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Corporate social responsibility in health sector: A case study in the government hospitals in Medan, Indonesia

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Contemporary society demands that every organization operate with a sense of social responsibility. Many organizations now include corporate social responsibility (CSR) activities in their work programs. In the health sector, however, the role of CSR has not been studied as intensively as in private corporations because the services provided by the health sector are already valued as directly serving humanity. This research aims to evaluate the impact of CSR on the health sector, specifically on government hospitals. This model was developed by analyzing the influence of CSR on hospital reputation, customer loyalty, and hospital values. By answering questionnaires, a total of 200 hospital patients from four government hospitals participated in the study. The proposed model was evaluated using path analysis with AMOS tools. The results of this study provide empirical evidence that overall, CSR positively affects the reputation of the hospital, patient loyalty, and hospital value. Although there is a direct negative effect of CSR on hospital value, the larger influence of indirect effect that occurs through the mediating role of reputation and patient loyalty variables shows that CSR is able to increase the hospital value. Practically, these results imply that CSR should be applied as a strategic tool in improving the value of the hospital.
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VERSLAS: TEORIJA IR PRAKTIKA / BUSINESS: THEORY AND PRACTICE
ISSN 1648-0627 / eISSN 1822-4202
http://btp.press.vgtu.lt
2018 19: 25–36
https://doi.org/10.3846/btp.2018.04
To link to this article: https://doi.org/10.3846/btp.2018.04
by Carroll (1991) indicates that the elements of volunteer-
ing and charity in CSR activities are just a small portion of
aseries of organizational goals.e concentric circles of
CSR state that CSR is an organizational obligation to create
a better life (Geva 2008).CSR is an important marketing
tool that is largely considered able to promote the com-
pany’s competitive advantage, reputation, and performance
in both private and government-owned companies.
CSR activity is perceived as being able to generate an
organizations good reputation among stakeholders in the
long term (Susanto 2009).In the context of hospital ser-
vice, the implementation of CSR is generally performed in
line with hospital operations.CSR activities conducted in
hospitals involving patients are able to create perceptions
in the minds of patients (Bosho and Gray 2004, Tian et
al. 2011, Mostafa 2005). However, unlike CSR activities in
the private sector that mainly focus on outside working en-
vironment (Handayani et al. 2017), hospital CSR activities
CORPORATE SOCIAL RESPONSIBILITY IN HEALTH SECTOR:
A CASE STUDY IN THE GOVERNMENT HOSPITALS INMEDAN, INDONESIA
Arlina Nurbaity LUBIS
Faculty of Economics and Business, Universitas Sumatera Utara, Medan, 20155 Indonesia
E-mail: arlinalubis10@gmail.com
Received 14 December 2017; accepted 06 March 2018
Abstract. Contemporary society demands that every organization operate with a sense of social responsibility.Many organiza-
tions now include corporate social responsibility (CSR) activities in their work programs.In the health sector, however, the
role of CSR has not been studied as intensively as in private corporations because the services provided by the health sector are
already valued as directly serving humanity.is research aims to evaluate the impact of CSR on the health sector, specically
on government hospitals.is model was developed by analyzing the inuence of CSR on hospital reputation, customer loyalty,
and hospital values.By answering questionnaires,a total of 200 hospital patients from four government hospitals participated in
the study.e proposed model was evaluated using path analysis with AMOS tools.e results of this study provide empirical
evidence that overall, CSR positively aects the reputation of the hospital, patient loyalty, and hospital value.Although there is
a direct negative eect of CSR on hospital value,thelarger inuence of indirect eect that occurs through the mediating role
ofreputation and patient loyalty variables shows that CSR is able to increase the hospital value.Practically, these results imply
that CSR should be applied as a strategic tool in improving the value of the hospital.
Keywords: corporate social responsibility, hospital reputation, customer loyalty, hospital value.
JEL Classication: H75, L20, M14.
Introduction
Corporate social responsibility(CSR)refers to a compa-
ny’s strategic actions in carrying out its business activities
in an ethical and social sphere (Aguilera et al. 2007, Tai
and Chuang 2014).e core concept of CSR is related to
empowering stakeholders and taking advantage ofavail-
ableresourcesin business activities (Bhattacharya et al.
2009).e scope of CSR activities is diverse, ranging from
cooperation, maintaining good relationships with employ-
ees and other stakeholders, and even activities inprotecting
the environment(Ismail2009, Babiak and Trendalova
2011, Frynas 2009, Torugsa et al. 2013).
e classical view of CSR only focused oncharitable
activities or solving social problems. Nowadays, this par-
adigm has shied as the business responsibility to solve
environmental and social problems (Handayani et al.
2017, Lee2008, Secchi2007). e CSR scheme proposed
that are conducted outside of the focus of healthcare ac-
tivities are deemed to disrupt the services.By considering
some aspects related to public awareness of the healthcare
sector, this study attempts to empirically evaluate the eect
of CSR on hospital value, reputation, and loyalty of patients
in state-owned hospitals in Medan City, Indonesia.is
study is valuable and has novelty due to the fact that CSR is
generally done by the private sector (e.g. Khan 2010, Lima
Crisóstomo et al. 2011, Fia 2012, Snider et al. 2003). As
a result of CSR usually being conned to the private sec-
tor, its practice in both government-owned agencies and
healthcare sector has attracted less attention.Publication of
CSR activities of private sector hospitals encourages public
trust in the use of private services rather than government
agencies, such as public hospitals (Pivato et al. 2008). is
leads to the phenomenon where private healthcare services
have a higher demand than that of government-owned hos-
pitals. is has encouraged the local government to start to
implement CSR in the regional hospitals they own.In the
last three years, government hospitals in Indonesia have
consistently performed CSR activities such as free eye treat-
ment and public health education, including healthy life-
style activities targeting a range of people from elementary
school children to students in higher education. For in-
stance, the government hospitals in Medan City have been
implementing such activities for the last three years. is
study was driven by the interesting question of the extent
to which the CSR in government hospitals is able to aect
reputation, value, and customer loyalty. is ultimately is
expected to have an eect on hospital performance in both
satisfaction of customer and nancial benet. is study
attempts to provide an insightful overview that focuses on
the patient’s perspective in evaluating the impact of CSR ac-
tivities implemented by government hospitals, rather than
focus on internal assessment of hospital service. Moreover,
this study is unique in that it investigates CSR in the health-
care sector which is considerably dierent from previous
studies that give more emphasis to the private sector.
1. Literature review
Corporate social responsibility and hospital reputation
Schermerhorn (2016) and Kurniawan (2017) states
thatgenerally there are four levels of CSR actions: prot-
ability, legitimacy, ethics, andphilanthropy. ese four are
grouped into two main groups. e rst group deals with
the scope of the company’s obligations that intersect with
applicable law.e other group relates to the persuasive
sphere leading to voluntary action.CSR is regarded as one
of the mostinstrumentalfactorsin beating the competi-
tion in the market (Wall 2008).Now, the community is
also strongly reacting to CSR activities that are considered
benecial to the community.CSR activities in the context
of hospitals generally relate to the education of paramedical
teams, health seminars, and charity activities for the public
to improve public health in general.CSR will strengthen the
reputation of the hospital as CSR activities conducted by the
hospital increase.Some studies, such as those by Susanto
(2012) and Gazzola (2014), identify a strong relationship
between CSR and the company’s reputation.Moreover,
Inleh, Bartlett, and May’s(2011) study reveals that one of
the reasons companies do CSR is that they do not lose
public reputation.
Doda’s (2015) study suggest a link between CSR prac-
tices and corporate reputat ion. is value is gained through
a comprehensive set of actions, involving consumers, in-
ternal human resources, client networks and innovation
exploration to add value to CSR practices. Dean (2003) pro-
vides empirical evidence of a positive relationship between
reputation moderated by certain types of donations with
CSR practices. McWilliams, A. (2000) states that CSR can
be used as a means to enhance the company’s reputation.
Other studies provide similar evidence (e.g Morsing and
Schultz 2006, Kotler and Lee 2008, Lai et al. 2010). More
specically in the health sector, Bear et al. 2010) suggest that
CSR ratings is less likely able to have a signicant eect in
the relationship between gender diversication in the board
of directors and corporate reputation. Clarke and Gibson-
Sweet, (1999) disclose that rms with high levels of public
scrutiny, as in the health sector, tend to use annual reports
to improve the reputation of the community.
Corporate social responsibility and customer loyalty
Previous studies have suggested that loyalty plays an im-
portant role in the long-term growth and sustainability
of a company’s business.Loyalty becomes more than the
ultimate goal of marketing(MandhachitaraandPoolthong
2011).In line with the concept of consumer behavior, con-
sumers would be more loyal to products that contain ethi-
cal elements and companies that consistently implement
CSR activities.Consumers consider CSR actions a factor
in evaluating the product of a company that leads to loyal
behavior (Öberseder et al. 2013).In this context, the hospi-
tals must consistently implement and budget CSR activities
in an eort to reach consumer loyalty.
Furthermore, a study from Vlachos et al. (2009) which
states that prot motive-based CSR has negative eect on
overall CSR value, has relevance and implication on health
sector, which generally implement social and humanity
based CSR (Grandón and Reinoso 2016, Mukhopadhyay
et al. 2014). In relation to loyalty, many studies show that
CSR is more likely able to increase the consumer loyalty
(García de los Salmones Sánchez et al. 2005). Whereas,
Sen and Bhattacharya (2001) reveal that under certain
circumstances, CSR is able to reduce consumer interest in
using company products. e model developed by Luo and
26 A. N. Lubis. Corporate social responsibility in health sector: a case study in the government hospitals...
Bhattacharya (2006) demonstrates the relationship between
CSR and customer satisfaction, which in turn can increase
the market value of the company.
Corporate social responsibility and hospital value
People are now increasingly conscious of human rights
and ethical behaviors which impacts the strong poten-
tialinuence of a company’s CSR activities. Brandaoet
al. (2013)reveal a new paradigm for an approach to social
responsibility in hospital management in whichhospitals
can perform CSR activities actively or passively.e ap-
proach to social responsibility that has been developed
and implemented by the private sector can now benet the
health services sector such as hospitals(Semplici 2011).In
a competitive market, the proper implementation of CSR
will likely increase the value of the hospital as CSR actions
will improve the eectiveness and eciency in providing
health services(Brandaoetal.2013).
CSR activities can attract the attention of workers as
well as shape the behavior expected of patients and para-
medics.is will encourage increased eectiveness and ef-
ciency of health services provided.However, some previ-
ous researchers indicated that CSR has no impact or even a
negative eect on the value of the hospital.Gherghinaand
Vintila (2016)show that there was no relationship between
CSR and corporate value, particularly in the form of CSR
stakeholders.In that study, the CSR activity was focused
on environmentalconservation. Communities are more
receptive to CSR actions related to the environment than
other forms such as education and counseling.Srivastavaet
al.(2012)asserts that CSR does not always bring increased
value and is even likely to decrease the consumer’s perceived
valueof the company.Sincepoorly implemented CSR ac-
tions may impair perceptions of value, the company’s social
responsibility to the environment in this case should be
applied wisely.
Hospital reputationand customer loyalty
Marketing literature suggests that customers evaluate their
perceived performance of a corporation and its product
based on its reputation.A stronger reputation will gain
more trust and customer loyalty (Keh andXie2009, Shirazi
et al.2013, Wahyuni and Ginting 2017).Brand identica-
tion theory also suggests that there is a positive relationship
between corporate reputation and customer loyalty.Hence,
a well-known product will be more likely accepted by new-
comers (Marinetal.2009).
A study from Bontis, Booker, and Serenko (2007) and
Budiharseno (2017) suggest that reputation aects loyalty.
Weiwei (2007) and Nugroho et al. (2017) state that with
respect to the nature of intangible in service business, the
use of the company’s physical aspects, direct contact and
communication is necessary to build a reputation for in-
creasing consumer loyalty. In addition, some studies (Helm
et al. 2010, Walsh et al. 2009) also reveal direct relationship
between company reputation and loyalty. In the context
of health sector, Bosho and Gray (2004), Wu (2011) and
Naidu (2009) show that assurance and the service quality
of hospital nurses has a positive impact on both satisfaction
and patient loyalty.
Hospital reputation and hospital value
As an action based ona cost-benetanalysis,CSR should
be able to increase the company›s value through the cre-
ation of reputation and competitive advantage in the long
term.However, the current study still does not provide
sucient evidence that CSR is likely able to increase the
value of the company as a whole.For instance, Doda (2015)
shows that CSR activities do not have an impact on com-
pany value. CSR is no longer just about social charity; it has
become an eective marketing tool used to promote the
image and value of the company(Folajin et al.2014,Geva
2008).
e relationship between the reputation and value
of a company has been identied as a valued relation-
ship (Knight and Pretty 2001). Companies that have a
high reputation will likely attract the attention of better
resources that can be used in increasing the value of the
company. Moreover, consumer perceptions of company
value will increase in well-known companies compared to
those which are lesser known.Haghkhah et al. (2013) states
that reputation is a source of growth and development in an
enterprise.Nicklin and Dickson (2009) state that reputation
in the form of hospital accreditat ion plays an important role
in the perception of the value of a hospital to the public.
Customer loyalty and hospital value
Many ndings of previous studies suggest that companies
carry out CSR activities to practically gain an edge and
sustainable growth in the long term(Carrolland Shabana
2010, KorkchiandRombaut 2007,Nasieku et al.2014).
However, it is worth noting that CSR may not solely achieve
decisive long-term benets for the company; it is consid-
ered to have costs as well. CSR activities require a certain
amount of costs to be incurred by the company.Some
studies argue that CSR will not likely be able to increase
the value of the company because of its very high level of
uncertainty. Four percent of the economic intelligence units
consider CSR to be entirely detrimental to the company
(Lev 2013).
In the health sector, such as in hospitals, the healthcare
provider’s reputation has an imp ortant role in attracting the
attention of consumers to use the health ser vices provided,
in addition to attracting awareness from others in the health
Business: eory and Practice, 2018, 19: 25–36 27
sector.is may be because a good reputation, for example
in terms of a healthcare provider’s service and hygiene, is
considerably demanded by users. Most people will very
likely not want to use the services of a hospital that does
nothave a good reputation.Most importantly, the hospi-
tal users will pay attention to hospital services and quality
problems, especially regarding hospital success rate and risk
of treatment failure(Meyeret al.2004). e patient’s loyalty
to the hospital also plays an important role in achieving
long-term growth.Marketing experts identify that one of
the expected behaviors of loyal consumers is the consump-
tion of services rendered, or the use of repeat services in the
future (Kotler and Keller 2012).
Kotler and Keller (2012) state that customer loyalty is
the key to achieving long-term growth and business conti-
nuity.e cost of acquiring new customers is generally ve
times more expensive than maintaining existing custom-
ers.Moreover, loya l customers will invite new prospects at no
additional cost.It becomes a potential for generating prots
for the company in t helongterm.e generated protscould
be used as investment to increase eectiveness and eciency
of existingservices that have an impact onbetter value.
2. Researchmodel andhypotheses
In line with the literature study conducted, the research
model was developed to meet the objectives of this
study.e model proposed in this study is summarized
in Figure 1.
In accordance with the prop osed model, this study pro-
posed eight hypotheses as follows:
– H1: ere is a direct positive inuence of CSR on hos-
pital reputation
– H2: ere is a direct positive inuence of CSR on cus-
tomer loyalty
– H3: ere is a direct positive inuence of CSR on hos-
pital value
– H4:ere is a direct positive inuence of hospital
reputationoncustomer loyalty
– H5: ere is a direct positive inuence of customer
loyalty on hospital value
– H6: ere is a direct positive inuence of hospital
reputation on hospital value
– H7: ere is a mediating role of hospital reputation
in strengthening the relationship between CSR and
hospital value
– H8: ere is a mediating role of customer loyalty in
strengthening the relationship between CSR and hos-
pital value
3. Research method
Participants
is study focuses on the patients perspective in evaluat-
ing the impact of CSR activities imposed by government
hospitals.erefore, the sample criteria are the patients
who know the CSR activity of the hospital.According to
Ghozali (2011), the minimum sample criterion for a path
analysis is 200–300. To get representative samples from
each hospital,50 inpatients from each one were randomly
invited toparticipate in this study.Participants were invited
randomly according to the list of patients present in each
hospital.If a selected sample was not willing to participate
in the study or was unable to participate because the select-
ed sample was out-patient, the samplewould be replaced
with a randomly selected sample that met the minimum
requirements.In thisstudy,allselected sampleswere able
to participate.
Location and time ofresearch
In terms of research location, this study was conducted
in the city of Medan, North Sumatra, that has four gov-
ernment hospitals: Putri Hijau Hospital, Haji Hospital,
Pirngadi Hospital, and Adam Malik Hospital. is study
was conducted from June to September, 2017.
Research scheme
e researcher visited four government hospital in Medan
to conduct the research. As the researcher visited, the par-
ticipants were gathered in the hall. Researcher give the basic
knowledge of CSR activities conducted in hospital, loyalty,
reputation, and value to the participants before collecting
the data. e researcher was accompanying the patients in
case they had a question about the statements.
Datacollection
is research was conducted using questionnaires as the
source of the data acquisition about patient perception of
the variables.Questionnaires were arranged based on the
Figure 1. e proposed model of CSR impact in government
hospital
28 A. N. Lubis. Corporate social responsibility in health sector: a case study in the government hospitals...
literature review and adjusted in line with the current situa-
tion in government hospitals in Medan City.e study also
interviewed inpatients who were randomly selected in an
eort to obtain specic information regarding the actual
situationinthegovernment hospitals.Documentation was
also conducted in an eort to obtain the necessary data in
discussing this research.
Validity and reliability
e distributed questionnaire has passed the validity test,
tested by Pearson Correlation, as well as a test of the reli-
ability of the instrument by using Cronbach’s Alpha. Both
instruments were used to ensure that the data measured
through the questionnaire is accurate and correct in mea-
suring each variable.e research questionnaires were
prepared with operationalization as shown in Table 1.
Dataanalysistechnique
Data in this research was analyzed by using path analysis
with regression method.e statistical tool used in as-
sessing the path coecient estimation was the Analysis of
Moment Structures (AMOS).A Likert scale was used to
measure the patient’s perception of research variables.e
variable score of each patient is the average value of each
variable with the consideration of the number of dierent
indicators for each variable.
is research proposes a CSR model with the assump-
tion that CSR is able to aect the reputation of the hos-
pital, patient loyalty, and the value of government hospi-
tals.Reputation and loyalty both serve as mediating vari-
ables in an eort to increase the value of the hospital.is
study evaluated direct, indirect, and total inuence of the
CSR on the hospital reputation, loyalty, and hospital val-
ue.edirect, indirect, andtotal inuence were estimated
by AMOS soware, while the estimate of the signicance
of theindirecteect, of the relationship between the CSR–
hospital reputation – hospital value, and between the CSR
the customer loyalty – hospital valuewas evaluated by using
Sobel Test (Sobel 1982).
4. Result and discussion
Descriptive statistics
is study used descriptive statistical analysis to evalu-
ate the perceptions of inpatients about CSR practices that
have been implemented by hospitals, patient loyalty levels,
hospital reputation, and their perception of overall hospital
values.e value used is based on the average score of each
variable.e value of the mean or average score used was
to avoid score bias due to an unequal number of indica-
tors in each variable.e descriptive statistical tools used
in the analysis are the maximum, minimum, average, and
standard deviation values.Descriptivestatistical resultsare
summarized in Table2.
Table2shows that inpatients assessed perceived the level
of implementation of CSR at government hospitals as rela-
tively good with an average score of 3.13 from a ve-point
Likert scale. e level of the standard deviation(STDEV =
1.08)indicates that the response of the patient varies con-
siderably.Many implementations of CSR applied by govern-
ment hospitals are not well p erceived by the patient.A high
range of answers conrm that although there are patients
who are perceive CSR programs as very good,some do not
feel the same way.ey did not respond well to the CSR
program that the hospital applied.
Table 2 also indicates that the general reputation of
the hospital for patients has been good with an average
score of 3.70 on a scale of 5.00. e hospital is perceived to
have a good image in the public. is is a good sign for the
ma nagerial practices of CSR of government hospitals, in-
dicated by a small value of standard deviation. In line with
the reputation, generally inpatients of government hospitals
have a high level of loyalty. is is likely to enable the hospi-
tal management to expect future visits from these patients
Table 1. Operational denition and instrument reliability
Variables Operational denition Number of
Indicators
Cronbach’s
Alpha
Corpo-
rate Social
Respon-
sibility
Patients’ perceptions
of the actionsof
socialresponsibility
applied by the hospital
6 0.871
Hospital
Repu-
tation
Patient perception of
hospital health care
image
14 0.735
Patients
Loyalty
Consumer behavior
that shows repurchase,
retain, and recom-
mend attitudes
19 0.722
Hospital
Value
Perception of hospital
values based on nan-
cial aspects, eective-
ness, and eciency of
health services
9 0.924
Table 2. Descriptive Statistics Result
Varia b l e Min Max Mean Deviation
Hospital’s CSR 1.00 5.00 3.13 1.08
Hospital
Reputation 1.60 4.60 3.70 0.54
Customer
Loyalty 1.50 4.50 3.53 0.60
Hospital
Perceived Value 1.30 4.30 3.73 0.57
Business: eory and Practice, 2018, 19: 25–36 29
when they need health services or even advise others to
seek treatment at the hospital.With regard to the hospital
value, inpatients in the study on average consider that the
value of public hospitals is relatively good.is assessment
is based on three main aspects, namely nancialservices,
eectiveness, and eciency of hospital services rendered.
Path analysis
e model evaluation performed using a path analysis with
AMOS identied that CSR only explained 7.7 per cent of
the variance of hospital patient loyalty.Moreover,CSR and
the hospital reputation together account for 71 per cent of
the variance of patient loyalty.In this case, reputation plays
a major role in explaining the loyalty of the patient.In con-
nection with the value of the hospital, the three variables
of CSR, customer loyalty, and hospital reputation are able
to explain 66 per cent of variance.Based on the statistical
value of squared multiple correlation, the model proposed
in this research is able to predict the impact of CSR on the
government hospitals in Medan City.
e results of the estimation of the AMOS diagram used
in evaluating the research model are presented in Figure 2.
e results of the estimated value and hypothesis testing
of direct inuence between variables are summarized in
Table3.
e direct eect
Table3indicates that CSR has a positive and signicant
impact on the reputation of the government hospitals, in-
dicated by the statistical result of hypothesis one of critical
ratio (C.R) 3.282 and p-value 0.001.Hence, there is statisti-
cal evidence to suggest that the more appropriately the CSR
is applied and well-perceived by the patient, the higher the
reputation the hospital gains.Since the rst hypothesisis
supported by statistical analysis, the hypothesis one stating
that there is a direct and positive inuence of CSR on the
hospital reputation is accepted.
e statistical analysis reveals that CSR has a positive
and signicant eect on the loyalty of inpatients, indicated
by the value of C.R and p-value of hypothesis two of 2.970
and 0.00, respectively.Accordingly, hypothesis two stating
the eect of CSR on customer loyalty is accepted. is allows
that patients will likely become more loyal as CSR activity
is implemented by the government hospitals.
Hypothesis three tests the eect of CSR activities on
the hospital value.e statistical testing reveals that there
is a negative and signicant impact of CSR on the value
of the hospital, indicated by the negative value of C.R
–2.905. Although the relationship is signicant, the nega-
tive sign proves that there is no direct inuence of CSR
on the hospital value. erefore, hypothesis three testing
the inuence of CSR on the hospital value is not statisti-
cally supported.
Furthermore, Table 3shows that the reputation of the
hospital is more likely perceived to have a positive eect on
loyalty of patients. is is supported by the statistical result
of C.R and p-value of 16.014, and 0.000, respectively. is
result statistically supports hypothesis four stating that CSR
has a direct and positive inuence on the patient loyalty in
hospital governments in Medan City. It means that the more
CSR programs are implemented by hospital governments,
the higher the customer loyalty will be.
Hypothesis ve tests the impact of the hospital reputa-
tion on the hospital value. e statistical testing reveals that
the reputation of hospital is likely perceived to have a posi-
tive and signicant impact on the value of the government
hospitals.is is indicated by the value of C.R of 1.983, and
Figure 2.AMOS path for estimate of CSR impact model
Table 3. Path analysis estimate and hypothesis testing
Hypotheses Estimate S.E C.R p-value Result
H1 Reputation CSR 0.155 0.047 3.282 0.001 Accepted
H2 Loyalty CSR 0.073 0.025 2.970 0.003 Accepted
H3 Value CSR –0.084 0.029 –2.905 0.004 Rejected
H4 Loyalty Reputation 0.707 0.044 16.014 *** Accepted
H6 Value Reputation 0.173 0.087 1.983 0.047 Accepted
H5 Value Loyalty 0.735 0.100 7.319 *** Accepted
*** signicant at <1%
30 A. N. Lubis. Corporate social responsibility in health sector: a case study in the government hospitals...
signicance level of 0.047. According ly, the hypothesis ve
is statistically supported. It means that the higher the hos-
pital’ reputation, the higher the hospital value.
Finally, hypothesis six tests the inuence of customer
loyalty on the hospital value. e statistical analysis shows
that there is a positive and signicant impact of customer
loyalty on the value of government hospitals, indicated by
the value of C.R of 7.319, and p-value of 0.000, meaning
that the more loyal patients in the hospital are more likely
to perceive increased value of the hospital.
e indirect eect
In order to evaluate the indirect eect of both mediating
variables of hospital reputation and customer loyalty in
strengthening the relationship between CSR programs and
the hospital value, this study used the Sobel test.e test
results of the Sobel testare summarized in Table4.
Table4 shows the indirect eect of CSR on the hospital
value through the mediating role of hospital reputation.
e result of Sobel test, indicated by the p-value of 0.006
demonstrates that there is a positive and signicant impact
of CSR on the hospital value. is means that the medi-
ating variable of customer loyalty is able to strengthen
the relationship between CSR and the hospital value.
Moreover, the relationship is likely to be stronger aer
the mediating variable of reputation is included, indicated
by the p-value of 0.000, and the value of indirect eect of
0.161. is means that the reputation together with loyalty
has a considerable role in an eort to increase the level
of the hospital value by conducting CSR activities. e
CSR, henceforth, is better able to enhance the reput ation of
government hospitals that will ultimately improve the pa-
tient’s perception of the value of the hospital.Accordingly,
the hypotheses sevenand eight are statistically supported.
Totaleect
e CSR Impact model proposed in this study provides the
indirect eect of CSR on the value of government hospi-
tals.Both the reputation and the loyalty of the patient are
also proved to signicantly play a role as intermediary vari-
ables that have an intervening eect on CSR in increasing
the hospital value.e direct, indirect, and total inuence
are summarized in Table5.
Table5shows that although directly CSR has a negative
impact on the hospital value, overall, CSR is more able to
increase the hospital value by inserting the mediating role
of the hospital reputation and patient loyalty.
5. Discussion
Direct eect of CSR on hospital reputation
e results indicate that CSR activities conducted by gov-
ernment hospitals will likely be able to improve the reputa-
tion of the hospital.According to reputation management,
an organization had to carefully set policy and action in
order to create hospital reputation among stakeholder in
long-term (Susanto 2009). Our ndings support the fact
that many organization commit to do CSR due to threat of
losing reputation for long term (Inleh et al. 2011). Susanto
(2012) and Gazzola (2014) also stated that CSR will en-
hance organizations reputation. Any CSR activity that is
announced or published will have more impact on the
company’s stakeholders.e community now has a very
high awareness of the “green-activities” and CSR activities
undertaken by the company, especially CSR that supports
the welfare of stakeholders in general.In this study, patients
were asked to respondto a credible form of CSR that has
been implemented by the hospital.When CSR activities
such as health education, providing free ser vices, and doing
Table4. Sobel test for indirect relationship
Path Indirect Eect p-value* Evaluation
CSRLoyalty Valu e 0.052 0.006 Accepted
CSRReputationLoyaltyValue 0.161 *** Accepted
* Calculated using Sobel test, *** Signicance value <1%
Table 5. Direct, indirect, and total eect
Independent Variable Dependent Variable Mediating Variable Direct Eect Indirect Eect Total Eect
CSR Loyalty Reputation 0.073 0.110 0.183
CSR Reputation 0.155  0.155
Reputation Loyalty 0.707  0.707
Loyalty Value 0.735  0.735
Reputation Va lu e Loyalty 0.173 0.520 0.707
CSR Valu e Loyalty; Reputation –0.084 0.161 0.077
Business: eory and Practice, 2018, 19: 25–36 31
devoted work are well perceived by the patients, in their
minds it is also attached to the stronger reputation of the
hospital.Reputation is associated witha good impression of
the service, impression of service reliability, the impression
of the service perception, the impression of good manage-
ment, and most importantly a general good impression by
stakeholders. erefore, in order to gain much more repu-
tation in public, government hospital must leave positive
impression to their CSR act. e better their CSR activities
perceived by patients, the better their reputation will be
gained.
Direct eect of CSR on patients’ loyalty
CSR activities applied by hospital and perceived by patient
are more likely able to encourage patient loyalty.e results
showed that statistically CSR will create patient loyalty to
government hospitals in Medan.Patients, as part of the
stakeholders, will interact directly with the CSR activities
undertaken by hospital.Moreover, unlike common char-
acteristics of CSR in the non-health sector, many of the
hospital’s CSR activities indeed take place in the hospital
environment itself.us, the customer as an inpatient will
become the rst party to have opportunities to interact with
CSR activities implemented.is activity will make people
trust more in these activities.is result is in line with the
studies of Chunget al.(2015), andAilawadiet al.(2014),
though these studies were not conducted specically in
the health sector.
Moreover,the results of this study are also consistent
with DialloandLambey-Checchin (2017), demonstrating
the positive impact of CSR on customer loyalty.When CSR
conducted by government hospitals is positively perceived
by inpatients, they increasingly show loyal behavior.ey
become more condent incommunicating the good experi-
ence at the hospital and recommend it to their colleagues, as
well as indicate the use of health care services in the future.
Our nding showed that even though the statistical result
of path coecient is relative small (less than 0.1), CSR is
signicantly able to aect the patients’ loyalty. Hence, pa-
tients will get more loyal to the gover nment hospital as they
perceived a better CSR activities implemented.
Direct eect of CSR on hospital value
e results indicate that CSR has a direct, negative and
signicant inuence on the hospital value.e result imply
that CSR activities, given there is no impact on reputation
and loyalty, will reduce the overall hospital value.e results
indicate that CSR has a direct and negative inuence on
the hospital value.is is seemingly caused by the budget
implementation of CSR activitieswith regard to the im-
position of operating costs that would make the patients
perceive that the hospital will nancially deteriorate at a
given level.is result is consistent with Srivastavaetal.
(2012), suggesting that CSR does not always have a posi-
tive impact on hospital values.Although it is in its initial
development, CSR would impose relatively large additional
costs, though, in theend,the hospital CSR would provide
benets by increasing levels of eectiveness and eciency
of services in addition to improved nancial performance
hospitalthrough the presence of a more skilled medical
personnel and the potential for morepatients. CSR alone
can be perceived in negative thought such as ineciency
use of service time and personal resource, waste of opera-
tional fund, also inecient schedule for the patients.
Direct eect of reputation in patients’ loyalty
e result regarding the positive relationship between repu-
tation and loyalty, is also supported by previous studies(e.g
Aliet al. 2012, Helm and Tolsdorf 2013).Shirazietal.
(2013)stated that a strong brand identity,for example, a
hospital that has a high reputation,is more likely to result
in consumer condence leading to the loyal behavior of
consumers. Hence, hospitals can update medical equip-
ment and training of medical workers to improve the ef-
fectiveness and eciency of the healthcare services. us,
the more reputable the hospital, the more loyal the patients.
Direct eect of loyalty on hospital value
Customer loyalty will improve hospital value. In accor-
dance with Kotler and Keller (2012), we believed that a
loyal customer will behave in three possible action, (1)
repurchase, (2) retain, (3) recommend. Each act of loyal
customer will improve hospital value. Basically a loyal cus-
tomer will bring more customer while retain themselves. If
hospitals had much more loyal customer, it will bring more
value to the hospital. Loyal customer become a source of
continuous income that can be used to improve hospital
value. Hospital may improve their equipment or undergo
training for medical sta which improve their eectiveness
and eciency level healthcare services. is result is consis-
tent with previous research that states that loyalty is key in
improving the value of business development(Haghkhah
et al. 2013,Keininghamet al. 2008). e statistical analysis
shows that loyalty is more likely able to improve the pa-
tients’ perceived information regarding the nancial aspect,
eectiveness and eciency of services, thereby improving
the hospital value
Direct eect of reputation on hospital value
e statistical testing also shows that there is a positive
and signicant inuence of hospital reputation on the
perception of the hospital value.is is consistent with
previous studies (Eccles et al. 2007, Cole 2012) highlight-
ing thepositive relationship between the reputation and
32 A. N. Lubis. Corporate social responsibility in health sector: a case study in the government hospitals...
value of the company.Reputation has an important role
in the eort to attract the attention of consumers and new
resources for the hospital.For example, doctors who are
more skilled or better paramedics will join a hospital that
has a high reputation.is will encourage the eectiveness
and eciency of health services that impact on the overall
value improvement.
Indirect eect of CSR on hospital value through loyalty
According to our research, most of CSR activities were
directed to the inpatients, thus they will be more likely
to experience the CSR conducted by hospital. It became
the moment of truth between patients, paramedics, and
hospital. As the CSR program delivered smoothly, it is
more likely improving the patients’ loyalty. e more they
loyal the more future nancial ow source established
to hospital. Loyal patient will be likely to repurchase the
services while spreading positive feedback to other. Loyal
patients will be taken care more eective and eciently
through patient database for references. Also, the nancial
ow can be used to improve equipment to operate more
eciently.
Indirect eect of CSR on hospital value through
reputation
Reputation management (Susanto 2009) stated that some
organization commit to do CSR to maintain their reputa-
tion. Gazzola (2014) stated that CSR not only maintaining
the reputation but also improve hospital reputation on pub-
lic opinion. As public opinion increased, it will bring new
source of human resource to improve service quality and
service delivered to the patients. ey will be more eec-
tive and eciently while delivering the healthcare services.
Conclusionand implication
is study provides some important considerations re-
garding the applicability of CSR in the health sector. e
statistical testing of the study model provides empirical
evidence that CSR plays an important role in the creation
of value through the creation of a government hospital
reputation and patient loyalty. It should be emphasized
that by analyzing the Sobel test, the direct negative impact
of CSR will be covered by the strengthening role of hos-
pital reputation and patient loyalty variables.CSR activi-
ties can encourage loyalty and reputation of the hospital
directly. Overall, CSR is more likely to promote the value
of the government hospitals. Hence, CSR activities should
be applied strategically and should be implemented with
regard tothe core business of the hospital. CSR also has
to be communicated properly in the eort to create the
reputation of the hospital.Implementation of CSR is highly
recommended in direct contact with hospital stakeholders
such as patients and paramedics.erefore according to
our research we may conclude that CSR on government
hospital will improve the patients’ loyalty, reputation, and
overall value. However we should pay attention that CSR
should be conducted with care.
Acknowledgment
e study is fully supported and funded by the Universitas
Sumatera Utara under research grant of Non-PNBP USU
2017, No. 5338/UN5.1.R/PPM/2017, dated May 22, 2017.
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36 A. N. Lubis. Corporate social responsibility in health sector: a case study in the government hospitals...
... However, limited research has answered the question of "how," such as how do hospitals practice social responsibility? Moreover, most of these studies were conducted in countries outside the U.S, such as countries in Asia (e.g., Lubis, 2018), the Middle East (e.g., Keyvanara & Sajadi, 2015), and South America (e.g., Lopez-Salazar et al., 2016), which have different cultural dynamics and business operations from the U.S. Thus, research focusing on the evaluation of hospital social responsibility in the U.S. is necessary (Liu et al., 2016). This study attempts to fill this gap by using a content analysis method specifically capable of (a) identifying the dimensions of CSR initiatives that hospitals tend to emphasize, (b) discovering the motivating principles behind hospitals' CSR practices, (c) exploring the relationship between CSR practice types and hospital value, and (d) investigating whether these aspects differ among hospitals with three types of ownership (i.e., for-profit, nonprofit, and governmental hospitals). ...
... Keyvanara and Sajadi (2015) observed similar patterns of hospital social responsibility practices in Isfahan, Iran. Lubis (2018) provided empirical evidence regarding patient/ consumer perspectives on hospital social responsibility by studying patients from four hospitals in Medan, Indonesia, and indicated that CSR practices positively contribute to patient loyalty, hospital reputation, and value. Liu et al. (2016) suggested that Chinese patients' assessments regarding service quality, appropriateness, and accessibility remarkably affect their perceptions on hospital social responsibility performance. ...
... Participating in social responsibility events would help improve hospital value (Liu et al., 2016). Lubis (2018) asserted that socially responsible conducts were able to improve the value of the government hospitals via the improvement of hospital reputation and the creation of patient loyalty. Hsieh et al. (2016) suggested that active and proper implementation of CSR would result in significant influences on hospital identification and job performance among healthcare providers, which in turn improve the service quality and effectiveness. ...
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The purpose of this article is to examine hospital social responsibility practices using a content analysis method. It selected a sample of 522 hospitals in U.S. and collected data from hospitals' official websites. Significant emphasis is found to be placed on CSR practices associated with marketplace activities that are mostly stakeholder-driven. Non-profit hospitals had stronger awareness on the actions of being a socially responsible organization. The results also confirm significant relationship between active CSR programs and hospital. The findings shed light on hospital social responsibility and provides a unifying conceptual basis that explains how hospitals in U.S execute CSR programs.
... 2015). Çalışmaların büyük bir çoğunluğu ise hastanelerde yürütülmüştür (Kakabadse & Rozuel, 2006;Oh & Park, 2008;Jamali ve ark., 2010;Runnels ve ark., 2011;Tuan, 2014, Zadros, 2014Kumar, 2015;Keyvanara & Sajadi, 2015;Yıldırım & Dinçer, 2016;Blesia & Sulelino, 2016;Yeşiltaş & Erdem, 2017;Lubis ve ark., 2017;Syahril & Ansini, 2017;Lubis, 2018;Soran, 2018;Rodrigez ve ark. 2018). ...
... Tuan (2014) ise, KSS'nin, hastanenin marka algısını oluşturan, yüksek düzeyde hasta bakım kalitesini sağlayan klinik yönetişim etkinliğinin güçlü bir göstergesi olduğu belirtilmiştir. Çalışma kapsamında incelenen 9 çalışmada KSS, hastaneler için önemli bir faktör olarak ele alınmıştır (Kakabadse & Rozual, 2006;Oh &Park, 2008;Runnels ve ark., 2011, Tuan, 2014Zadros, 2014;Yıldırım & Dinçer 2016, Tuan, 2016, Creixans-Tenos & Arimany-Serrat, 2018, Lubis, 2018. Ancak, sekiz çalışmada, KSS'nin yeterli bir şekilde anlaşılmadığı, kamu ve özel sağlık sektöründe yetersiz kaldığı, yöneticilerin bilgi eksiklerinin ve hastanelerin alt yapı eksiklerinin olduğu, KSS'nin ana bileşenlerinden hesap verilebilirlik ve şeffaflık bileşenlerinin hastanelerde yeterli uygulama alanı bulmadığı vb. ...
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Günümüzde işletmeler, çeşitli sosyal, çevresel ve ekonomik baskılarla bağlantılı olarak Kurumsal Sosyal Sorumluluk (KSS) projelerini destekleme sorumluluğunu taşımaktadırlar. İşletmelerin sağlık, sosyal ve çevre problemlerini analiz etme, paydaş taleplerini karşılama, diğer aktörler ile toplumsal problemlerin çözümüne katkıda bulunma yükümlülükleri bulunmaktadır. Son yıllarda tüm sektörlerde önemli bir rol oynayan KSS kavramı, sağlık sektöründe de yaygın bir kullanım alanı bulmuştur. Bu bağlamda, bu çalışmanın amacı, sağlık sektöründe KSS faaliyetlerini sistematik derleme yaklaşımıyla analiz etmektir. Bu amaçla, araştırma kapsamında 30 makale incelenmiştir. Araştırma sonucunda, KSS’ye ilişkin yürütülen çalışmaların en fazla kamu ve özel hastanelerde yapıldığı, daha sonra ise sırasıyla sağlık merkezleri, ilaç şirketleri, hane halkı ve öğrenciler üzerinde yürütüldüğü tespit edilmiştir. KSS’nin, başta hastalar olmak üzere dış paydaşlara yönelik faaliyetlere katılım, hastaneye olumlu finansal sonuç sağlama, çevreye olumlu imaj yaratma, yasalara saygı gösterme, işyerinde güvenli ve dostça çalışma ortamı oluşturma, çevreye duyarlılık ve güçlü pazarlık pozisyonu sağlama gibi avantajlarının olduğu bu çalışmada elde edilen sonuçlardandır. Bu çalışmadan edinilen sonuçların, belirsizliğin yüksek olduğu sağlık sektöründe, kuruluşların KSS faaliyetlerini rekabetçi bir avantaj olarak nasıl kullanılabileceği ile ilgili bilgiler sunması nedeniyle önem taşıdığı düşünülmektedir. Anahtar Kelimeler : Kurumsal sosyal sorumluluk, Sağlık sektörü, Sağlık profesyonelleri, Hastane, Sistematik derleme. Jel Sınıflandırması : M14, D23, I10.
... In this sense, CSR could be considered as a share responsibility to use resources effectively to deliver better health , an instrument to promote a more reasonable (Galvin, 2010), efficient and accessible healthcare sector. In relation to these aspects, more and more institutions operating in the healthcare sector adopt CSR activities in their work programs (Lubis, 2018). In particular, CSR activities influence the hospital reputation among stakeholders and, consequently, the hospital value (Susanto, 2009;Inleh, Bartlett, &May, 2011;Doda, 2015). ...
... In particular, CSR activities influence the hospital reputation among stakeholders and, consequently, the hospital value (Susanto, 2009;Inleh, Bartlett, &May, 2011;Doda, 2015). Lubis (2018) considered the CSR should a strategic tool. The second group derives from the Drucker (1989) thought "their first social responsibility is to do their job because it emerges that they must be responsible for their impact, acting as a member of a community"!. ...
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The aim of the paper is to talk about the risk management system especially today in pandemic time. The authors would like to analyze the issue of risk management in an economic and healthcare context. taking into account that there are strong relationships between society and health such as the question of social responsibility and organization, social responsibility and social impact and social responsibility and competitiveness. The correlation between economy and health is highlighted in the healthcare sector, where the risk profile is in fact considered complex and extremely dynamic.
... They found that service quality, appropriateness, accessibility, and professional ethics were positively related to patients' assessments of hospital SR. Later, Libus (2018) investigated the impact of patients' perceptions of SR in governmental hospitals. He found that hospital SR positively affects the hospital's reputation and patient loyalty. ...
... patients) of hospital SR (e.g. Hossain et al., 2019;Libus, 2018;Liu et al., 2016). Further exploration of the perception of internal stakeholders (i.e. ...
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This investigation aims to examine the moderating and mediating role of public service motivation (PSM) on the relationship between organizations’ social responsibility (SR) and employee organization engagement (OE). Using a sample of employees working in four public hospitals in Egypt, the study’s hypotheses were tested using structural equation modeling. Results reported in the study indicated the following: a) PSM had a positive influence on employees’ OE; b) PSM mediated the relationship between organizations’ SR and employees’ OE; c) PSM did not moderate the relationship between organizations’ SR and employees’ OE. Overall, the model results into a partial mediation model of PSM. This investigation could be regarded as one of the first studies undertaking analyses of the relationships between organizations’ SR, PSM, and employee engagement. However, further work is still needed to provide a better understanding of the organizational factors that can help instill, nurture, or suppress PSM and employees’ OE in the public sector.
... Khalifa (2018) identifies four dimensions of social responsibility based on research on the hotel industry in Egypt: economic social responsibility (Economic Social Responsibility, ETRES), social responsibility for the law (Law Social Responsibility, LRES), social responsibility for ethics (ETRES), and social responsibility for humanity (PRES). According to studies on Indonesian public hospitals, economic, legal, ethical, and humanitarian social responsibility are four components of hospital social duty Lubis (2018). In this study, the constitutive selection of hospital social responsibility includes four aspects: economic, legal, ethical, and humanistic CRS. ...
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... It has been mentioned in the literature that, in response to increasing pressure from various stakeholders, organizations in the current era have adopted different green practices to decarbonize their environmental footprint [39,40]. Industries in the current age, irrelevant in size and sector, including healthcare, implement different green strategies under a CSR framework to achieve corporate sustainability [41,42]. Extending this debate, Lagoudis and Shakri [43] showed the importance of green initiatives in neutralizing carbon emissions. ...
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