The Mandatory Corporate Social Responsibility in Indonesia: Problems and Implications

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155 Citations (Scopus)

Abstract

The adoption of the 2007 Indonesian Law No. 40 has created significant debate over the nature of Corporate Social Responsibility (CSR), namely, whether it is voluntary or mandatory. On the one hand, the adoption of such a law represents a legal recognition of the existence of CSR, and this clarification on the legal nature of a concept is necessary for understanding the obligation and responsibility. On the other hand, it has created much confusion surrounding its substance and procedures. This article tries to analyze the development and consequences of CSR under 2007 Indonesian Law No. 40, through the discussion of mandatory versus voluntary dichotomy. It is argued in this article that the mandatory nature of CSR is legitimate and therefore encouraged; however, in practice, this is problematic, as it not only requires a precise concept of interpretation of CSR and identification of the duty bearer and beneficiaries, but also an effective implementation mechanism and a means of verifying the impact.

Original languageEnglish
Pages (from-to)455-466
Number of pages12
JournalJournal of Business Ethics
Volume98
Issue number3
DOIs
Publication statusPublished - Feb 2011

Keywords

  • Corporate Social Responsibility
  • Indonesia
  • mandatory
  • regulation
  • voluntary

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