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Susanto, Y.K.;  Rudyanto, A.;  Rahayuningsih, D.A. The Concept of Local Wisdom-Based Corporate Social Responsibility. Encyclopedia. Available online: https://encyclopedia.pub/entry/28802 (accessed on 16 November 2024).
Susanto YK,  Rudyanto A,  Rahayuningsih DA. The Concept of Local Wisdom-Based Corporate Social Responsibility. Encyclopedia. Available at: https://encyclopedia.pub/entry/28802. Accessed November 16, 2024.
Susanto, Yulius Kurnia, Astrid Rudyanto, Deasy Ariyanti Rahayuningsih. "The Concept of Local Wisdom-Based Corporate Social Responsibility" Encyclopedia, https://encyclopedia.pub/entry/28802 (accessed November 16, 2024).
Susanto, Y.K.,  Rudyanto, A., & Rahayuningsih, D.A. (2022, October 11). The Concept of Local Wisdom-Based Corporate Social Responsibility. In Encyclopedia. https://encyclopedia.pub/entry/28802
Susanto, Yulius Kurnia, et al. "The Concept of Local Wisdom-Based Corporate Social Responsibility." Encyclopedia. Web. 11 October, 2022.
The Concept of Local Wisdom-Based Corporate Social Responsibility
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This entry is adapted from the peer-reviewed paper 10.3390/su141912069

Corporate social responsibility (CSR) refers to actions taken by companies through socially responsible behaviour toward society, with a focus on economic, social, and environmental concerns. Local wisdom is needed to make corporate social responsibility (CSR) activities benefit local communities.

corporate social responsibility local wisdom

1. Introduction

Corporate social responsibility (CSR) refers to actions taken by companies through socially responsible behaviour toward society, with a focus on economic, social, and environmental concerns. Such activities are intended to benefit the community around a company, with the aim that they will later benefit the company itself. For the activities to provide benefits for the community, the CSR must be based on local wisdom [1]. Hadi [2] states that companies need to be sensitive to the systemic adoption of various cultures (local wisdom) in developing CSR strategies.
However, in reality most companies in Indonesia view CSR as a charitable activity, making profits their top priority, without paying attention to the real needs of the surrounding community [3][4]. This is because companies do not know how to correctly implement local wisdom-based CSR. To effectively do this, they need to understand the concept and emulate successful examples of local wisdom-based CSR implementation that other companies have demonstrated.
The research objective is to formulate the concept of local wisdom-based CSR and provide an overview of related activities that companies in Indonesia have conducted. The formulation of the concept and depiction of such activities could assist companies in undertaking such activities themselves. They will also complement their understanding of the concept of local wisdom-based CSR, so that they will be able to understand and apply it.
Previous researchers have identified how local wisdom has been applied in various CSR activities and the concepts of local wisdom-based CSR. The concepts of local wisdom-based CSR from previous studies are presented in Table 1. Table 1 shows that local wisdom-based CSR is conceptualized by comparing secondary data with primary data (i.e., observation, interview, focus group discussion, and questionnaires to local communities). 
Table 1. Concepts of local wisdom-based CSR in previous studies.
Author Concept Context Method
Kartikawangi [5] Corporate social responsibility (CSR) activities that use local wisdom to accommodate a sustainable and effective communication plan CSR of multinational companies in Indonesia Secondary data comparison, interview, focus group discussion (FGD), and monitoring
Diamastuti et al. [6] CSR activities which conform with stakeholder expectation (connects God, human being, and nature) Tri Hita Karana in Bali Interview and secondary data comparison
Rosilawati and Mulawarman [7] CSR activities which connect local communities and companies Tri Hita Karana in Bali Interview and secondary data comparison
Hendro and Naryoso [8] CSR activities which alleviate poverty, create self-reliance of citizens, work together to maintain environmental balance and cares for the preservation of local culture Community empowerment in Semarang Interview and secondary data comparison
Djufri et al. [9] CSR activities based on cultural and social norms in society Listed companies in IDX Survey and secondary data comparison
Werastuti [10] CSR with spirituality as guidance Catur Purusa Artha in Bali Interview and secondary data comparison
Rosilawati and Ahmad [11] CSR programs that are based on local issues, culture and tradition of community Tri Hita Karana in Bali Interview and secondary data
Mulyani et al. [12] CSR programs that use and develop local wisdom to become a tourist attraction Community empowerment as tourist village in Java Interview and secondary data
Suhadi et al. [13] CSR programs that allow and develop the culture, customs, and habits of the local community CSR in South Sumatera Interview and secondary data
Said and Junaid [14] CSR programs that accommodate local wisdom values to be part of the system and orientation of company PT Vale Indonesia Interviews, focus group discussions (FGD), field observations, and secondary data

2. Definition of CSR

The concept of CSR is one that continues to evolve dynamically [6]. Initially, CSR was a consequence of a company’s existence, because the company had been given the freedom to operate in a certain environment [10][15]. Companies that have been given the freedom to operate need to assure their stakeholders that their presence can positively impact society and the environment [16]. To do this, they need to conduct business ethically [11][17], and show their concern [18][19] for society and the environment.
The early concept of CSR concerned a company’s commitment to creating an order that could increase its awareness of the surrounding community and environment [20][21][22]. The definition of CSR above seems to give the impression that it refers to a company’s obligation to the surrounding community and environment [17][23] without providing benefits to itself. Companies that still adhere to this meaning of CSR consider that it is a burden for them, and is detrimental to stakeholders such as shareholders [10] because their goal is to make a profit, not to undertake social activities [24]. They consider that CSR obligations violate the human rights of shareholders [10].
Most companies in Indonesia embrace this meaning of CSR. As a result, CSR is merely the fulfilment of government regulations [15][18][25][26] and is seen as charitable, becoming an addiction (creating a dependency on the community), as a hostage (a tool for the community to suppress the company), and as toxic (damaging the company and community relations) [27]. Because CSR activities are mandatory, companies in Indonesia attempt to benefit from them. However, with the understanding that CSR is a corporate burden, related activities aim to provide a deceitful positive image [10]; therefore, companies are unable to have a sustainable positive impact on the environment and society [28].
To remedy this problem, the meaning of CSR evolved to replace the old one [29]. Currently, it is defined as a holistic approach that integrates economic, social, and environmental aspects with a company’s business activities in a sustainable manner [10][16][30], as well being an integral part of the company strategy [31] to realize sustainable economic development [17][18][24], resulting in a relationship that benefits both the company and society [18]. If CSR is a part of the company strategy, it can be undertaken voluntarily [28], which means that the company is proactive in exploring CSR activities that benefit the community and the environment [5][10].
CSR also shapes a company’s social standing [24], connecting it with its stakeholders [32]. The surrounding community and environment are the company’s stakeholders; by positively impacting these, the company can develop good relationships with stakeholders [8][17]. This can ensure its sustainability [17].
However, realising that CSR determines social standing and is part of corporate strategy is not sufficient to make the related activities beneficial to stakeholders. Whether or not a CSR activity is beneficial depends on the perception of stakeholders of where the CSR activity is implemented. The successful implementation of a CSR activity in one area does not guarantee the same result in another; therefore, CSR activities must take into consideration the local wisdom of the area where the CSR will be implemented so that the planned activities do not fail [17].

3. Local Wisdom

Before discussing the meaning of local wisdom-based CSR, the meaning of local wisdom is first discussed. Epistemologically, it consists of two words: wisdom, which means righteousness, and local, which refers to locality. Local wisdom refers to local ideas, values, and views that are wise, full of wisdom, have good values, and are unique [33][34], which are embedded within and followed by members of the community [15]. Local wisdom guides local people in fulfilling their needs, facing life’s problems, and improving their quality of life [17][24][35][36].
Through a long process [37], local wisdom is acquired from life experiences and/or is passed down from generation to generation in a particular environment [9][12][20]. Because it is dynamic, there are two types of local wisdom: traditional and contemporary. Local wisdom that does not come from the previous generation is called contemporary wisdom [36]. Another result of it being dynamic is that local communities can renew wisdom through life experiences and by adjusting to current conditions affected by globalisation or outside cultures [24]. Although it is dynamic, the community has deep-rooted local wisdom that enables it to adapt outside culture to its own character [9]. Entrenched local wisdom is called traditional local wisdom [38]. Both types of local wisdom reflect the uniqueness and identity of the community [9][33].
There are various types of local wisdom, depending on the literature consulted. According to Djufri [9], local wisdom consists of (1) locally developed norms, such as prohibitions and obligations; (2) community rituals and traditions; (3) folk songs, legends, myths, and folklore, which usually contain certain lessons or messages, (4) data information and knowledge collected from community elders and spiritual figures; (5) ancient manuscripts or books that the community believes in; (6) the way the community (society) fulfils its daily life; (7) the tools and materials used for certain needs; (8) natural or environmental conditions commonly used in daily life; (9) language. Other studies mention that transportation, tourism [28], and religion are also forms of local wisdom [12][20]. Regardless of its form, local wisdom teaches ethics and morals, is attached to its owner (the local community), and teaches humans to love nature [34][39].
Based on the information above, it can be concluded that local wisdom is wholly owned by the community and is used as a guide to life and community identity; therefore, it oversees whatever the community is involved in, including how to conserve and preserve natural resources, develop human resource potential, and develop science and culture [24]. Assisting communities in conserving and preserving natural resources, developing human resource potential, and developing science and culture are forms of CSR; therefore, it is only natural that CSR activities are based on the local wisdom of the community.

References

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