The Influence of Corporate Social Responsibility towards the Development of the Rural Communities: Case Studies in North Sumatera, Republic of Indonesia

Abstract

Corporate Social Responsibility (CSR) has strategic goals to maintain a harmonious relationship and contribute to socio-economic impacts on the surrounding communities. Therefore, CSR could be seen as a part of planning and development program in the particular area. This study focuses on oil palm plantation companies. This study aims to (1) analyze and assess the effect of CSR program in the development of rural areas around the estate by using indicators of socio-economic impact; (2) Analyze and assess the effect of intervening variables Integrated CSR Implementation to the socio-economic impact on local communities; (3) Analyze and assess the effect of CSR on the social impact of surrounding communities; (4) Analyze and assess the effect of CSR on the economic impact of surrounding communities; (5) Based on point 1 to 4, it could be shaped the Strategic Model of Integrated CSR Program. This research conducted in PTPN IV Pabatu Estate, District of Serdang Bedagai, North Sumatera, Indonesia. The selection method uses multistage random sampling technique. Total sample is 367 respondents, by using analytical methods Structural Equation Modeling (SEM).

There is a Causal Relationship between the Input of CSR and an Integrated CSR Implementation, this is indicated by CSR Input (X) is significant and has positive impacts on the implementation of Integrated CSR (Y). The direct effect of the application of CSR (X) on the Implementation of Integrated CSR (Y) is 0.988. It means whenever there is an increase in the performance of the application of CSR (X) it will improve the implementation of Integrated CSR (Y) which is equal to 0.988 units. The results show that the model-based of Intervening Integrated CSR provides a significant and positive effect on socio-economic aspects thus The Strategic Program of Integrated CSR Model is very appropriate to be applied in the realization of an integrated and sustainable palm oil industry.