Navigating the CSR Paradox in Extractive Industries: A Multivariate Study on CSR Performance and Social Acceptance of Local Communities

Extractive industry operations often face social challenges, particularly in gaining acceptance from local communities. One common strategy employed by company to secure Social License to Operate (SLO) is through implementation of Corporate Social Responsibility (CSR) programs, which typically take the form of either charity-based initiatives or empowerment-oriented interventions. CSR programs that are responsive to the needs and expectations of the community have the potential to foster harmonious relationships between companies and local stakeholders. In contrast, low levels of social acceptance may escalate into community resistance and conflict. Building on this context, the present study aims to examine the differential relationship between CSR performance and social acceptance, based on the distinct characteristics of charity-based and empowerment-oriented CSR programs. This study highlights a paradox in the objectives of CSR practices within extractive industries: the pressure to secure short-term social support through charitable programs often stands in contrast to the long-term commitment to sustainable development through community empowerment initiatives. Data were collected through a structured survey involving 449 respondents residing in proximity to geothermal operations in West Java, Indonesia, utilizing a stratified sampling method. The findings indicate that CSR performance has a moderately strong influence on social acceptance. Moreover, multivariate analysis reveals that CSR performance significantly affects social acceptance, with charity-based programs exerting a stronger influence than empowerment-based ones. This disparity is largely attributed to the characteristics of the local community, which tend to be pragmatic, possess limited formal education, and prioritize immediate tangible benefits.