Expanding Changing Discontinuous Surprising

Characteristics

Complexity of Not at all Slightly Moderately Usually very Always

Issues complex complex complex complex highly
complex

Pace of Rare Time to Must respond Must catch up Always

Change respond quickly to change changing

Predictability Changes are Easily Usually Predictable, Unpredictable

of Change rare predictable predictable but some
surprises

MNC Strategy Aggressiveness

This study examined the advantages of integrating strategic CSR into a firm’s

core business strategy. Successful corporate responsibility involves policy development

between an MNC and its stakeholders. The CSR management system aggressiveness

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concept represents the mindset that MNC managers conceive to enact an overall CSR

perspective more strategically into their business operations. To not do so, for instance,

failure to satisfy consumer demands or provide acceptable pricing for safe products,

affects consumer confidence. To counter this requires organizational capability

responsiveness that meets the changing demands of various stakeholders, as well as

consumers. According to Clarkson (1995), an organization’s capability of satisfying

stakeholders’ demands is a key factor that determines the organization’s competitive

advantage.

Process Dimension of CSR “Built-in”

and “Bolt-on”

According to the RARE project’s Rhetoric and Realities: Analyzing Corporate

Social Responsibility in Europe, CSR sustainable management systems take two different

forms: the “built-in approach” and the “bolt-on” approach. The “built-in approach” deals

with building responsible behavior into the process. In addition, it includes efforts to

make corporate processes more sustainable, thereby improving the social properties of

the products and services tailored to host countries. Specifically, it strives to promote

sustainable consumption, sustainable extraction of raw material, and greening of

production and distribution processes, fair trade practices, and consumer information.

Additionally, it works to enforce compliance with ISO 26000 guidelines for corporate

social responsibility with respect to human rights and with the ILO’s labor standards,

especially as regards renunciation of child labor. It also supports efforts to increase

women’s participation on different management levels. Through a CSR management

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system, “change management” becomes an integral part of a firm’s strategic posture and

can create a bottom line impact.

The second form, the “bolt-on” approach, deals with company engagement with

pro-social initiatives beyond its core business operations and strategically can be linked

to the scope of business as the very raison d’être of the company. It is comprised of

strategic philanthropic activities, partnerships, and, most importantly, policies to manage

negative externalities in cooperation with external stakeholders.

The two processes can be considered as a continuum with management systems

“building in” responsibilities beyond compliance with regard to both goals and measures

followed by codes of conduct and reporting activities, while contributing at the same time

to sustainable development. The CSR management system aggressiveness requires that

the firm’s top management craft a CSR plan to transform the firm’s behavior. The

elements that contribute to CSR sustainable management system aggressiveness are

derived from the elements of strategic aggressiveness in Ansoff’s Strategic Success

Paradigm. Table 16 summarizes the five levels of CSR management system

aggressiveness that correspond to the five levels of MNC issue turbulence.

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Table 16

CSR MNC Management System Aggressiveness Verses MNC Issue Turbulence

Turbulence Level

1 2 3 4 5

Turbulence Static/ Repetitive Slowly changing Rapidly changing Discontinuous Surpriseful

Characteristics

CSR Company Fiduciary duty Corporate Corporate communications Strategic issue management Strategic CSR
Approach management reputation Business ethics leadership
Profit Philanthropy Strategic philanthropic
Maximization Public affairs Corporate identity activities
Public relations

CSR Stakeholder Stakeholder Stakeholder Stakeholder dialogue and Interactive strategic Partnerships and
Approach information with debate informal contacts stakeholder dialogue alliances
no interaction

Use of Technologies Use only current Adapt to new Implement Implement Seek novel
existing technologies and periodic/incremental continuous/incremental technologies
technologies quality control technologies creative technologies
management
systems

(table continues)

171
Table 16 (continued)

Turbulence Level

1 2 3 4 5

Change Management Reject change and Welcome change Adapt to change for new Change for potential risk and Integrate creative
seek stability for existing CSR instruments opportunity change
instruments

Maintain Strategic CSR as

Maintain profit Strategic issue management
CSR Strategy Maintain CSR financial a form of
maximization with limited and strategic philanthropic
Integration Mindset strategy isolation responsibility to engagement with
philanthropic activities activities
shareholders stakeholders

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 CSR Capability Responsiveness

CSR management system responsiveness represents the ability of the CSR

management system to respond to stakeholders’ demands regarding societal needs while

optimizing the MNC’s economic performance. Ansoff and McDonnell (1990) defined

the general management capability of an organization as consisting of two key factors,

the capabilities of the general managers and the capabilities of the management

organization. According to Ansoff and McDonnell, levels of strategic aggressiveness and

capability responsiveness appropriate to the level of environmental turbulence are

required for business success.

Basically, the CSR management system represents the capabilities of the top

management to craft the CSR initiatives. This includes the formation of a socially

diverse CSR team that represents different departments. Such a team makes clear the

organizational mindset and goal-setting, which can then implement state-of-the-art

technologies and maintain continuous knowledge of globally, accepted CSR instruments.

D’Amato, Henderson, and Florence (2009) cited that leadership competencies include

courage, business acumen, and a vision of the company’s legacy. They added that a

leader should be remembered as a person who designed, not just a company, but a society

that is educated and economically sustainable.

Ansoff and McDonnell (1990) stressed that business strategy should be aligned

with organizational strategy. Based on this concept, sustainability and CSR should be

aligned and integrated with organizational business strategy. The design structures and

systems should address sustainability and CSR societal needs, implement CSR change

management, overcome organizational resistance to change, empower team engagement

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with stakeholders, and support performance to build a new culture to support the CSR

implementation process.

The hypothesis presented in this research was that MNC performance is

optimized when MNC strategy aggressiveness and MNC capability responsiveness are

aligned with MNC issue turbulence. In the research model, the difference between MNC

issue turbulence and MNC strategy aggressiveness was named MNC strategy

aggressiveness gap. Similarly, the difference between MNC issue turbulence and MNC

capability responsiveness was named MNC capability responsiveness gap. The research

model also indicated the CSR strategic posture reflecting the influence of MNC issue

turbulence, CSR management system aggressiveness, and CSR management system

responsiveness for MNC CSR continuum.

Table 17 outlines the five levels of CSR management system responsiveness that

correspond to the five levels of MNC issue turbulence.

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Table 17

CSR MNC Management System Responsiveness Verses MNC Issue Turbulence

Turbulence Level

1 2 3 4 5

Turbulence
Static/Repetitive Slowly Changing Rapidly Changing Discontinuous Surpriseful
Characteristics

No commitment to
Focuses on risk Creates awareness Creates new form of
Top Management address CSR issues Implements CSR
mitigation and harm and understanding of engagement with
Involvement in CSR Political change management
avoidance CSR issues stakeholders
Public relations
Political
Charismatic and
Leadership Skills
transformational

Forms cross-
Explores CSR added Plans for new CSR Acts as CSR agents
Primary roles and functional CSR
CSR Team roles and roles and to implement change
responsibilities teams within
responsibilities responsibilities management
departments

(table continues)

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Table 17 (continued)

Turbulence Level

1 2 3 4 5

CSR Policies, CSR policies,

Programs, Policies, programs standards, and
International and standards are not programs are
Standards, and part of organization formalized to
Guidelines stakeholders

Staff Knowledge of Expert Knowledge of

Effective knowledge
CSR Policies, Knowledge of Some knowledge of Moderate knowledge new CSR policies,
of CSR policies,
Programs, existing internal CSR policies, of CSR policies, programs and
programs, and/or
International policies programs and/or programs, and/or international
standards
standards and/or standards/guidelines standards/guidelines standards and/or
and guidelines
Guidelines Guidelines

Seek novel and

Reject Accept familiar risks Seek familiar risks Seek unfamiliar risks
CSR Risk Propensity creative risks and
and opportunities And opportunities and opportunities
opportunities

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 CSR Management System Strategic
Posture

Ansoff and McDonnell (1990) referred to the combination of the firm’s strategic

aggressiveness, its capability responsiveness, and its change management as the

“strategic posture” of the firm. The strategic posture of the firm is derived through

diagnosing the future levels of environmental turbulence and the desired strategic

aggressiveness and capability responsiveness of the firm, based on the gap analysis

approach. They stated that the outcome of the gap analysis and the closure of these gaps

were the bases for implementing change management and further establishing the

strategic aggressiveness and general management responsiveness required for optimum

performance. According to Ansoff and McDonnell, the general management capability

responsiveness includes the general management and the supporting organization. The

closure of the gaps in general management capability responsiveness that supports

strategy aggressiveness requires significant change in organizational behavior in order to

overcome resistance (Ansoff & McDonnell, 1990).

Table 18 depicts the attributes of general management capability.

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Table 18

The Attributes of General Management Capability

Attribute Managers Organization

Climate Mentality Culture

Will to Respond Power Position Power Structure

Competence Talents Structure

Ability to Respond Skills Systems
Shared Knowledge

Capacity Personal Organizational

Volume to Response

Based on research of Palestine, the drivers of CSR include the following: (a)

socioeconomic priorities, (b) governance gaps, (c) market access, (d) political stability

and reform, (e) investment incentives, (f) supply chain factors, (g) stakeholder activism,

and (h) international standardization. The firm’s CSR strategic posture should

specifically target the impact of the MNCs’ activities in the workplace; that is, labor

standards, human resources, organizational development, and the marketing that defines

the MNC to its customers, including product manufacturing and quality, distribution

access, and selling practices should be transparent to employees, as should concerns

about the sustainability of company technologies. The CSR should address the

socioeconomic development challenges facing Palestine. This would include generating

employment to alleviate poverty; capacity building; health-care provision; infrastructure

development; peace-building; helping to rebuild weak government institutions; political

178
reforms; and human rights, as well as challenging governance gaps regarding social

services and anti-corruption issues.

The Research Questions and Hypotheses

The research questions focused primarily on management issues that relate to

improved MNC financial and social performance. The following list of research

questions was constructed based on the above information:

Research Question 1. What is the relationship between the MNC strategy

aggressiveness gap and the MNC’s financial performance?

Hypothesis 1. There is a reliable relationship between MNC strategy

aggressiveness gap and MNC financial performance.

Research Question 2. What is the relationship between the MNC strategy

aggressiveness gap and the MNC’s social performance?

Hypothesis 2. There is a reliable relationship between MNC strategy

aggressiveness gap and MNC social performance.

Research Question 3. What is the relationship between the MNC capability

responsiveness gap and the MNC’s financial performance?

Hypothesis 3. There is a reliable relationship between MNC capability

responsiveness gap and MNC financial performance.

Research Question 4. What is the relationship between the MNC capability

responsiveness gap and the MNC’s social performance?

Hypothesis 4. There is a reliable relationship between MNC capability

responsiveness gap and MNC social performance.

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 Research Question 5. What is the relationship between the MNC’s strategy

aggressiveness and the MNC’s social responsibility (CSR) posture?

Hypothesis 5. There is a reliable relationship between MNC strategy

aggressiveness and MNC social responsibility (CSR) posture.

Research Question 6. What is the relationship between the MNC’s capability

responsiveness and the MNC’s social responsibility (CSR) posture?

Hypothesis 6. There is a reliable relationship between MNC capability

responsiveness and MNC social responsibility (CSR) posture.

Research Question 7. What is the relationship between the MNC’s CSR posture

and the MNC’s financial performance?

Hypothesis 7. There is a reliable relationship between MNC CSR posture and

MNC financial performance.

Research Question 8. What is the relationship between the MNC’s CSR posture

and the MNC’s social performance?

Hypothesis 8. There is a reliable relationship between MNC CSR posture and

MNC social performance.

Research Question 9. What is the relationship between the MNC’s financial

performance and the MNC’s social performance?

Hypothesis 9. There is a reliable relationship between MNC financial

performance and MNC social performance.

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 Research Strategy

The methodology for this research study was based on the Strategic Success

Paradigm (SSP) presented by Ansoff and McDonnell (1990). This methodology was

operationalized in this study through the relationship between MNC environmental

turbulence, MNC aggressiveness, and MNC capability responsiveness. Specifically, the

study hypothesized that organizational performance is improved when MNC strategy

aggressiveness, MNC capability responsiveness, and MNC CSR strategic posture are

aligned with MNC issue turbulence. The environmental turbulence was the driving

variable that determined whether the firm’s strategic behavior would succeed in an

environment. As part of the MNC’s strategy, CSR was considered an integral part of the

overall core business strategy to optimize economic and social performance for

companies operating in Palestine.

This study evaluated four independent variables: (a) MNC issue turbulence, (b)

MNC strategy aggressiveness, (c) MNC capability responsiveness, and (d) MNC CSR

strategic posture. The MNC strategy aggressiveness gap and the MNC capability

responsiveness gap were the two intervening variables. The two dependent variables

were the MNC’s financial performance and the MNC’s social performance. The industry

type, business, business sector, and business activity were control variables. The data for

each variable were evaluated based on interval scales. The research consisted of

statistical hypothesis testing using a descriptive correlation approach. Data were

statistically analyzed using the SPSS program to test the hypotheses of the research study.

A probability value was generated based on the statistical analysis of the hypotheses of

the research study. A threshold value of 5% was used for the sample size to assess

181
statistical significance of the null hypothesis. Table 19 outlines the variables of this

research study with conceptual and operational definitions.

Table 19

Variables of the Research Study With Conceptual and Operational Definitions

Variables Conceptual Definition Operational Definition

MNC Environmental MNC Environmental

Turbulence is characterized by Turbulence is measured
the (a) complexity, (b) rapidity through an arithmetic mean
of change, and (c) calculation from each
predictability of the business respondent for Questions 1
environment in Palestine. It through 8, using a 5-point
MNC Environmental will measure the company’s Likert scale.
Turbulence response relative to changes in
(Independent) the business environment and
predictability of economic,
political, and security closure
policies and complexity of
regulations and financial
policies that affect a firm’s
activities and business
environment.

It will measure the MNC’s The MNC Strategy

behavior toward the Aggressiveness is measured
integration of CSR as an through calculating the
integral part of its core arithmetic mean from each
business operations, the respondent for Questions
company’s approach to change 9–13, using a 5-point Likert
MNC Strategy Aggressiveness on issues pertaining to CSR, scale.
(Independent) the top management’s mindset
and CSR goals, whether CSR
is conceived of organization as
a new form of engagement
with stakeholders, and how
receptive the company is to
new technologies for the
production of quality products.

(table continues)

182
Table 19 (continued)

Variables Conceptual Definition Operational Definition

It is characterized by the The MNC Capability

ability of management and its responsiveness is measured by
organizational system to calculating the arithmetic
respond to CSR issues in the mean for the following
business environment. It is questions: 14-26, using 5-
measured through a series of point Likert scales.
questions that examine top
MNC Capability
management’s involvement in
Responsiveness
CSR issues, organizational
(Independent)
leadership that supports CSR
initiatives, policies and
programs developed for
stakeholders, management’s
knowledge of international
standards, initiatives, and
various factors that MNCs
consider when contemplating
investment in Palestine.

The conceptual definition of The operational definition of

MNC posture articulates the MNC posture is measured by
two approaches, the “built-in,” calculating the arithmetic
which deals with building mean for Questions: 27–36,
responsible behavior in the using a 5-point Likert scale.
organization; and the “bolt-
on,” which deals with
MNC CSR Posture company engagement using
(Independent) pro-social initiatives that
extend beyond the core
business operations. It will be
measured through a series of
questions pertinent to the
firm’s strategic
aggressiveness, its capability
responsiveness, and its change
management stance.

(table continues)

183
Table 19 (continued)

Variables Conceptual Definition Operational Definition

The conceptual definition of The operational definition of

the MNC aggressiveness gap the MNC aggressiveness gap
MNC Strategy is a measure of how much an is calculated as the absolute
Aggressiveness Gap organization’s MNC difference between the scores
(Intervening) aggressiveness differs from its of MNC aggressiveness and
issue turbulence. MNC issue turbulence from
each respondent. The MNC
aggressiveness gap can range
in value from 0 to 4.
The conceptual definition of The operational definition of
the MNC responsiveness gap the MNC responsiveness gap
MNC Capability is a measure of how much an is calculated as the absolute
Responsiveness Gap organization’s MNC difference between the scores
(Intervening) responsiveness differs from its of MNC responsiveness and
MNC issue turbulence. MNC issue turbulence of each
respondent. The MNC
responsiveness gap can range
in value from 0 to 4.
MNC financial performance is The financial performance is
a measure of the firm’s calculated as the arithmetic
finance when the CSR mean from each respondent
MNC Financial Performance management system is part of for Question 37. It measures
(Dependant) the core business strategy. the average firm’s return on
equity (ROE) over the last 3
years’ percentage of MNC
operations (ratio of income to
shareholder’s equity).
A measure of important The operational definition of
elements of MNC social the social performance is
performance that contributes calculated as the arithmetic
MNC Social Performance to the firm’s stakeholders as mean from each respondent
(Dependant) evidenced by implementation for Questions 38-55.
of beneficial programs to the
firm’s employees and external
stakeholders.
It is a measure to categorize Industry Type is identified in
Industry Type , Business
business classification, sector, Question 56, 57, and 58,
Sector, and Business Activity
and activities of the MNC’s respectively.
(Control)
operations.

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 Data Sources

The target population for this research included multinational corporations

(MNCs) and domestic Small and Medium Enterprises (SMEs) that had operations in or

were contemplating undertaking FDI investment in Palestine. The intended survey

respondents must have had the knowledge and expertise regarding the political and the

socioeconomic challenges in the Middle East, mainly of a conflict-prone region such as

Palestine. Two multiple sets of samples were downloaded into a Microsoft Excel

spreadsheet from two Web site sources: the Palestinian Trade Center (Pal Trade) and

Palestine Stock Exchange (PSE), respectively. Pal Trade is a national trade development

organization that has 339 memberships for Palestinian leading businesses (see Appendix

A) of various industry sectors in the West Bank and Gaza. There were 43 companies

listed on the Palestine Stock Exchange in various industries, and they were actively

traded on the PSE market (see Appendix B). These companies were mainly located in

the West Bank and Gaza. Company names, contact persons, industry sectors, e-mail

addresses, and telephone and fax numbers were tabulated. Companies that responded to

the survey instrument were industries in the following: (a) manufacturing, (b)

communication and advertising, (c) IT and networking, (d) real estate, (e) construction,

(f) financial services and banking, (g) telecommunication, (h) retail, and (i) business

consulting firms.

Instrument and Procedure

The questionnaire was set up online using SurveyMonkey.com, and a link to the

survey was e-mailed to listed companies on Pal Trade and PSE to participate in the

185
survey. An introductory page that briefly described the purpose of the study, with

information required by the Institutional Review Board (IRB) and instructions for

completing the survey, was attached to survey. Massar International, a private business

consulting firm and a subsidiary of the main firm that promoted sustainable development

in Palestine, was consulted to communicate with companies in Palestine to either

participate through online SurveyMonley.com and/or provide companies with printed

questionnaires in PDF format downloaded from the Survey Monkey Web site on both

sides of 8½ x 11-inch white paper. Respondents preferred a direct e-mail to their

companies with an attached questionnaire that was downloaded from SurevyMonkey.com

in a PDF format.

Validity and Reliability

The survey questionnaire was built on an extensive review of the literature

pertinent to the business environment in Palestine. Additionally, a comprehensive

investigation of corporate social responsibility (CSR) concepts, policies, international

initiatives, guidelines, and standards directed this research study. Research on the

business environment in Palestine was modeled on research done by multiple,

recognizable, international organizations of repute. The dissertation committee members

provided helpful resources and recommendations and have been instrumental in guiding

this research study. Previous research questions designed by committee chairperson Dr.

Greg Lorton and committee member Dr. Kevin Loebbaka served as a guide in structuring

the research questions in this study.

186
 Suggestions and recommendations on the survey validity were sought from a third

party, Massar International, which has extensive knowledge about the business

environment in Palestine. The variables analyzed in this research were calculated from

the respondents’ answers to multiple questions. Reliability measurements were

undertaken for the independent and dependent variables within the study using

Cronbach’s alpha. The reliability and descriptive statistics for these variables are

presented in Table 20.

Table 20

Variable Reliability and Descriptive Statistics

Variable Alpha Scale Mean Range SD

MNC Environmental
Turbulence .818 1–5 3.17 2.13–4.50 .714

MNC Strategy
Aggressiveness .489 1–5 3.23 2.20–4.00 .598

MNC Capability
Responsiveness .821 1–5 3.66 2.77–4.38 .559

MNC CSR Posture .641 1–5 3.26 2.60–4.60 .567

MNC Aggressiveness
Gap -- 0–4 .55 .03–1.47 .489

MNC Responsiveness
Gap -- 0–4 .61 .02–1.79 .549

Social Performance .554 1–5 3.41 2.45–4.17 .526

Financial Performance
(as ROE) -- percent 8.12 -10–+27 12.38

Note. N = 11.

187
 Data Analysis

The survey questionnaire was sent to 316 companies that operated at the time of

the survey taken in Palestine. There were 15 companies that responded to the survey.

One company missed a major part of the questionnaire pertaining to financial and social

performance and was removed from the sample. Another company in the technology

sector was eliminated from the sample because it did not insert its financial performance.

In addition, two more companies declined to participate in the survey. The research

study was analyzed based on 11 returned surveys. The response rate was approximately

5%.

The data collected through the questionnaire were coded into a Microsoft Excel

spreadsheet that included data collected for MNC issue turbulence, MNC strategy

aggressiveness, MNC capability responsiveness, MNC corporate social responsibility

(CSR) posture, and financial and social performance of each MNC. Data were

statistically analyzed using the SPSS program to test the hypotheses of the research study.

A probability value was generated based on the statistical analysis of the hypotheses of

the research study. A threshold value of 5% was used for the sample size to assess

statistical significance of the null hypotheses.

Assumptions

The methodology of the research model, measurements, and data analysis

included the following assumptions:

188
 1. The research method and procedures were suitable for this study.

2. Respondents to the questionnaire understood and were able to answer the

questions with honesty and transparency.

3. Respondents were familiar with the business environment and familiar with

their organization’s CSR involvement.

Limitations

One of the limitations of this research study was that a limited number of

multinational companies operated in the West Bank and Gaza territory. The private

sector establishments constituted 90.7% of total businesses. These were largely family-

based, small-sized, and low-capacity businesses. Consequently, CSR was new to

Palestine, but MNCs doing business there were importing CSR policies that were well-

established in developed countries. Domestic local companies and MNCs operating in

Palestine were sought for this research study. Although there were not enough MNCs

operating in Palestine, the studies required multiple respondents from the same

organization and their subsidiaries to fine tune the research to test the hypotheses in the

research study. The number of companies that responded was limited, and a small

sample of 11 companies was used to analyze and test the hypotheses in the research

study.

Another limitation for this research study was the possibility of the population

being conditioned to a high level of turbulence that might have produced bias from the

respondents. The environment in Palestine has been shaped by conflict, violence, and

continued unrest for many decades. The long-term social and cultural norms of

189
acceptance of a high turbulence level might have shifted the business environment to

acceptance of a moderate high turbulence level.

Research Findings

MNC environmental turbulence, MNC strategy aggressiveness, MNC capability

responsiveness, MNC CSR posture, and MNC social and financial performances were

directly computed from responses to survey questions. The MNC aggressiveness gap and

MNC responsiveness gap were calculated as the difference between MNC environmental

turbulence and MNC aggressiveness and MNC responsiveness, respectively.

A summary of the results from Hypotheses 1, 2, 3, 4, 5, 6, 7, 8, and 9 are

presented in Table 21. Hypotheses 1, 2, 3, 4, and 5 were not supported at significance

levels of less than 0.05. Hypotheses 6, 7, 8, and 9 were supported at a significance level

of less than 0.05.

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Table 21

Summary of Statistical Results

Hypotheses Statistical (rho) Value p Value Supported

Test

H1 Relationship between MNC Spearman’s .137 .689 Not

Strategy Aggressiveness Gap rho Supported
and MNC financial
performance

H2 Relationship between MNC Spearman’s .191 .574 Not

Strategy Aggressiveness Gap rho Supported
and MNC social performance

H3 Relationship between MNC Spearman’s .534 .09 Not

Capability Responsiveness rho Supported
Gap and MNC financial
performance

H4 Relationship between MNC Spearman’s .424 .194 Not

Capability Responsiveness rho Supported
Gap and MNC social
performance

H5 Relationship between MNC Spearman’s .385 .243 Not

strategy aggressiveness and rho Supported
MNC corporate social
responsibility (CSR) posture

H6 Relationship between MNC Spearman’s .642 .033 Supported

capability responsiveness and rho
MNC corporate social
responsibility (CSR) posture

H7 Relationship between MNC Spearman’s .735 .01 Supported

CSR posture and MNC rho
financial performance

H8 Relationship between MNC Spearman’s .642 .033 Supported

CSR posture and MNC social rho
performance

H9 Relationship between MNC Spearman’s .665 .026 Supported

financial performance and rho
MNC social performance

Note. N = 11.

191
 Discussion of Findings

The sample sizes, means, standard deviations, and reliability outcome pertaining to

the variables were presented in Table 20. Spearman’s rho revealed no statistical

correlation for Hypotheses 1, 2, 3, 4, and 5 for a significance level less than .05.

Spearman’s rho revealed a statistically reliable relationship for Hypotheses 6, 7, 8, and 9

and was supported at a significance level of less than 0.05.

Hypothesis 6, the relationship between MNC capability responsiveness and MNC

corporate social responsibility (CSR) posture, was supported (p < 0.033), indicating that

those firms that scored high on capability responsiveness tended to score high on CSR

posture. As the firm’s managerial and organizational system had the ability to respond to

CSR issues in the business environment, the firm’s CSR posture became proactive and

had the ability to build competence and implement CSR change management.

Hypotheses 7 and 8 were statistically supported, respectively (p <.010 and p <

0.033), which indicated that relationships existed between an MNC CSR posture and its

financial and social performance. Firms that scored high on MNC CSR posture tended to

score high and increase their financial and social profitability. As the firm’s CSR posture

became proactive—to build a responsible behavior, implement CSR change management,

and engage with stakeholders to respond to societal needs—the firm’s financial and

social profitability increased.

Hypothesis 9 showed a statistically significant relationship (p < 0 .026) between

financial and social performance. Firms that proactively implemented CSR posture and

engaged with pro-social activities to respond to societal needs and scored high on social

performance tended to score high on financial performance. This outcome indicated that

192
as firms implemented successful CSR policies in which all stakeholders were invested,

the company would be financially successful.

The research findings also showed a significant relationship with development of

viable national economy (r [11] = .781, p = .005), a significant relationship with

enhancing government institutions (r [11] = .741, p = .009), and a significant relationship

with supportive investment climate (r [11] = .740, p = .009). It was found that MNC

strategy aggressiveness had a significant relationship with CSR core business strategy

incorporation (r [11] = .831, p = .002), a significant positive relationship with companies’

approach to interaction with stakeholders (r [11] = .760, p = .007), a significant positive

relationship with MNC managerial skills (r [11] =.960, p = .00), and a significant positive

relationship with MNC leadership skills (r [11] =.819, p = .002.). These significant

relationships indicated that companies that scored high on these variables tended to score

high for a supportive business environment and a proactive CSR posture for firms

operating in Palestine. For instance, there would be the need for a proactive posture to

integrate strategic CSR in a firm’s core business strategy, the need for interaction with

stakeholders to define societal needs, and the need for managerial and leadership skills to

implement a new change management and institutionalize CSR embedment in the firm’s

business operations for optimal financial and social performance.

Palestine is characterized by, and encumbered by, a small market and an uncertain

political and business environment, which created multifaceted threats, surprising trends,

and bountiful opportunities. The level of environmental turbulence in the West

Bank/Gaza region was reflected in the complexity of its business environment.

According to the World Bank (2009a), the political and the socioeconomic environments

193
in Palestine had seen frequent, unpredictable, and surprising upheavals. Firms operating

in Palestine should develop and install an environmental surveillance and capability

analysis management system to detect discontinuities in the market place and proactively

respond to societal challenges . The drivers for CSR pertaining to socioeconomic

priorities and political stability ought to be implemented to achieve sustainable

development in Palestine. MNC engagement with stakeholders could take the leadership

in defining the societal needs pertinent to the location in Palestine through a social

agenda as part of the core business strategy.

The strategic and systematic integration of CSR into the company’s strategy would

allow companies in Palestine to respond to societal needs while satisfying company and

stakeholder financial and societal goals. According to Ansoff (1984), the optimal

performance of an organization would require MNC strategy aggressiveness and

organizational capability responsiveness to match the level of environmental turbulence

in which the firm operated. Realizing that there were different types of environments,

different strategy-capability couplings were required for successful operation in Palestine.

Additional Findings

The additional findings of this study examined the relationships between MNC

environmental turbulence and various factors that affect the business environment in

Palestine for successful operations. The external political, socioeconomic, and legal

environment was extensively researched and concluded that a supportive investment

environment for companies seeking foreign direct investment (FDI) in Palestine needed a

transparent, stable, and predictable investment climate for successful operations.

194
 MNC environmental turbulence showed a significant relationship with political

stability (r [11] = .937, p = .000). Goll and Rasheed (2002) concluded that a positive

relationship was dependent upon the business environment in which the firm was

operating. Loree and Guisinger (1995) indicated that equity FDI was positively linked to

political stability. The research showed a positive strong relationship between political

stability and development of a viable national economy in Palestine (r [11] = .872, p =

.00).

According to the World Bank Operations Evaluation Department (WBOED)

(1998), one aspect of successful post-conflict rebuilding was the necessity of

interdependent and mutually reinforcing political, economic, and military pillars to

consolidate the peace. A strong economic recovery could not be built on a fragile peace,

and a strong peace could not be built on a fragile economy. The research showed a

significant relationship with developing a viable infrastructure (r [11] = .792, p = .004).

Empirical research indicated that physical infrastructure influenced MNC decisions in

that it formed the basis of calculations regarding the expected costs of moving raw

materials and finished goods to and from a MNC home base (Loree & Guisinger, 1995;

Root & Ahmad, 1978). The research showed a significant relationship with development

of viable national economy (r [11] = .781, p = .005), a significant relationship with

enhancing government institutions (r [11] = .741, p = .009), and a significant relationship

with supportive investment climate (r [11] = .740, p = .009). Successful multinational

companies operating in this challenging market should diagnose their environmental

turbulence with inside-out and outside-in approaches to optimize their long-term

economic and social profitability.

195
 The MNC strategy aggressiveness examined other relationships that are positively

correlated. It was found that MNC strategy aggressiveness had a significant relationship

with CSR core business strategy incorporation (r [11] = .831, p = .002), a positive

correlation with CSR goal and mindset of the organization (r [11] = .633, p = .037),

positive correlation with MNC capability responsiveness (r [11] = .654, p = .029), and a

positive relationship with transparency in commercial transactions (r [11] = .640, p =

.034).

Prahalad and Hart (2002) argued that transaction governance capacity (TGC) was

a fundamental dimension of a transparent market for capital, land, labor, commodities,

and knowledge, which further would set the stage for a supportive investment climate.

The study showed a positive relationships with sustainable job creation (r [11] = .650, p =

.03) and political risk insurance (r [11] = .627, p = .039). Political risk was a top concern

for corporate foreign investors when venturing into emerging markets (MIGA, 2009).

Specifically, for developing countries, political risk was a major factor in the investment

decision-making of foreign investors (Okoroafa, 1986). The research showed a

significant relationship with free inflow and outflow of foreign currency (r [11] = .753, p

= .007). El-Said and El-Hennawi (1982) found that favorable conditions for profit

repatriation and capital had a positive impact on management decisions to invest in

developing countries.

The MNC capability responsiveness variable showed a positive correlation with

promoting an investment climate in Palestine (r [11] = .798, p = .004); a significant

positive relationship with companies’ approach of interaction with stakeholders (r [11] =

.760, p = .007); a significant positive relationship with MNC managerial skills (r [11]

196
=.960, p = .00); a significant positive relationship with MNC leadership skills (r [11]

=.819, p = .002); a positive correlation with access to resources as an important factor in

the decision-making of MNC FDI investment in Palestine (r [11] = .670, p = .024); a

significant positive relationship with collaboration between MNCs as an important factor

of cooperation with stakeholders (r [11] = .729, p = .011); a significant positive

relationship with creating transparency in commercial transactions (r [11] = .927, p =

.00); a positive relationship with employee health plan programs contribution (r [11] =

.667, p = .036); a positive relationship with sustainable job creation as a contribution to

socioeconomic development in Palestine (r [11] = .724, p = .012); a positive relationship

with companies’ support initiatives to attract FDIs to Palestine (r [11] = .686, p = .02

<.05); a significant positive relationship with companies’ support of local education,

health, and enterprise development programs (r [11] = .749, p = .008); a positive

significant relationship with tax incentives and exemptions as an important factor to

consider when investing in Palestine (r [11] = .828, p = .002); a positive relationship with

companies’ innovation to manufacture products and services tailored to local markets in

Palestine (r [11] = .669, p = .024); and a positive relationship with free inflow and

outflow of foreign currencies as an important factor to consider for MNC operations in

Palestine.

The MNC CSR posture variable showed a strong positive relationship with MNC

cooperation with non-governmental organizations’ (NGOs) stakeholders (r [11] = .843, p

= .001), MNC cooperation with civic and local government in Palestine as an important

factor in the decision-making (r [11] = .743, p = .009), a positive relationship with

cooperation with not-for-profit (NFT) organizations (r [11] = .681, p = .021), a positive

197
relationship with creating sustainable jobs in Palestine (r [11] = .649, p = .031), a positive

relationship with employee health plans (r [11] = .690, p = .019), a positive relationship

with MNC capability responsiveness gap (r [11] = .674, p = .023), a positive relationship

with MNC’s CSR involvement (r [11] = .702, p = .016), and a positive relationship with

promoting managerial skills (r [11] = .654, p = .029).

The additional positive correlations of the MNC return on equity (ROE) pertained

to the importance of the MNC collaborations and interaction with stakeholders (r [11] =

.618, p = .043), collaboration between MNCs (r [11] = .703, p = .016), cooperation with

NGOs (r [11] = .712, p = .014), and a strong positive relationship with employee health

plan programs (r [11] = .798, p = .003).

The additional findings with social performance showed positive relationships

with MNC capability responsiveness (r [11] = .606, p = .048), importance of investment

in human resources (r [11] = .699, p = .017), support of internal and cross border

business (r [11] = .626, p = .039), and support initiatives to attract FDIs to Palestine (r

[11] = .618, p = .043), and a negative relationship with complexity of regulations and

financial frameworks in Palestine (r [11] = - .740, p = .009). Mendibil et al. (2007)

described how in practice innovation and social responsibility appeared to come together

through strong engagement with employees and external stakeholders. The report added

that CSR needed to be part of core business strategy if it was to be a competitive

differentiator. MNC strategic posture planning requires integration of international

instruments in framing the CSR plan for successful operations.

198
 Conclusions

The study examined the relationships among MNCs’ environmental turbulence,

MNC strategy aggressiveness, MNC capability responsiveness, MNC corporate social

responsibility (CSR) posture, and the financial and social performance of MNCs

operating in Palestine. This study hypothesized that organizational performance was

improved when MNC strategy aggressiveness and MNC capability responsiveness were

aligned with MNC issue turbulence level. The sample sizes, means, standard deviations,

and reliability outcome pertaining to the variables were presented in Table 20.

Spearman’s rho revealed no statistical correlation for Hypotheses 1, 2, 3, 4, and 5 for a

significance level less than .05. Spearman’s rho revealed a statistically reliable

relationship for Hypotheses 6, 7, 8, and 9 and was supported at a significance level of less

than 0.05.

According to Ansoff and McDonnell (1990), levels of strategic aggressiveness

and capability responsiveness appropriate to the level of environmental turbulence were

required for business success. Basically, embedment of CSR management system in the

companies’ operations would require the capabilities of firms’ top management to craft

CSR initiatives and respond to socioeconomic challenges facing Palestine. This would

(a) generate employment to alleviate poverty, (b) support capacity building, (c) support

health-care provisions, (d) promote infrastructure development, (e) help peace-building,

(f) help to rebuild weak government institutions, (g) institutionalize political reforms, and

(h) preserve human rights, as well as (i) challenge governance gaps regarding social

services and anti-corruption issues.

199
 According to Ansoff and McDonnell (1990), the strategic posture of the firm was

derived through diagnosing the future levels of environmental turbulence and the desired

strategic aggressiveness and capability responsiveness of the firm based on the gap

analysis approach. The closure of these gaps was the basis for implementing change

management and further establishing the strategic aggressiveness and general

management responsiveness required for optimum financial and social performance. The

MNC CSR posture showed significant relationships with NGOs, civic and local

government, and company interaction with stakeholders and NFP organizations. Mainly,

MNC CSR posture showed a positive relationship with sustainable job creation for firms

operating in Palestine.

According to Porter and Kramer (2011), the most important thing a corporation

could do was to contribute to a prosperous economy because with that contribution, the

corporation could change the state of affairs with regard to social welfare. Based on the

findings of this research study, incorporating strategic CSR into a firm’s core business

would improve the organization’s financial and social performance.

In addition to these findings, multinational companies’ engagement and

collaboration with stakeholders, government, civic agencies, NGOs, and NFP organizations

showed positive and significant relationships with MNC CSR posture that could lead to

sustainable development. This was consistent with Kidder’s (2006) statement that a

carefully crafted coalition of international businesses, NGOs, and prominent businesses

could be organized to improve economic conditions in Palestine.

200
 Recommendations for Business Managers

The research study examined integration of CSR strategies in multinational and

local companies in Palestine with the objective of maximizing both profits and social

performance that would lead to socioeconomic development. Firm leaders and managers

could improve their competitive advantage by embedding CSR strategies as part of their

core business strategy. The conclusions of this study pointed out that MNC CSR posture

could add value and obtain competitive advantage and be profitable through socially

responsible activities. Acting strategically, CSR management systems should be

integrated with core corporate strategies.

According to Porter and Kramer (2002), companies’ actions should be seen as

adding value to their products in the eyes of the public and should also improve their

local business environment. It is critical for managers to outline a CSR change

management system where strategy aggressiveness and capability responsiveness match

the level of turbulence in Palestine. MNC’s management should diagnose the

environment based on inside-out and outside-in approaches and proactively respond to

societal challenges through dialogue with stakeholders operating in Palestine. This is

where an MNC with stakeholder engagement can take leadership in the definition of the

societal needs pertinent to its location in Palestine through a social agenda that is part of

the core business strategy.

201
 Contributions to the Academic Field
of Strategic Management

It is posited that good social responsibility is good business. This study

contributed to the field of strategic management by empirically testing and validating

hypotheses regarding the relationships between environmental turbulence, MNC strategy

aggressiveness, and MNC capability responsiveness for MNCs operating in a conflict-

prone zone such as Palestine. The study provided researchers and professionals with

tools for aligning the business environment with the political environment and for

maximizing stakeholder legitimacy strategy and CSR for optimal financial and social

performance. This research study empirically validated the application of Ansoff’s

Strategic Success Paradigm (SSP) in the area of strategic CSR as part of core business

strategies. It also complemented the works Dr. Greg Lorton’s environmental system

integration (2006) and Dr. J. K. Loebbaka’s (2008) safety management system

integration.

Contributions to the Practice

of Management

This study was designed to examine the background of the MNC issue turbulence

in Palestine. It clarified the CSR strategic approach as an integral part of the overall core

business strategy for optimum financial and social profitability. The study summarized

the strategic success paradigm (SSP) as a framework to integrate CSR as a core strategy

in companies’ operations, the importance of legitimacy strategy, and the rules of the

game to optimize the preferred objectives and profit-seeking activities. The following

CSR management systems were identified in the research study for FDI’s in Palestine:

202
 1. Analysis of the MNC issue turbulence surveillance system that would be

required to diagnose the social, economic, political, and legal environment through

inside-out and outside-in approaches to identify the gaps and mitigate turbulence in the

business environment through the implementation of CSR proactive-integrated posture.

This issue management system would help organizations rapidly detect and respond to

changes in the socio-political environment as they emerge.

2. Implementation of strategic posture management that would be derived

through diagnosing the future levels of environmental turbulence and the desired strategic

aggressiveness and capability responsiveness of the firm, based on the gap analysis

approach. The outcome of the gap analysis and the closure of these gaps would form the

basis for implementing change management and further establishing the strategic

aggressiveness and general management responsiveness required for optimum

performance.

3. Incorporation of strategic CSR into a firm’s core business that would improve

the organization’s financial and social performance. The research study showed a

positive relationship between financial and social performance (FP-SP). The social

performance pro-social activities do not appear to increase the company’s financial risk.

On the contrary, social performance integrated particular stakeholders preferred

objectives in a legitimacy strategy that would lead to socioeconomic development in

Palestine.

4. Implementation of MNC CSR management system aggressiveness that would

require the firm’s top management to craft a CSR plan to transform the firm’s behavior

through CSR change management.

203
 5. Implementation of MNC CSR management system responsiveness that would

represent the ability of the CSR management system to respond to stakeholders’ demands

regarding societal needs while optimizing the MNC’s economic performance.

6. Following the CSR strategic posture management and integrating CSR

management systems into their core business strategies that would allow firms’ managers

to be able to achieve financial and social profitability.

Recommendations for Further Research

The research study could be refined and expanded for further research. The

following are additional items to be considered for further research:

1. Additional respondents to the research study would allow for a larger sample.

Basically, the larger the sample, the more likely a computed correlation coefficient would

be found to be statistically significant for the strategy aggressiveness and capability

responsiveness gaps, respectively. Hypothesis 3, the relationship between MNC

capability responsiveness gap and MNC financial performance, was not supported (r [11]

= .534, p = .09). The test could have been significant if the sample was larger than N =

11.

2. Additional questions could have been designed and added that pertained to the

strategy aggressiveness independent variable in the research study. The reliability for

Cronbach’s alpha coefficient = .489 is considered low, and more questions could increase

the reliability coefficient to support internal consistency of the construct.

3. Additional questions might be asked about financial performance since some

companies might not understand the definition of the term return of equity (ROE).

204
 4. The results of this research did not support the application of the Ansoff

strategic success model in the case of Palestine. However, previous research by Abu

Rahma (1999), Chabane (1987), Salameh (1987), and Thabet (1993) did support the

model in different situations in Arabic countries. Further research is recommended to

identify the factors that either support or contradict the elements of the Ansoff model in

this region of the world.

205
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APPENDICES
 APPENDIX A

PALESTINIAN TRADE CENTER –

PALTRADE
PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

A.C.C Co. Najeeb Ja`bari Stone and Marble Hebron 22222229 22229618 acc@hebronet.com

A. R. Hijawi Sons Husam Hijjawi Paper Industry Nablus 92311867 92311870 annaser@arhijjawi.com www.arhijjawi.com
Company

Abdo Khasawneh Majid Abdo Tourism Jerusalem 22349816 22344360 abdotours2000@yahoo.com

Tourism & Travel

Abed Alfatah Mushtaha Maher Mushtaha Wood and Gaza 82802355 82802355
Sons Furniture
Abu Alsbaa‘ Animals Hatem Abu Alsbaa‘ Food Industry Jenin 42414862 42414860 abubasil64@gmail.com
Seeds Company
Abu Farha for Olive Majdi Elias Handicrafts Bethlehem 22774002 22774324 reem_jr@yahoo.com
Wood Products
Abu Ramadan Inv. Mohammad Abu General Trade Gaza 82822616 82821381 mramadan@marna.com www.marna.com
Group Co Ramadan
Abu Zolof Company for Nour Alddin Jaradat Stone and Marble Bethlehem 22560085 22560085 nourzlf@gmail.com
Stone & Marble
Adawa for Designing & Imad Abu Taha Consulting and Ramallah 22980552 22961493 adwa1993@yahoo.com
Printing trade services
Adwaa Al basheer for Wissam Ghorab General Trade Gaza 82821322 82864647 info@adwaa1.com www.adwaa1.com
Trade
Ajjawi for Commerce Bashar Ajjawi General Trade Jenin 42453235 42453234 info@ajjawe.com www.ajjawe.com
AL Amana Alkhayreia Ghaleb Abu Shaban Information Gaza 82846111 82846112 info@al-amana.ps www.al-amana.ps
Company Technology
Al Arz for Ice Cream Zahi Anabtawi Food Industry Nablus 92377677 92379808 alarz@alarz.ps www.alarz.ps
Industry
Al Darwish Investment Abd Alkarim darwish Consulting and Gaza 82830360 82828191 investment@a-darwish.org www.a-
Company trade services darwish.org

(table continues)

224
PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

Al Haddad Brothers Sameeh Haddad Plastics Gaza 82822278 82822304 info@hbco.cc www.hbco.cc
Company
AL Hithnawi for Bashir Alhithnawi Food Industry Jenin 42414741 42416741 info@hathnawi.com www.hathnawi.com
Trading Company
Al Marad Al Assry Khaled Labad General Trade Gaza 82844913 82821413 alassry@palnet.com
Electrical Supplies
AL Mubtasem Sweets Mubtasem Omrieh Food Industry Jenin 42453524 42453524 mobtasem2000@yahoo.com
Al Ostath Company for Tayseer Al ostath Textile and Gaza 82854665 82854440 ostaz11@hotmail.com
Trade and Industry Garment
Al Salam Pottery Fares Al-Natsheh Handicrafts Hebron 22229127 22221530 alsalam-ceramic@hotmail.com
Factory
AL Saqqa Electrical Tareq Alsaqqa General Trade Gaza 82838803 82841582 info@al-saqqa.com www.al-saqqa.com
Equipment Co.
Al Shurook Jewellery Muhannad Amraish Jewelry Hebron 22227531 22257582 shurookgold2000@yahoo.com
Company
AL Tariq for System & Tarek Eslim Information Gaza 82860280 82847736 Tarek@altariq.ps www.altariq.ps
Projects Technology
Al-Taweel Company Mahmoud Samhan Wood and Ramallah 22404722 22404722
for Trading and Furniture
Furniture
AL–Deira Company Rashid Abdelhamid Consulting and Gaza 82838100 82838400 deira@pis.com
Trade Services
Al-Hadad for Ibrahim haddad Metal Industry Jenin 424140101 424140101 Hddadfactorys@yahoo.com
Agriculture Equipment
Al-Hamarsheh Mohammad Hamarsheh General Trade Jenin 42463464 42461124 alhamarshehama3@yahoo.com
Company for House
Equipment
Al-hoda Textile Factory Tareq Saqf Elheit Textile and Nablus 92345420 92345420 tareq_ziyad@hotmail.com
Garment
Al-marah for Trade & Nidal Jabarin Metal Industry Jenin 42414306 42414307
Industries
Al-rajah Detergents Zuhair Dweikat Chemical Nablus 92311893 92311085 info@alrajeh.ps www.alrajeh.ps
Factory Industry

(table continues)

225
PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

Al-Akram Co. for Raed Abu Asab General Trade Hebron 2230097 2230097 ragd@hotmail.com
Importing and
Exporting and General
Trade
Al-Anwar Marble Co. Mohammad Manasrah Stone and Hebron 22222715 22222716 alaa@palnet.com
Ltd. Marble
Al-Aqsa Factory for Yousef Alkhatib Food Industry Jenin 42504087 42450136
Food Products
Al-Ayam Press Mahdi Almasri Consulting and Ramallah 22987341 22987342 mmasri@al-ayyam.com www.al-ayyam.com
Publishing & Printing Trade Services
Al-Fares Al-Masy Co. Nasser Alzghayyar Leather and Hebron 2223091 2214790 alfaresalmasyn@yahoo.com
for Import Shoes
Al-Gentle for Shoes Azmi Alzghayyar Leather and Hebron 2233817 2233817 aljyntel@yahoo.com
and General Trade Shoes
Company
Al-Hamoda Co. for Mousa Salameh Food Industry Jerusalem 022421131- 22421133 feda.f@hamodagroup.com www.hamodagroup.com
Food & Dairy Products 6
Al-Hijaz for Chocolate Hussain Hijaz Food Industry Tulkarim 92673077 92673516 info@alhijaz.ps www.alhijaz.ps
Ltd.
Al-Jada Electrical Jamal Qawasmeh General Trade Hebron 2259931 2259931 aljada-co@maktoob.com
Engineering
Corporation
Al-Jarmaq for Ghassan Al-Kurdi Information Ramallah 22401007 22404334 info@aljarmaq.com www.aljarmaq.com
Computer Electronics Technology
& Services
Al-Jneidi for Trade & Noman Al-Junaidi Metal Industry Hebron 22220087 22258680 info@junidi.com www.junidi.com
Industrial Engineering
Al-Juman for Trading Muhannad Shuman Wood and Ramallah 2972177 2976851 aljuman.asfor@gmail.com
and Furniture Furniture
Manufacturing
Al-Kaileh Furniture Jamal Kaileh Wood and Ramallah 2951810 2957083 akfc@p-ol.com
Co. Furniture
Al-Khalla Stone and Khalil Thawabteh Stone and Bethlehem 599264605 22769701
Marble Co. Marble

(table continues)

226
PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

Al-Majd Industrial Osama Alkhuzndar General Trade Gaza 82552355 82552353 almjdindust@gmail.com
and Trade Company
Al-Manar Trading Raed Zghayyar General Trade Hebron 2219301 2229544 info@almanar.ps www.almanar.ps
Company
AL-Mohandison Utax Maher Al-Shalabi Consulting and Ramallah 22984970 22984977 mhr@palnet.com
Trade Services
Al-Morouj Co. for Adnan Abu Awad Food Industry Ramallah 22980470 22963070
Manufacturing
Al-Naba Aljadeeda Hafith Alkhodor Stone and Hebron 22218001 22218002
for Stone & Marble Marble
Al-Naseem Bros. Co. Nidal Qawasmi Metal Industry Hebron 22220423 22219211 nidal_k_69@hotmail.com
Al-Nasher Saad Abd Al-Hadi Consulting and Ramallah 22408423 22407387 info@enasher.com www.enasher.com
Advertising Co. Trade Services
Al-Reef for Salim Abu Ghazaleh Food Industry Jerusalem 22963840 22963850 saleem@pal-arc.org www.pal-arc.org
Investment and
Agricultural
Marketing
Al-Saifi Co. for Muhammad Bashar General Trade Nablus 92370868 92371219 saifimb@yahoo.com
Import and Export Al-Saifi
Al-Shammas Maher AlFathoury Metal Industry Hebron 2227928 2290901 alshamas@yahoo.com
Aluminum Co.
Al-Shunnar for Food Muhammad Nidal Al- Food Industry Nablus 92348601 92347070
Industries Shunnar
AL-Tawfiq Marble Co. Noman Shabaneh Stone and Hebron 22222697 22227051 info@tmsco.ps www.tmsco.ps
Marble
Al-Yaseen Marble Co. Odeh Jaradat Stone and Hebron 22563047 22563047
Marble
ALahlieh Carton Mohammad Alhirbawi Paper Industry Hebron 22227543 22225659 info@al-ahlia.ps www.al-ahlia.ps
Alaqsa Company for Subhi Thawabteh Stone and Bethlehem 22765011 22745173
Marble Marble
Albadawi Company Rabah Zaatari Leather and Hebron 22220749 22293593
for Leather and Shoes
Shoes

(table continues)

227
PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

Aldeera Electric Bashar Shammout General Trade Ramallah 22975384 22975387 bashar@shammoutcenter.com www.shammoutcenter.com
Investment Co
Aldwaik Fashion Fadel Al-Dwaik Textile and Hebron 2296117 2296117 pil-d2005@yahoo.com
Company Garment
ALhodalis Textile Abd Allah Hodali Textile and Bethlehem 22741386 22745308 ashodali@palnet.com
Printing Factory Garment
Alhusam United Bashar Alzaghal Leather and Hebron 22252212 22252212 alzaghal@palnet.com
Company Shoes
Lhusani for Marble Mahmoud Sabateen Stone and Bethlehem 22770784 22770784 info@al-husani.com www.al-husni.com
Marble
ALithad Socks Co. Nabil Abu Rumman Textile and Bethlehem 22747843 22770874
Garment
ALjabary for Marble Mohammad ALjabari Stone and Bethlehem 22743340 22743340 info@aljabarymarble.com www.aljabarymarble.com
& Stone Marble
ALjaber for General Ahmad Thawabteh Stone and Bethlehem 22769066 22769756
Trade Marble
Aljamal for Printing & Salam Amin Consulting and Ramallah 22955987 22955986
Invest Trade Services
Aljarashi Trading Khader Aljarashi Stone and Bethlehem 22744141 22741186
Industrial Marble
Contracting Co. Ltd.
ALjarashi Trading Saqar Aljarashi Chemical Bethlehem 22744738 22745367 Saqerjerashi@hotmail.com
Industries Co. Ltd. Industry
ALjundi Marble Co. Sayel ALjundi Stone and Bethlehem 22770553 22770554
Marble
Aljuneidi dairy food Hashim Aljuneidi Food Industry Hebron 22229011 22220558 info@aljuneidi.com www.aljuneidi.com
stuff co
Allam Ahmed Allam Hamada General Trade Gaza 82859808 82859809 allam-
Hamada company hamada78@hotmail.com
Alshawaheen Marble Rebhi al Shawaheen Stone and Hebron 22270093 22270093
Co. Marble
Alshifa Industrial Ibrahim Boziya Food Industry Ramallah 22404020 22404020 boziya@m-alshifa.com www.m-alshifa.com
Trading Company
Altakamolia Ala‘a Eddin Obaid Consulting and Gaza 82889132 82889133 info@altakamolia.com www.altakamolia.com
Management and Trade Services
Planning Co.

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Company Name Contact Person Sector City Telephone Fax E-mail Web site

Alternative Business Sami Khoury Consulting and Ramallah 22971528 22973751 Sami@abs.ps www.abs.ps
Solutions Trade Services
Aluminum Alamal Saher Bdeir Metal Industry Qalqilia 92946922 92946911 info@alamal.ps www.alamal.ps
Company
ALwalid Company for Walid Diryeh Stone and Bethlehem 22769128 22769622 info@waleedstone.com www.waleedstone.com
Marble & Stone Marble
Alworood Shoes and Muhammad Abu Rajab Leather and Hebron 2235277 2234802 alworood2004@yahoo.com
General Trade Co. Shoes
Alyateem for Olive Mansoor alyateem Handicrafts Bethlehem 22773129 22775015 Alyateemjs@yahoo.com
Wood Products
Alzaghal investment Mohammad Alzaghal Leather and Hebron 22231148 22231149 alzaghalgroup@yahoo.com
Group Shoes
Amani Tours Tourism Ramallah 22965785 22987013 amanitr@hotmail.com
Amsi Brothers Ziyad AL Amsi Wood and Gaza 82455050 82457858 amassi@amassy.com www.amassy.com
Company Furniture
Annahda book shop Mahmoud Lubbad Paper Industry Gaza 82862237 82865265 annahda2000@yahoo.com
Annunciation Olive Nichola bshara Handicrafts Bethlehem 22773120 22773549 hawwash2@hotmail.com
Wood Factory
Aqarat Consulting and Nablus 92332333 92332335
Trade Services
Arab Company for Michael Jarad Stone and Bethlehem 22741004 22767969
Stone & Marble Marble
Arab Eastern Co. Nidal Al Shakaa Paper Industry Nablus 92311071 92311070 nidal@aecodiapers.com www.aecodiapers.com
Arab Technology Hisham Zaid Information Ramallah 22410000 22411111 info@ats-pal.com www.ats-pal.com
Systems (ATS) Technology
Arabic Center for Walid Aljedi Consulting and Gaza 82845153 82848844 ABC_conf2000@hotmail.com
Businessmen Trade Services
Atalla Trading Issa Attalla Handicrafts Bethlehem 22772710 22773047 attalla@bethlehem- www.bethlehem-
Company souvenirs.com souvenirs.com
Auto Zone Company Zaki Abu Yousef General Trade Ramallah 22400565 22400566 jack.bahbah@peugeot.ps www.peugeot.ps
Azzouni for Trading Iyad Azzouni General Trade Nablus 92377240 92375192 azzouni@palnet.com
Services Co.

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PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephon Fax E-mail Web site
e
B Cell Fadi Baransi Information Ramallah 22981108 22964167 fbaransi@bci.ps www.bci.ps
Technology
Babel Soft Company Mhana Manasra Information Ramallah 22408769 22408769 info@BaBilsoft.com www.babilsoft.com
Technology
Badri & Hania Co. Fouad Hania General Trade Gaza 82864435 82869078 info@bah.ps www.bah.ps
Bani Naim Marble Izat Al-Khodor Stone and Hebron 22218820 22218822 info@baninaim-marble.com www.baninaim-
Co. Marble marble.com
Bank of Palestine Banks Gaza 82826818 82828973 info@bankofpalestine.com www.bankofpalestine.com
Ltd.
Basher Siksik Co. Plastics Gaza 82833374 82864208 info@bashirsiksik.com www.bashirsiksik.com
BCI Saeed Baransi Information Ramallah 22981108 22964167 sbaransi@bci.ps www.bci.ps
Technology
Beauty Paints Jamal Alghawanmeh Chemical Ramallah 22349905 22349908 beauty_paints@yahoo.com
Company Industry
Beit Almakdes Samer Shokeh General Trade Gaza 82824775 82821709 beampal@rannet.com www.rannet.com
Health Services
BEAM
Belal Co. for General Fayeq H . Belal Textile and Gaza 82803485 82803487 fbelal-55@hotmail.com
Trading Garment
Bessisso &Alami Co. Mohammad Bessisso Wood and Gaza 82808121 82808121 info@farahgaza.com www.farahgaza.com
Ltd. Furniture
Best Buy Imad Qanadilo General Trade Ramallah 22425838 22424998
Bethlehem Hotel Elias Alarja Tourism Bethlehem 22770702 22770706 bhotel@p-ol.com
Bir Zeit Firas Nasser Al Deen Pharmaceuticals Ramallah 22987572 22967205 info@bps.ps www.bps.ps
Pharmaceutical and Chemicals
Company
Blest Art Co. Samah Qumsieh Handicrafts Bethlehem 22772120 22772120 admin@holycrafts.com www.holycrafts.com
Brothers Travel & Maher Alatrash Tourism Bethlehem 22775188 22775189 maher@brostours.com www.brostours.com
Tours
Bunto Blue Company Zeyad Alzaghal Leather and Hebron 22280005 22280007
for Shoes Industry Shoes
Burbar Jerusalem for Firas Burbar Stone and Ramallah 2811588 2811064 firas@burbarstone.com www.burbarstone.com
Stone and Marble Marble

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PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

Company & Factory Naim Jaber Food Industry Jenin 42501875 42431822 naser@alnaser.ps www.alnaser.ps
Nasser Crinders
Computer Land Marwan Kuhel Information Gaza 82855662 82852229 info@computerland.ps www.computerland.ps
Center Technology
Crown Tourism & Ibrahim Alatrash Tourism Bethlehem 22740911 22740910 crowntt@p-ol.com
travel Co. Ltd.
Dar Elkhebra Trade Mohammad Jamil Naja Consulting and Gaza 82885635 82842496 consult@dar-elkhebra.com www.dar-elkhebra.com
and Development Trade Services
Darwish Abu Muaileq Nabil Abu - Muaileq General Trade Gaza 82865972 82821236 darweesh@mtcgaza.com www.mtcgaza.com
Company Insurance
Agency
Da`ana Industrial Muhammad Da`ana Leather and Hebron 2286085 2286085
and Trade Co. Shoes
Debas Agriculture Mohammad Debas Food Industry Tulkarim 92672079 92686662
and Animal Food Co.
Delta International Abdalhakim Hassuna Consulting and Gaza 82834886 82834886 delta@deltagaza.com www.deltagaza.com
Logistics Custom Trade Services
Clearance Import &
Export
Eagle Flex Abrasive Roben Julani Metal Industry Hebron 22225759 22225597 info@eagle-flex.com www.eagle-flex.com
Company
Eka Trading Yousef Elyas General Trade Bethlehem 22747108 22764432 info@eka-trading.com www.eka-trading.com
Company
Electro nihad for Nihad abd alazziz Metal Industry Jenin 42468565 42468566 Jeninpack@yahoo.com
packing machines
Elhayek Trade and Ali Hayek General Trade Gaza 82838664 82838674
Industrial Company
Elhytham Trading Hani Alyazji Consulting and Gaza 82833568 82848556 info@alhaytham.com www.alhaytham.com
Co. Trade Services
Ellam Tam- The Kamel Al-Husseini Consulting and Ramallah 22409105 22409106 info@ellamtam.com www.ellamtam.com
Communication Trade Services
Company
Ernest and Young Sa`ed Abdallah Consulting and Ramallah 22421011 22422324 ramallah.office@ps.ey.com www.ps.ey.com
Trade Services

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PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

Essa Mhnna Trading Issa Mhanna Wood and Gaza 82801227 82801226 easa56@hotmail.com
Co. Ltd. Furniture
Etkaidek Buildings Nidal Etkaidek General Trade Hebron 22292505 22292606 info@etco.ps www.etco.ps
Technology
Everest Hotel Walid ALarja Tourism Bethlehem 22742604 29934946 everest@p-ol.com
Eye Specialty Center Anwar Maswadi Consulting and Hebron 2228919 2228919 anwarmaswadi@yahoo.
Co. Trade Services com
Fadda Technology & Awni AL-Tawil Information Gaza 82869777 82866226 info@faddatech.com www.faddagtech.com
Information Systems Technology
Fatima for Olive Jiries Faqooseh Handicrafts Bethlehem 22742695 22743407 info@fatimaco.com www.fatimco.com
Wood Works
Feed Co. – Saif Aldeen aldeek Food Industry Ramallah 22955534 22955534
Operation Co.
Fleifel Trading Zaid Othman Textile and Tulkarim 92675927 92678049 fleafel_co@hotmail.com
Textile Industry Garment
Company
Foam Co. Ltd. Gamal Elkhoudary Chemical Gaza 82457151 82457152 foamco@p.i.s.com
Industry
Four Seasons Co. Hani Naji Atallah Tourism Bethlehem 22774401 22774402 fseasons@p-ol.com

Future Tech Mohammad Alami Information Gaza 82847355 82835655 alamim@futuretech-pal.com www.futuretech-pal.com
company Technology
Galaxy Information Majed Bakeer Information Ramallah 22958444 22958807 info@galaxy.ps www.galaxy.ps
Systems Technology
Gamma Jamileh Alsayed Pharmaceuticals Ramallah 22900911 22900064 gamapharm@gmail.com
Pharmaceuticals Co. and Chemicals
Geneva Company Hassan Asfour Stone and Ramallah 22966882 22966880 info@geneva-marble.com www.geneva-marble.com
Marble
George for Olive Georg Kheir Handicrafts Bethlehem 22775675 22775675 gkowwsh@hotmail.com
Wood Products
Glad Baby Company Jawdi Abu Rajab Leather and Hebron 2230254 2230257 jawdiaburajab@yahoo.com
Shoes
Globalcom Kameel Qattan Information Ramallah 22975108 22975109 info@globalcom.ps www.globalcom.ps
Telecommunications Technology

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PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

Golden Wheat Mills Bassam Walweel Food Industry Ramallah 22818013 22818014 info@gwmc.ps www.gwmc.ps
Hadara Technologies Mahmoud Yaseen Information Ramallah 22403434 22403430 info@hadara.ps info@hadara.ps
Technology
Hagob Jewelry Issa Rashmawi Jewelry Bethlehem 22743785 22743374 issgold@yahoo.com
Factory
Halaika Marble and Ishaq Alja`fari Stone and Bethlehem 2745757 2747805 halaika@palnet.com
Stone Industries Marble
Hani Al-Ajjawi Hani Omarieh Food Industry Jenin 42453168 42453914 ajjawi@ajjawi.ps www.ajjawi.ps
Company - General
Trading
Harvest Export Ibrahim Barakat Agriculture Ramallah 22972760 22972776 info@harvestexport.com www.harvestexport.com
Company
Hebron Star Co. Mowaffaq Salhab Leather and Hebron 2230206 2230206
Shoes
Helen Chemical Ayman Al Taweel Chemical Nablus 92311177 92311179 info@helen1970.com www.helen1970.com
Factory Industry
High Line for Jamal M. Elbaghdadi Consulting and Gaza 82861799 82861799 hili2004@yahoo.com
Engineering Trade Services
Consultant
Hirbawi Investment Majid Hirbawi General Trade Hebron 22226789 22229770 info@hitco.ps www.hitco.ps
and International
trade company
Hmouda Company Akef Hmouda Textile and Tulkarim 92674994 92684994 akef_h@yahoo.com
Garment
Holy Land Ceramics Fayez Abu Omar Handicrafts Hebron 22229767 22220041 hlcs@p-ol.com
Holy Land for Joudeh Jamal Agriculture Ramallah 22971901 22971902 info@holyland.ps www.holyland.ps
Marketing and
Agricultural
Investment
Holy Land Mosaic Sami Thaljieh Stone and Bethlehem 22742817 22770062 sales@holy-mosaicstone.com www.holy-
Stone Marble mosaicstone.com
Holy Land Society Bassam Abu Farha Handicrafts Bethlehem 22773087 22773088 hlcs@p-ol.com
Home Engineering Ahed F. Bseiso Consulting and Gaza 82834676 82860990 homeco@palnet.com
unlimited Trade Services

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PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

Horizon for Amin Khateeb Information Ramallah 22988128 22988128 amin@axizo.com www.axizo.com
Computer Technology
Technology
Hulul Business Mustafa Hasan Information Ramallah 22410000 22411111 info@hulul.com www.hulul.com
Solutions Technology
Ibrahim Karajah Ahmad Karajah General Trade Hebron 22299555 22299830
General Trade
Company
International Khaled Anabtawi General Trade Nablus 92383623 92372957 khaled@intl-anabtawi.ps www.intl-anabtawi.ps
Overseas Co.
International Trading Fahed Ghaith Consulting and Hebron 22291403 22253133 info@palstone.com www.palstone.com
Services Center Trade Services
Isra‘ Software and Husam Dweikat Information Nablus 92373001 92373002 info@iscosoft.com www.iscosoft.com
Computer Company Technology
Issam Da`ana Co. Issam Da`ana Leather and Hebron 2286229 2286229
Shoes
IT Partners Abdelhadi Abu Shahla Information Gaza 82839911 82839901 hadi@itp.ps www.itp.ps
Technology
Iyad Amr for Bags Iyad Amr General Trade Hebron 599253399 2296922 rahal_a2000@hotmail.com
and Accessories
Jaddeh Industrial Mohammad Aljabari Stone and Hebron 22218691 22218692
Company Marble
Corporation
Jaffa Net Computer Yihya Alsalaqan Information Ramallah 22961060 22966613 info@i-jaffa.net www.i-jaffa.net
Systems Technology
Jamal Sons Telecom Mohamed Haboush Information Gaza 82867199 82833507 mod55@palnet.com
Computer Systems Technology
Ltd.
Jerusal Information Mahmoud Yaseen Information Ramallah 22403434 22403430
systems Technology
Jerusalem Mohammad Masrouji Pharmaceuticals Ramallah 22406550 22403246 info@jepharm.ps www.jepharm.ps
Pharmaceuticals and Chemicals

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PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

Jerusalem Stone and Muhammad Taqatqa Stone and Bethlehem 22763804 22763805
Marble Company Marble
K. A. R. for Macaroni Osama Alhirbawi Food Industry Hebron 22233459 22233860 kar@hitco.ps www.hitco.ps
Food Stuff Co.
K.Hawash and Abdel Ra`of Hawash Wood and Nablus 92311980 92311703 abd@hawash.ps www.hawash.ps
Brothers for Plywood Furniture
and Trading Co.
Khadair Bros. Co. Suhail A. Khdair General Trade Gaza 82478252 82821574 kgt@p-i-s.com
Ltd.
Khairy Alja`bari Asem Alja`bari Leather and Hebron 22258650 22258651
Sons Industrial Abd Shoes
Trading company
Khamis trading Shukri Dallal General Trade Bethlehem 22744702 22751678 sandra@khamistc.com www.khamistc.com
company
Link Information Weam Abu Yousef Information Gaza 82825520 82825530 info@linkit.ps www.linkit.ps
Technology Technology
Lozan Trade Mohammad Khader Consulting and Ramallah 22900568 22900805 khader@palnet.com
Consultants Trade Services
Management Walid Al najjab Consulting and Ramallah 22954001 22986410 mcs@mcs-palestine.com www.mcs-palestine.com
Consulting services Trade Services
Manasrah Zuhair Almanasrah Agriculture Jericho 2320791 2320791 z.almanasreh@gmail.com
Development and
Investment
Company
Maramara khader Nassar Stone and Bethlehem 22745552 222745553 info@marmarastones.com www.marmarastones.com
Investment Marble
Company
Mashareq Company Abd Alkareem Consulting and Gaza 82827668 82820733 info@mashareq.ps www.mashareq.ps
Habboush Trade Services
Maslamani Trading Jamal Maslamani Food Industry Nablus 92348899 92348244 info@maslamani.ps www.maslamani.ps
Corp.
Massar Consulting Manal Zraiq Consulting and Ramallah 22409595 22409110 info@massar.com www.massar.com
Services Trade Services

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PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

Middle East Marwan Alasttal Pharmaceuticals Gaza 82455012 82455051 info@megapharm.ps www.megapharm.ps
Pharmaceutical & and Chemicals
Cosmetics
Laboratories Co.
Milano Shoes Omar Habboub Leather and Gaza 82800454 82818772 milano_2010@windowslive.com
Industries Co. Shoes
Models Textile Jamil Jarayseh Textile and Bethlehem 22772048 22772096
company Garment
Modern Company for Rafiq Abumunshar Construction Hebron 22225682 22224842 creativestone4u@aol.com
Construction
Supplies
Modern Industrial Mohammad Alnajar Wood and Gaza 82138728 82138729 info@mig-pal.com www.mig-pal.com
Group Furniture
Modern Technology Rasem Moshtaha Information Gaza 82824099 82820929 mtcg@mtcgaza.com www.mtcgaza.com
Corporation Technology
Mohammad Mustafa Mohammad Bader Stone and Nablus 92535301 92535301 smsubeih@go.com.jo
Esbeih & Sons Co. Sbaih Marble
Mohammed Abu Dan Mohammed Abu Dan Textile and Gaza 82473510 82473520 h224344@hotmail.com
Company Garment
MTC Majed Alsousi Wood and Gaza 82453970 82453970
Furniture
Mushtaha Furniture Mohammad Mushtaha Wood and Gaza 82828312 82823782 mushtaha@palnet.com
& Trading Co. Furniture
Musleh for General Salah Musleh General Trade Nablus 92316221 92316223 moslehco@gmail.com
Trading
Nabel Shoes Nidal Jaabari Leather and Hebron 22256592 22256521 nabelshoes@yahoo.com
Industry and Trading Shoes
Company
Nablus Company for Mujtaba Tbeileh Chemical Nablus 92501006 92501004 info@nablussoap.ps www.nablussoap.ps
Cleaning Agents Industry
Nablus Diamond Muhannad Ghazal Metal Industry Nablus 92311329 92311328 info@ndt.ps www.ndt.ps
Tools Co.
Naboly Shoes Fadel Alnatsheh Leather and Hebron 22259946 22227936 naboly_f@hotmail.com
Company Shoes
Nairokh Company Nafiz Nairoukh Metal Industry Hebron 22233322 22233425 info@nierokh.com www.nierokh.com

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PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

Nassar Stone Nassar Nassar Stone and Bethlehem 22747707 22747708 info@nassarstone.com www.nassarstone.com
Investment and Marble
General Contracting
Company
National Agriculture Khalil Kharraz Food Industry Ramallah 229584101 22958415 info@zaytps.com www.zaytps.com
Company
National Aluminum Anan Anabtawi Metal Industry Nablus 92347222 92347616 napco@napco.com.ps www.napco.com.ps
Profiles Company
National Beverages Imad Alhindi Food Industry Tulkarim 92683483 92683458 cocacola@nbc-pal.ps www.nbc-pal.ps
Company
National Insurance Aziz Abd Aljawad Consulting and Ramallah 22983800 22407460 nic@nic-pal.com www.nic-pal.com
Company Trade Services
National Leather Co. Adel Za`tari Leather and Hebron 2226275 2223397
Shoes
National Textile Majdi Abu Rumman Textile and Bethlehem 22742622 22770891 majdi@ntc-pal.com www.ntc-pal.com
Company Garment
Nativity for Rimon Abu Farha Handicrafts Bethlehem 22775576 22775621 info@nativity.ps www.nativity.ps
Manufacturing and
Trading Olive Wood
Near East Industries Ziyad Anabtawi Food Industry Nablus 92348035 92348436 info@anabtawiGroup.com www.anabtawigroup.com
& Trade
Nestle Trading Co. Anton Hazboun General Trade Bethlehem 22777666 22770004 FSB@palnet.com
Ltd.
New Farm Daoud Istanbuli Food Industry Ramallah 22819557 22819557 newfarm@palnet.com
Processing &
Marketing
New Power Company Othman Zughayar Leather and Hebron 22250939 22250939
Shoes
Noor for Trading & Alaa AlBayed Consulting and Hebron 2290784 2292784 noorint2004@yahoo.com
Clearing Services Trade Services
NTS - Nextlevel Majed Ayyad Information Ramallah 22959816 22959817 husni@nts.ps www.nts.ps
Technology System Technology
O.B.G Arja Bros. Khaled alarja Textile and Bethlehem 22765345 22765346 info@arja-textile.com www.arja-textile.com
Textile Garment

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PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

Odeh Commercial Majid Odeh handicrafts Bethlehem 22773642 22773022 iodeh@p-ol.com

Stores
Omar Shakhshir and Azzam Shakhshir General Trade Nablus 92313320 92326028 shkshrco@palnet.com
Sons Co.
Organic Oil Producers Wisam ziyadeh Food Industry Salfeet 92516951 92516951
Association
Osaily Trading Naser Osaily Construction Hebron 22229851 22220873 najah@osaily.com www.osaily.com
Contracting Company
Pal Karm Cosmetics Ali Barham Cosmetics Nablus 92311490 92311725 omar-barham@hotmail.com
Ltd.
Pal Lease Abed Qattawi Consulting and Ramallah 22973333 22972020 info@wassel.ps
Trade Services
Pal Media Company Kamal Abu Khadija Consulting and Ramallah 22406477 2406479 mghunaim@vandv.ps www.vandv.ps
Trade Services
PAL NET Ghassan Anbtawi Information Ramallah 22403434 22403430 Info@palnet.com
Technology
Pal Safe Majdi Al Atari Consulting and Ramallah 22974444 22972020 majdiatari@wassel.ps www.wassel.ps
Trade Services
PAL TEL Abd Almalek Aljaber Information Nablus 92390657 92389983 info@paltel.net
Technology
Pal- Expo Samer Taher Consulting and Ramallah 22973333 22972020
Trade Services
Palestine Cellular Ammar Al Aker Information Ramallah 22402440 22968636 jawwal@jawwal.ps
Communications Ltd. Technology
Palestine Co. for Fadel ALjaru Construction Gaza 82801196 82801175 pmc@palestineco.com www.palestineco.com
Building Materials
Automatic Factory
Palestine Sameer Hulileh Ramallah 2403336 2403363 s_hulileh@padico.com www.padico.com
Development and
Investment Limited
Co. – PADICO

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PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

Palestine Electronics Ghassan Anabtawi Information Nablus 92397681 92397683 ghassan.anabtawi@paltelgroup.ps www.paltelgroup.ps
and Electrical Technology
Company - PEEC
Palestine Food A‘aed Abu Ramadan Food Industry Gaza 82801235 82801234 aaburamadan@ped.ps www.ped.ps
Industries Co.
Palestine Industrial Wadei Al Masri Consulting Gaza 82801003 82801003 piedco.holding@piedco.ps www.piedco.ps
Estate Development and Trade
Co. Services
Palestine Industrial Hani Dajani Construction Ramallah 22971901 22971902 piedco.holding@piedco.ps www.piedco.ps
Estate Development
Company
Palestine Islamic Aziz Hammad Banks Gaza 82827360 2980558 info@islamicbank.ps www.islamicbank.ps
Bank
Palestine Online Nafeth Alkoni Information Ramallah 22403434 22403430 Info@p-ol.com
Technology
Palestine plastic Jamal Daraghmeh Plastics Nablus 92398716 92398715 info@ppic-pal.com www.ppic-pal.com
industries Co
Palestine poultry Co Abd Alhakeem Food Industry Tulkarim 92683177 92683180 aziza@aziza-ppc.com www.aziza-ppc.com
Foqahaa
Palestine Real Estate Nidal Abu Lawi Construction Ramallah 22986505 22986506 aqariarm@palnet.com
Investment
Palestine Securities Khaled Jiaan Stock Nablus 92311765 92311748 pse@p-s-e.com www.p-s-e.com
Exchange Ltd.
Palestine Yellow Mohammad Sbeih Consulting Ramallah 22964446 22964445 msbeih@yellowpages.com.ps www.yellowpages.com.ps
Pages and Trade
Services
Palestinian Banking Ameen Haddad Banks Ramallah 22969800 22969801 info@palbanking.com www.palbanking.com
Corporation
Palestinian beit Sulaiman Alduaifi Consulting Nablus 92345066 92345067 hope_ps@yahoo.com
Alkhibra for and Trade
Research & Services
Investment
Palestinian Internet Rajaie Emeel Es`eed Information Gaza 82843197 82843377 info@pis.com
Services – pis Technology

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PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

Pama Forza Mahmoud Obaido Leather and Hebron 22227676 22220332 pama-company@hotmail.com
Investment Shoes
Company
Paper Industries Co. Marwan Alhirbawi Paper Industry Hebron 22224237 22224068 info@pic.ps www.pic.ps
Ltd.
PC – World Co. Ltd. Ahmed Abualoun Information Gaza 82824229 82825968 rami@pcworld-co.com www.pcworld-co.com
Technology
PCNC 2000 for Net- Iyad Qumsieh Information Bethlehem 22402931 22402931 sales@pcnc2000.com www.pcnc2000.com
Working Technology
Pharmacare PLC Pharmaceuticals Ramallah 22900680 22900189 pharmacare@pharmacare- www.phatmacare-ltd.com
and Chemicals ltd.com
Professionals Mohammed Akram Information Gaza 82861772 82861772 info@pit.ps www.pit.ps
Information Skaik Technology
Technology
Quality for Marble Mohammad Ali Nassar Stone and Bethlehem 22740947 22740985
Company Marble
Rami Sport Company Rami Alsughaiar Leather and Hebron 22220550 22216360 info@golf-horse.com www.golf-horse.com
for Shoes Industry Shoes
Ramtan Studios Qasem ALi Consulting and Ramallah 22989460 22989462 info@ramattan.com www.ramattan.com
Trade Services
Redwan Salah Radwan Mortaga General Trade Gaza 82810610 82810611 salahmourtaga@palnet.com
Mortaga Co.
Roma Company for Jamal Almadbooh Leather and Hebron 22233616 22235220 romashoes@yahoo.com
Shoes Industry Shoes
Roxi for Shoes and Raed Dahnous Leather and Hebron 2296776 r_dahnous@hotmail.com
Trading Co. Shoes
Royal Company for Radwan Zaghal Leather and Hebron 22235296 22235295
Shoes Shoes
Royal Industrial Mazen Zughayar Plastics Hebron 22225288 22220127 info@royal.ps www.royal.ps
Trading Company
Royal Tourism & Nisreen Al-shyookhi Tourism Ramallah 22966351 22966635
Travel
Saad ELwadia & Khaled S. Alwadeya General Trade Gaza 82808526 82808527 khaled@saadelwadia.com www.saadelwadia.com
Stones Co.

(table continues)

240
PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

Saba & Partners Co. Adnan Awad Consulting and Gaza 82823746 82823746 adnan@sabagaza.com www.sabagaza.com
Trade Services
Sabi International Samer Alsabi General Trade Qalqilia 92949484 92949485 samer@sabi.ps www.sabi.ps
Ltd.
Safa Office furniture Hisham Allwaini Wood and Gaza 82457010 82457799 hesham-502@hotmail.com
Furniture
Safad Engineering Ibrahim Barham Information Ramallah 22957229 22980142 ceo@safad.com www.safed.com
and Electronics Ltd. Technology
Sahem Trading and Sameer Zraiq Consulting and Ramallah 22965710 22965713 sahem@sahem-inv.com www.sahem-inv.com
Investment Co. Trade Services
Salah Trading Khaled Salah Food Industry Hebron 22229960 22224970 salahchips@yahoo.com
Company
Salama Alaemar Co. Sa‘di Salama Construction Gaza 82061317 82067494 info@salama-co.com www.salama-co.com
Saleem Co. Ltd. Ahmed Saleem Wood and Gaza 82855441 82855442 akss@gmx.net www.gmx.net
Furniture
Salman Elhelou & Nasser S. Elhelou General Trade Gaza 82825177 82840275 elheloco@palnet.com
Sons Ltd.
Shawa Furniture Nader AL - Shawa Wood and Gaza 82806755 82809822 sfc@p.i.s.com
Company Furniture
Shawwa Contracting Faisal G. Shawwa General Trade Gaza 82821788 82866624 info@ascc.ps www.ascc.ps
Co.
Shweiki Sikurit Salah Shweiki General Trade Jerusalem 25350425 25350412
Sidata Information & Basim AL - Wazeer Information Gaza 82825131 82824665 info@sidata.net www.sidata.net
Communication Technology
System
Siniora Food Majdi Alshreef Food Industry Jerusalem 22796804 22799088 iizhiman@siniorafood.com www.siniorafood.com
Industries Co.
Sinokrot Food Mohsen Sinokrot Food Industry Ramallah 22955701 22965521 ceo@sinokrot.com www.sinokrot.com
Company
Sky Advertising Tareq Abbas Consulting and Ramallah 22986878 22986879 info@sky-adv.com www.sky-adv.com
Trade Services
Smart Co. Amjad Asfour Information Gaza 82888069 82821658 info@smart.ps www.smart.ps
Technology

(table continues)

241
PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

Solutions for Iyad Joudeh Consulting and Ramallah 22970710 22970711 ijoudeh@solutionsdev.ps www.solutionsdev.ps
Development Trade Services
Consulting Company
Sotex for Tareq Alsouos Textile and Bethlehem 22741760 22766132
Undegarments Garment
Textile
Suheil & Alsaheb Hisham Alsaheb Stone and Bethlehem 22744933 22944932 info@ssmarble.com www.ssmarble.com
Trade Industrial Marble
Sun Fashion Majdi Zughaiar Textile and Ramallah 22342777 22342777 Majdi@sun-z.com www.sun-z.com
Garment
Sun Pharm Thaer Abu Shmais Chemical Nablus 92311181 92311184 sunpharm@sunpharm- www.sunpharm-pal.com
Chemicals Ltd. Industry pal.com
Super Nimer Ind. & Ahmad Nimer Metal Industry Hebron 22291219 22297198 info@super-nimer.com www.super-nimer.com
Invest Co.
Super Tech Trading Mohammed Ghazi General Trade Hebron 22257704 22229638 supertec@palnet.com
Company Hirbawi
Susi Furniture Co. Mujahed Al - Susi Wood and Gaza 82457301 82454560 sousy@sousy.com www.sousy.com
Ltd. Furniture
Swan Cosmetic Ihssan Abd Alnabi Cosmetics Gaza 82458657 82454281 ihssan@swancosmetic.com www.sawncosmetic.com
Laboratories
Talem Associates Basheer Al-Rayyes Consulting and Ramallah 22977776 22973751 brayyes@talem.ps www.talem.ps
Company Trade Services
Tami Training Imad Abu Dayyah Consulting and Gaza 82841877 82841867 tamiinst@palnet.com
Accounting & Trade Services
Management
Institute
Tamimi Ceramics Nader AL-tamimi Handicrafts Hebron 22220358 22229253 info@tamimics.com www.tamimics.com
Tatweer Business Haitham Abu Sha`ban Consulting and Gaza 82882600 82882700 info@tatweer.ps www.tatweer.ps
Services Co. Trade Services
Techno Pal Co. Nimer Jayyousi General Trade Tulkarim 92672111 92691123 info@technopal.com.ps www.technopal.com.ps
Tera Company for Faraj Alsughaiar Leather and Hebron 22227553 22296959 info@tera.ps www.tera.ps
Shoes Industry Shoes
Terano for Shoes Abd Aljawad Zaatari Leather and Hebron 22231836 22232837
Industry Shoes

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242
PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

The Arab Clearing Fadi Qattan Consulting and Bethlehem 22741872 22742431 freight@aca.ps www.aca.ps
Agency Trade Services
The Arab Palestinian Ali Aqqad Ramallah 2961461/2/3 2981541 aaggad@apic.com.jo www.apic.com.jo
Investment Co. -
APIC
The Arab Shopping Zuhair Osaily General Trade Ramallah 22408582 22408582 zosaily@arabmarketsco.com www.arabmarketsco.com
Centers Co.
The Holy Family Sami Abu Aitah Tourism Bethlehem 22740656 22744888
Company
The International Abdel Fattah Consulting and Gaza 82860569 82848587 abed.shorafa@dslco.ps www.dslco.ps
Trade Service Co. Alshurafa Trade Services
ITSC
The Modern Nezar Kuhail Metal Industry Gaza 82830018 82822903 info@mic-toys.com www.mic-toys.com
Industrial Co. for
Producing Baby Toys
Ltd.
The National Paper Nabeel Haj . Abed Paper Industry Ramallah 22956342 22956343 info@national-paper.com www.national-paper.com
Product and
Marketing Company
The Palestinian Odeh S. Zaghmouri Consulting and Ramallah 22974444 22972020 info@wassel.ps www.wassel.ps
Distribution & Trade Services
Logistics Services Co.
The Palestinian Mamoun A. Abushahla General Trade Gaza 82822726 82823967 mas@pbtc.com www.pbtc.com
British Trading &
Contracting Co.
Tosseti Shoes Co. Farhat Siaj Leather and Hebron 22220433 22220826 tossettishoes@yahoo.com
Ltd. Shoes
Trust international Haleem Al-Halabi Consulting and Gaza 82823446 82823447 trustpalestine@trust-pal.com www.trust-pal.com
insurance Co. PLC Trade Services
Union of Agriculture Khaled Al-Hidmi Food Industry Jerusalem 22954289 22965545 hidmikhaled@hotmail.com
Work Committees
Unipal General Saleh Tabakhna General Trade Ramallah 22981060 22981065 asmam@unipalgt.com www.unipalgt.com
Trading Co.

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243
PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php

Company Name Contact Person Sector City Telephone Fax E-mail Web site

United Feed Co Hamdi Fattooh Food Industry Nablus 92590367 92590116

Usama J. Kuhail & Usama J. Kuhail General Trade Gaza 82839959 82842035 info@ujkuhail.com www.ujkuhail.com
Brothers General
Contracting
Company
Vegetable Oil Mahdi Almasri Food Industry Nablus 92324161 92325036 najeh@asad.ps www.asad.ps
Manufacturing
Company
Venezia Trading Abd Alsalam Ameen General Trade Ramallah 22956670 22963576 salamamin64@hotmail.com
Company
Vision and Visuals Kamal Abu Khadija information Ramallah 22426477 22426033 info@vandv.ps www.vandv.ps
Active Media Technology
Wasef Mute` Wasef Mute` Wood and Ramallah 2986462 2986462 wasefmfurniture@yahoo.com
Furniture Factory Furniture
Yaboos Stone Mahmoud Razzouq Stone and Jerusalem 22345787 22340873 info@yaboosstone.com www.yaboosstone.com
Company Marble
Yazegi Group for Soft Mahmoud Alyazegi Food Industry Gaza 82806732 22806731 info@yazegigroup.com www.yazegigroup.com
Drinks Ltd.
Yooya Land Information Ramallah 22403434 22403430 info@yooyaland.com www.yooyaland.com
Company Technology
Zain Public Relations Mohammad Jaber Consulting and Ramallah 2955120 2955121 info@zain.com.ps www.zain.com.ps
& Business Services Trade Services
Zalmoot Trading Co Ahamd AlZalmout General Trade Nablus 92311765 92311748 import@zalmout.com www.zalmout.com
Zant Co. for Medical Marwan Zant Pharmaceuticals Gaza 82870028 82870029
Supplies and Labs and Chemicals
Ziyad Mourtaga and Fuad Murtaja General Trade Gaza 82866562 82867593 info@z-mortaga.ps www.z-mortaga.ps
Bros. Company

(table ends)

244
 APPENDIX B

PALESTINIAN COMPANIES ON

STOCK MARKET
Palestinian Companies on the Stock Market

Company Name Industry Symbol General Manager E-Mail Fax Phone Location

Mr. Samer Aziz nic@nic-pal.com 2240746 0229838 West Bank

AL-WATANIAH TOWERS Service ABRAJ Shihadeh 0 00
2296524 02296524
West Bank
THE ARAB HOTELS Service AHC Mr. Anan Takrori hotels@palnet.com 2 0/1
Mr. Atyieh arabislamicbank@aibn 2240706
West Bank
ARAB ISLAMIC BANK BnkFinServSec AIB Shananier k.com 5 22407060
Dr. Mohammed M. 2298663
West Bank
AHLIEA INSURANCE GROUP Insurance AIG Sabawi info@aig.ps 6 22986634
Mr.Ahmad Al-haj 022978
West Bank
ALRAFAH MICROFINANCE BANK BnkFinServSec AMB Hasan info@alrafahbank.ps 880 22978710
Mr. Wael Al- 092311 09231130
West Bank
ARAB PAINT PRODUCTS Industry APC Qadoumi apcpaints@p-ol.com 302 1/3
Dr. Mohammad M. iyad.abdo@jerucig.co 022799 0227990
West Bank
ARAB INVESTORS Investment ARAB Alami m 020 21
Mr. Lotfi Fayez aqareia.arab@hotmail. 092384 09238403
West Bank
ARAB REAL ESTATE ESTABLISHMENT Service ARE Sarawan com 034 0/2
Mr. Abdel Hakim 092683 09268317
West Bank
PALESTINE POULTRY Industry AZIZA Al-Fuqaha aziza@aziza-ppc.com 180 7/8
Mr. Hashem Hani info@bankofpalestine.c 2296470 0229650
West Bank
BANK OF PALESTINE BnkFinServSec BOP Shawa om 3 10
Mr. Talal 2296720 02298757
West Bank
BIRZEIT PHARMACEUTICALS Industry BPC Nasereddin contact@bpc.ps 5 2/4
022975
West Bank
GLOBALCOM TELECOMMUNICATIONS Service GCOM Mr. Ibrahim Qattan info@globalcom.ps 109 22975108
Mr. Bassam 2281801 0228180
West Bank
GOLDEN WHEAT MILLS Industry GMC Walweel info@gwmc.ps 4 13
Mr. Jamal 9239092 0923909
West Bank
GLOBAL UNITED INSURANCE Insurance GUI Barahmeh info@gui-pal.com 0 19
Mr. Mohammed 022956 0229861
West Bank
GRAND PARK HOTEL & RESORTS Service HOTEL Mousa Info@grandpark.com 950 94
Susp
AL-I'TIMAN FOR INVESTMENT & Mr. Hussein N. alitiman_company@ya 092332 0923373 West Bank end-
DEVELOPMENT Investment IID Abu-Zant hoo.com 420 34 ed
Mahmoud Ahmad 2295474 02295633
West Bank
PALESTINE ISLAMIC BANK BnkFinServSec ISBK Al-Rama' info@islamicbank.ps 5 0/1
022799
West Bank
JERUSALEM CIGARETTES Industry JCC Dr. M. Alami inform@jerucig.com 770 22799777

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246
Palestinian Companies on the Stock Market

Company Name Industry Symbol General Manager E-Mail Fax Phone Location

022403 0224065
West Bank
JERUSALEM PHARMACEUTICALS Industry JPH Dr. Iyad Masrouji info@jepharm.ps 246 50
JERUSALEM REAL ESTATE Mr. Walid N. Al- 2296521 02296521
West Bank
INVESTMENT Investment JREI Ahmad jrei@palnet.com 7 5/6
Mr. Jamal 9239871 09239871
West Bank
PALESTINE PLASTIC INDUSTRIES Industry LADAEN Daragmeh ppic@palnet.com 5 6/7
Mr. Ayoub Wael 022958 0229580
West Bank
AL MASHRIQ INSURANCE Insurance MIC Zurub mic97@p-ol.com 089 90
Mr. Hazem Al- 092311 09231129
West Bank
THE NATIONAL CARTON INDUSTRY Industry NCI Aghbar info@nci.ps 294 0/1
Mr. Ahmad 2240746 0229838
West Bank
NATIONAL INSURANCE Insurance NIC Mushasha nic@nic-pal.com 0 00
Dr. Yosif
Mohammad N. 092341 0923415 West Bank
NABLUS SURGICAL CENTER Service NSC Masri info@nsh-pal.org 506 01
PALESTINE DEVELOPMENT & padicojo@padicojo.co 009626 0096264
WB/Jordan
INVESTMENT Investment PADICO Mr. Samir Hulileh m 4630451 647837
092350 0923762
West Bank
PALESTINE TELECOMMUNICATIONS Service PALTEL Mr. Ammar Aker paltel@paltel.net 451 25
Mr. Masouad M. Al- 2297997 0229799
West Bank
PALESTINE COMMERCIAL BANK BnkFinServSec PCB Aardah info@pcb.ps 7 99
8288860
Gaza
PALESTINE ELECTRIC Service PEC Mr. Walid Salman info@pec.ps 7 82888600
Mr. Ibrahim Abu 2240788 0224078
West Bank
PALESTINE INVESTMENT BANK BnkFinServSec PIBC Dayeh info@pinvbank.com 7 80
022985 0229876
West Bank
PALESTINE INSURANCE Insurance PICO Mr. Naser Ghunaim pic@pic-pal.ps 894 03
PALESTINE INVESTMENT & 022954 0229540
West Bank
DEVELOPMENT Investment PID Mr. Azzam Dakkak pidcopal@yahoo.com 027 28
Mr. Abdel Hakim 092384 09238618
West Bank
PALESTINE INDUSTRIAL INVESTMENT Investment PIIC Fuqha piico@palnet.com 354 0/3
ARAB PALESTINIAN SHOPPING 022428
West Bank
CENTERS Service PLAZA Mr. Aram Hijazi nfo@plaza.ps 582 22428581
0229865 02298650
PALESTINIAN REAL ESTATE Investment PRICO Mr. Nidal Abu Lawi aqariarm@palnet.com 06 5 West Bank

(table continues)

247
Palestinian Companies on the Stock Market

Company Name Industry Symbol General Manager E-Mail Fax Phone Location

PALESTINE MORTGAGE & HOUSING 0229791 02297919 West Bank

CORPORATION BnkFinServSec PMHC Mr. Issa Kassis info@pmhc.com 92 1
Mr. Azzam Al- 0229799 02297955
West Bank
AL QUDS BANK BnkFinServSec QUDS Shawwa quds@qudsbank.ps 55 5
Mr. Alfred Mahfouz ramallah_rsr@yahoo.c 2298574 0229564
West Bank
THE RAMALLAH SUMMER RESORTS Service RSR Kishek om 0 88
022425 0229785
West Bank
TRUST INTERNATIONAL INSURANCE Insurance TRUST Mr. Anwar Shanti trustwb@palnet.com 734 50
UNION CONSTRUCTION AND Eng. Khaled Al- 022974 02297499
West Bank
INVESTMENT Investment UCI Sabawi info@uci.ps 978 2/3/4/5
092325 0923241
West Bank
THE VEGETABLE OIL INDUSTRIES Industry VOIC Mr. Mahdi Masri voic@padico.com 036 61
PALESTINIAN DISTRIBUTION & Mr. Odeh 2298369 0229744
West Bank
LOGISTICS SRVs Service WASSEL Zaghmory info@wassel.ps 1 44
WATANI Dr. Bassam 022423 0224150
West Bank
WATANIYA PALESTINE MOBILE TELE Service YA Hannoun info@wataniya.ps 044 00

http://www.pex.ps/PSEWEBSITE/English/ListedCompanies.aspx?Tabindex=0

248
 APPENDIX C

SURVEY QUESTIONS
250
251
252
253
254
255
256
257
258
259
 APPENDIX D

PALESTINIAN LABOR FORCE

STATISTICS
Adapted from Labor Force Survey Report, by Palestinian Central Bureau of Statistics
(PCBS), April-June 2008, retrieved September 30, 2010, from http://www.google.com/
search?q=ilo+and+PSCB&sourceid=ie7&rls=com.microsoft:en-S&ie=utf8&oe=utf8&rlz
=1I7ADFA_en

261
 APPENDIX E

CALCULATED VARIABLES
Calculated Variables

Survey Response Number 1 2 3 4 5 6 7 8 9 10 11

MNC Environmental Turbulence 2.13 2.25 3.75 3.25 4.5 3.5 3.63 2.5 2.75 3.13 3.5

MNC Strategy Aggressiveness 2.6 3 3.8 3.4 3.4 2.6 3.6 2.2 2.4 4 3.6

MNC Capability Responsiveness 3.92 3.17 4 4.38 4.15 3.58 3.31 2.87 2.77 4.23 3.92

MNC CSR Posture 3.3 3.44 2.8 3.7 3.3 3.1 2.7 2.6 2.87 4.6 3.5

MNC Strategy Aggressiveness Gap 1.47 0.75 0.05 0.15 1.1 0.9 0.03 0.3 0.35 0.87 0.1

MNC Capability Responsiveness Gap 1.79 0.92 0.25 1.13 0.35 0.08 0.32 0.35 0.02 1.1 0.42

MNC Financial Performance (ROE %) 10.4 10 -5 27 -1.3 21.73 8.5 -10 -5 10.13 22.9

MNC Social Performance 3.83 3.17 3.53 4.13 2.78 3.57 3.13 2.45 3.36 4.17 3.45

263