**4. Findings and discussion**

In Indonesia, CSR is mandatory by definition, in view of the Indonesian constitution. Indonesian constitution states that " *national economic and social welfare must be regulated by the government to the biggest society's wealth*." There is some legislation created to support these claims, such as Indonesian Corporate Law No. 40 and Indonesian Investment Law No. 25 of 2007. This legislation applied to CSR as mandatory in nature. Nevertheless, every company has a duty under Article 15 of Investment Law No. 25 of 2007 to carry out corporate social and environmental responsibility [45].

CSR policy in Indonesia is stringent enough from the standpoint of power distance practices. In doing their social responsibility, the government makes regulations for the business. Nevertheless, the implementing regulations are challenging. We had found some facts. First, Law overlapping. First, Overlapping in law. Even the government had regulations that could push companies to run their social responsibility, due to the overlapping of the policy some companies found some dilemma. Some statements underlined these problems below.

*"I think we produce so many regulations and sometimes one regulation is overlapped with the other and non-synchronized with the other" (State-owned 1).*

*"We find that the overlapping regulations are due to the Indonesian regional autonomy law. Different perceptions and concerns between the local and central governments" (Local company 2).*

Second, the high cost of bureaucracy due to corruption needs to be given serious attention, some experiences of our respondent are highlighted in below quotes:

*"We generally have to follow so many stages of bureaucracy to get permission for our programme. Sometimes, when our CSR tried to collaborate with the local agendas community association in charge until we got the permission, we have to contact too many people from low level of government to regional government. Otherwise, we could pay someone internally to get access" (State-Owned 1).*

*"Even all government offices stated that they always say no to briberies and in war with corruption. But we often find the condition when the permission need several days to be processed. As you now, our CSR based on the company's budget year, we need a quick response and progress. The government officer may not specifically or directly indicate that they request for money, but without the fund, there is possibility that they could delay our programme for quite some time and long and this is ineffective for us" (Multinational company 4).*

*"Frankly speaking, we dislike dealing with bureaucracy, we are going to choose a program that may not be in touch with some boundary of administration. That's why our choices help microenterprise renew their booth carts, or make soccer school for unfortunate kids. Because such programs do not need authorisations from them" (Multinational 1).*

This situation often leads to a dilemma among companies: whether the company should consistent with its code of conduct and commit to anti-corruption practices or succumb to bribery as global commitment. Corruption has become a chronic problem in Indonesia nowadays. The model of 'petty corruption' or small scale of corruption [46, 47] as indicated above is a common practice among low-level government officer.

#### *Corporate Social Responsibility*

Third, the weak low enforcement; Our respondents also highlighted the law's inconsistency and its strengthening. Some regulation is also created and usually not followed by punishment and sanction for those who have failed to implement the regulation.

*"Another problem is inconsistency in term of sanctions and law enforcement. Many regulations made by government do not provide the consequences should the implementation failed. So, it is seen as just an advice or suggestion. I Think the government is in dilemmatic on whether CSR should be mandatory or just a volunteerism (Multinational company 4).*

Problems explained above show weak overlapping legislation, high rates of corruption, as well as law enforcement as the country's main problem. Some earlier studies related to CSR practices and debate among academic and business practitioners in Indonesia had also identified these problems. Due to some conflict between economic interests the difficulty of reducing these practices is quite difficult. Moreover, due to the intention to attract foreign investment, the Indonesian government often gives special treatment to corporations, such as tax-reducing and less stringent environmental standards [19].

Power distance in Indonesia therefore does not become relevant for encouraging CSR practices. This finding is in line with the previous study that high-power distance will eliminate the interest of corporation to work with CSR [34]. We argue, however, that the reason why power distance does not correlate with CSR motivation is not due to the limited opportunity and space for the company to express its interest and sound its social interest, but more about the problem of implementing the regulation as discussed above: overlapping of regulation, bureaucracy and low law enforcement that has created ambiguity in the regulation implementation thus creates uncertainty among the businesses.

Our previous studies found that the intent to implement CSR among Indonesian corporations is increasing [19], and that the trend is also attracting small businesses [48]. This research shows there are several things that might explain the phenomenon. In Indonesia, we argue that the increase in social responsibility initiatives is the conformity of the combination of the collective and feminine character of Indonesian society. The two dimensions of national culture are seen as the main motivation of why companies in Indonesia work with CSR. The character of both cultures matches two normative values of the indonesian people: *"gotong royong"* (mutual coorperation) and "*teposeliro"* (being tolerance) that include in Pancasila (Indonesia's five national principles) articles. Below are some of the quotes of our informants that we sum up as a reflection of this argumentation.

*"Togetherness, I think is a major value in our society. Helping each other is actually very relevant to religious values and also the values of gotong royong as a foundation in Pancasila. All companies can do this through their CSR. Apart from that any religion teaches us to help each other." (Multinational 3).*

*"CSR is actually a reflection of a tradition that has existed in our society for a long time. Our society is a society that likes togetherness and upholds family values, such as gotong royong, teposeliro. Everything is the same as the spirit of CSR. Corporate CSR is a tangible form of the company's contribution to show that it is part of society" (State Owned 2).*

This finding is quite significantly contradictory with Indonesia 's collective character, where previous research Peng [34] found that countries with higher levels of

#### *The Institutional and Cultural Challenges of Corporate Social Responsibility: Case Study… DOI: http://dx.doi.org/10.5772/intechopen.94478*

individuals are more capable of encouraging CSR but are consistent with the findings [39]. In Indonesia we see a phenomenon that the collective character of the Indonesian people makes CSR the main reason why it is easily acceptable in society and becomes a corporate culture in Indonesia. However, these findings may differ with Peng [34], since the cultural elements were viewed separately in the previous research.

In the meantime, our findings indicate that Indonesian society's collective element is not only a single problem but also a synthesis of Indonesian society's feminine culture. The effort to be integrated into community life is also high when a company feels itself as a community member. Harmonization with society in attitudes in Indonesian society is very significant, and that is also translated by company behavior. So, CSR is not seen merely as acquiring "legitimacy" in the Indonesian sense. Nevertheless, the CSR that the organization carries out is more of an attempt to connect with the society and show its commitment.

Nonetheless, the type of national culture of collectivism also often becomes a challenge for companies to develop and execute CSR programs in Indonesian society. Collective between them is often described as equalizing the same justice. The following comments demonstrate that collectivism in Indonesian culture faces yet another obstacle in Indonesia's implementation of CSR.

*"There was jealousy from the unreached people in our CSR program. They often ask for the same activity to be carried out in their area. For us, this is certainly not easy, because apart from having a limited budget, we also have to measure impact" (State Owned 1).*

*"You have to be smart in choosing the agent of change, people who will support our program. Indonesians like to "ngekor" or follow others. If you want to join a program, they will first see who their friends are (that joined the same program). Often at the beginning of the program it was not easy to find people like this. This person must be able to invite others too and be able to encourage others to continue engaging in our program" (Local private company 1).*

*"Selection of issues and who is confident in these issues are crucial aspects that we have to be cautious about. We have a plan for giving children the vaccines. Yet several people have refused to believe in vaccination because they received recitation from their ustad. Therefore, we need to also identify informal representatives who can clarify the right facts to the public" (Local private 2).*

In addition, we do not really see the low level of ambiguity avoidance in Indonesian society as being linked to the essence of CSR and CSR decision taking in Indonesia. As explained earlier, due to the complexity of the regulations, in order to avoid confusion in reacting to the different stakeholders 'expectations, the company's CSR choices are more likely to respond to community expectations and seek models for their respective approaches either in the form of charity or community project programs. This result is not in accordance with the findings of Thanetsuthorn [39], that companies operating in countries with high uncertainty avoidance tend to carry out CSR that is more concentrated on the environment and society.

However, Indonesian people's attitudes and behaviors, which have a lowuncertainty avoidance character, pose challenges to a CSR program's success or failure. Our study found that group character which is not too straightforward and appears to avoid confrontation sometimes creates obstacles to 1) identify the real community needs and 2) identify potential conflicts and conflict resolution during the program, like the following remarks we come across during data collection:

*"Indonesian culture is in general a little closed, it is not easy for us to recognise their needs if we only address them a few times. Nevertheless, we need to be more observant about seeing and understanding them both from their actions and from what is the topic of conversation among them "(Local company 2).*

*"Sometimes in the program, we cannot avoid conflicts. Conflicts between communities must be examined longer because they sometimes do not want to talk about it. But suddenly, sometimes someone (who has problems with their friend) has disappeared and is no longer active in the program "(Multinational company 1).*

Finally, this research also clearly explores the role of religion in taking social actions related to corporate CSR, particularly when making choices about CSR programmes.

It is fascinating and also a obstacle for Indonesia's implementation of CSR is how to communicate CSR in the most effective way. And when we ask what the firm thinks about the CSR initiatives for the business. There were many answers that were very normative in nature, such as:

*"CSR is doing a good thing, we do not expect anything in CSR. In accordance with religious teachings, we must pay attention, do not let the right hand give and the left hand tell". (State-owned company 1).*

This normative response often appears from officers at CSR who may have strong religious observances. This awareness of CSR engagement continues to make businesses less conscious of whether CSR can be a strategic concern for the organization, and to avoid focusing on CSR operations. Except for organizations that are really aware of the need for strategic CSR collaboration.
