Internal corporate social responsibility as a strategic tool for employee engagement in public organizations: Role of empathy and organizational pride

Abstract

BACKGROUND:

The macro-level corporate social responsibility (CSR) has been researched widely in recent years, however, micro-level CSR has recently gained attention. Employees are more influenced by employee related internal CSR initiatives than the external CSR activities. Internal CSR ensures favorable behavior of employees towards their employer which leads towards better organizational performance.

OBJECTIVE:

This study investigates the impact of internal corporate social responsibility (CSR) on public sector employees’ engagement through Organizational Pride (OP). Further, the study considers moderating role of empathy between internal CSR and employee engagement (EE)

METHODS:

Quantitative research design was developed and theoretical framework was investigated through a survey of 430 employees of public sector in Pakistan. SmartPLS was used and partial least square structural equation modeling (PLS-SEM) was used for hypothesis testing

RESULTS:

The results showed that the internal CSR directly influences EE. Secondly, the mediation of OP between internal CSR and EE is also supported. However, the results do not significantly support moderation of empathy between internal CSR and EE.

CONCLUSIONS:

Public sector organizations should actively contribute in employees well- being through internal CSR activities especially on skills development, work-life balance and employment stability. Public sector organizations lack in emotional and cognitive attachment with employees, and should pay attention to pride over organization through employee focused CSR activities

Keywords

Internal corporate social responsibility employee engagement empathy organizational pride

Mr. Farraz Ali is a MPhil Scholar at Department of Leadership and Management Studies, National Defence University Islamabad. His research areas include corporate social responsibility and employer branding. Faraz Ali can be contacted at E-mail: faraz.hussain1579@gmail.com

Dr. Zubair Nawaz is a professional marketer and research scholar, currently working as Assistant Professor at Department of Leadership and Management Studies, National Defence University Islamabad. He earned PhD in Business Administration (Marketing) from Huazhong University of Science and Technology. Research interest includes areas of employer branding, consumer behavior, advertising and brand management. He has published research papers in well-reputed databases and journals at national and international level. Dr. Zubair Nawaz can be contacted via email at E-mail: zubairnawaz@ndu.edu.pk

Dr. Nilesh Kumar (PhD, Huazhong University of Science and Technology) is a foreign faculty in the School of Business Administration, Zhejiang Gongshang University. His current interests include leadership, work motivation, emotional labor, and creativity. His papers have appeared in the Journal of Nursing Management, Psychology Research and Behavior Management, Asia Pacific Journal of Marketing and Logistics, among others.

1 Introduction

Since industrial revolution the scholars are engaged to maximize organizational productivity through effective and efficient employees. In last few decades, various theories and frameworks for capacity building have been introduced. Many researchers have prioritized to investigate the impact of economic and social benefits on employees’ behavior. Past studies suggest that corporate social responsibility (CSR) is concerned with social and economic benefits for the society [1]. According to McWilliams & Siegel (2001) CSR involves wellbeing of society which ensure positive behavior of the members of the society towards organization. The growing social and economic awareness in society has empowered the employees regarding their needs, wants, and specially their social and civil rights. They now understand how to pressurize corporations to keep them aligned with their social and economic responsibilities.

CSR initiatives assist organizations to identify the needs of their stakeholders related to society and environment [3 –5]. The macro-level CSR has been researched widely in the past decade, however, micro-level CSR has recently gained its place in the shelves of researchers. According to Hur et al. (2019) and Story & Castanheira (2019) the employees are more influenced by employee related CSR initiatives than the external CSR activities because it directly impacts the behavior and attitude of the employees. Maslow’s hierarchy theory also supports that human prioritizes personal needs, after that they motivated to achieve higher needs. It is expected that internal CSR increases employee engagement (EE) through ensuring employment stability, improving working environment, providing skills development programs and preparing employees for future tasks, managing workforce diversity and reducing conflicts among employees from different groups, and ensuring balance between personal and professional life of the employee. It creates sense of belongingness and pride for their organization which ultimately leads to positive change in employees’ behavior towards organization [8].

Humans often feel better when working for the greater cause [9]. They feel socially secure while doing something for needy ones. In practical life, they share their inner feelings, praise good deeds, and support each other during bad times. These acts establish trust and sympathy for group members by providing deep understanding regarding sufferings of others which ultimately leads to good relationship among group members. People feel connected and develop sense of relatedness through doing something good for others [10]. Behaving ethically and morally create feelings of pride and self-esteem which establish strong bond among group members [11]. Kurzban (2016) argues that preferring to be engaged is in favor of groups and individuals as well, it collectively ensures improved organizational performance. However, when employees find difficult to keep empathetic behavior towards others, they usually give it up due to inadequate rewards [13]. Therefore, real rewards should prevail in the environment to motivate employees’ empathetic behavior and attitude [14].

People cooperate empathetically with one another to experience various aspects of interaction to develop rational understanding and maximize self-efficacy [15]. In a relationship such as employees’ routine interaction for long period of time require better understanding on which empathy depends [16]. Past studies have supported that empathetic employees do care for others and ready to deliver their maximum potential in shape of time and efforts to assist the needy ones and those who try to work in favor of others [17, 18]. However, people also do cost-benefit analyses to evaluate the outcomes that empathetic behavior may results for them [13]. Therefore, humans show empathetic behavior for others to secure social and emotional support which ultimately leads to reputation in the society where everyone has their own concerns [19]. Empathetic employees concern more about other employees and the organization; they invest extraordinary efforts in organization when they feel that the organization is taking care of its employees [20]. Empathetic employees try to put their feet into other’s shoes to understand how others are surviving in certain situation. Organizations that actively take care of internal CSR, instigate pro-organizational behavior among those employees who are empathetic towards their colleagues, and they engage themselves to reciprocate the actions of the organization through improved performance [21].

Organizational Pride (OP) refers to the emotional attachment and sense of identification towards the organization which makes employees loyal [22]. CSR practices assist organization to create positive reputation among employees and society to get affection of employees [23]. It increases employees self-concept which create sense of belongingness among employees to relate themselves with the organization that actively participate in the welfare of its employees [24]. Based on social exchange theory, the wellbeing is a two-way process which ensures mutual participation. The organization invest in internal CSR activities to take care of employees’ needs and wants, however, employees reciprocate by helping their organization to achieve desired objectives effectively and efficiently.

This study aims to investigate the relationship between Internal CSR and EE through mediating role of OP and moderating role of empathy. It focuses on public sector organizations of Pakistan that are often criticized of being ineffective and low performing. However, public sector organizations often get enough resources to develop themselves a highly effective and efficient machinery of the government. The structure of the remaining paper as follows; literature section deeply reviews the relevant past studies to explain the relationship between variables in the context of public sector of Pakistan. Further, methodology section discusses the research design that has been used to conduct empirical research. Analysis section covers statistical procedures, followed by discussions and conclusion.

2 Literature

2.1 Internal corporate social responsibility

People are ready to compromise for the work that provides meaningfulness and purpose. According to Humphrey et al. (2007) human beings look for meaning in professional and personal life. It indicates that workplace has potential to maximize employees’ motivation in the darkest depth of anxiety and depression [26, 27]. Therefore, organizations are trying to establish purposeful and meaningful workplaces that can deliver more than just money, appraisals, and promotion to employees [28]. In this regard, organizations hence proactively involved with academics to explore various ways to ensure economic and social benefits in line with their organizational goals to retain quality employees. Therefore, CSR has been the topic of interest for researchers; scholars are expanding the CSR to various fields like human resource management, marketing, and organizational behavior [29, 30]. Recently, relation between CSR and employee behavior has gained attention of researchers [31]. CSR is considered one of the effective ways to establish healthy relationship and ensure maximum value for stakeholders including customers, shareholders, environment, suppliers, employees, and the society [32].

Davis (1973) defines CSR as social and economic activities in which organizations invest to develop society. Since then the idea has gained much attention among researchers [33]. The governments, NGOs, media, and consumers have also acknowledged that the CSR is beneficial for the firm and the society as well [34]. Cave (2002) states about recruiting that financial instruments are no more the critical factor to motivate the staff; rather employees prefer meaningfulness, purpose, and difference it makes to the community. In fact, the literature also second this concept that the socially responsible organizations get more attention of skilled workforce and keep their employees motivated [36, 37]. However, literature also supports that the culture has key role in between CSR and employee behavior [38, 39]. According to Sethi (1975) CSR has various explanations due to differences in cultural, social, economic, and political factors. Other researchers emphases that behavior is not only related with the culture but also strongly dependent on the social system of state, therefore, the CSR policy must be according to country’s social system [41].

Many scholars consider CSR a multi-dimensional idea which includes various communities, consumers, stakeholders, employees, and the environment [31, 42]. There are corporation’s internal beneficiaries of CSR and others are external stakeholders [31, 43]. Supporting humanitarian cause, helping independent organizations, and developing community are the CSR activities in which the organizations invest to facilitate both beneficiaries [44, 45]. On the other hand, environmental CSR requires organizations to invest in the environment protection programs including pollution reduction, and initiatives to ensure sustainability in future to secure generations [42].

Internal CSR involves well-being of employees and their mental and physical health [46]. It is concerned with training, participation of employees, work-life balance, equality [47]. It is directing to investigate practical implementation of micro-CSR or internal CSR activities to mitigate employee turnover and maximize EE. There are various dimensions of internal CSR that influences employees behavior and attitude towards the organization, however, this study adopts fundamental dimensions of internal CSR that previous researchers have included in their studies [48 –50]. Precisely, this study considers five dimensions of internal CSR which are employment stability, working environment, skills development, work-force diversity, and work-life balance. The employment stability refers to the company’s efforts to provide security and stability of employment for its employees. According to social exchange theory, employment stability is ‘love’ between the organization and its employees. The organization provides security, safety, support, and stability. In return, employees pay their loyalty, commitment, and efforts to deliver what is best for the organization. This notion has been earlier investigated by Lin & Wei, (2006). The working environment includes goodness and safety of employees at work, therefore, while incorporating these in the work place the company mainly utilize tools of advanced technology and psychological techniques to alleviate health risk. Al-bdour et al., (2010) in his study confirmed that the internal CSR activities are directly in connection with physical and psychological conditions. In the contemporary world skills development has emerged popular factor in human resource management due to its strong connection with human capital development [52]. It is an systematic process to empower employees with aim of achieving organizational objectives [53]. Scholars argue that skilled and engaged staff is essential to survive in a competitive environment [54]. Harter et al. (2002) argue that performance of the organization is dependent on employees’ performance; the productivity of the organization is high when employees are effective and efficient.. Work-force diversity includes the regions and various departments and divisions of the organization on the bases of domiciled zone in different nations. Workplace diversity often defined as respecting and accepting the personal without considering their affiliation with any ethnicity, race, gender, or physical ability [56]. Work life balance empowers employee to manage personal, professional, and social life which reduces stress level [57, 58]. Organizational effective performance depends upon employees’ cognitive and physical involvement which requires sufficient WLB. Therefore, the organizations are establishing mechanism to manage the work hours and organizational commitments so that employees can actively participate in every aspect of life to avoid exhaustion and depression.

2.2 Employee engagement

EE is considered as emotional, physical, and cognitive involvement of employee to accomplish assignments or tasks effectively and efficiently to deliver their maximum performance in order to assist organization’s overall objectives [59]. It is essential factor to manage employees as according to organizational need [60]. Truss et al. (2013) also explain EE as individuals’ emotional and cognitive participation in the job for high performance. Employees show commitment, deeply understand their tasks and duties towards organization, and integrate themselves with organizational objectives to show loyalty with the organization specifically when they are engaged, however, disengaged employees keep distance from accomplishing the job assignments and show lack of interest. Other scholars have investigated and explained EE in various ways, as Men (2015) describes the EE the employee’s favorable behavior for organization and its objectives. Commitment of an employee for organizational objectives and its values defines the individual’s performance level [63]. Awareness of employee about nature of business and cooperation with peers to maximize collective performance for the sake of organization is the symbol of engaged employee. Vigor, absorption, and dedication are the results of satisfaction which ensure positive behavior and work-related state of mind. It reduces mental absence of employee and mitigate the probability of attempting mistakes and errors [64].

Fig. 1

Research Model.

The literature has supported the relationship between CSR and EE [65, 66]. The literature has reported two aspects of CSR the external and internal. According to Ferreira & Real de Oliveira, (2014) and Gupta & Sharma (2016) internal CSR has more impact on employees attitude and behavior than the external CSR because internal CSR is directly concerned with employees wellbeing, whereas, external CSR has indirect impact on employees through welfare of society. The CSR has various dimensions that contribute in favor of the organization but the mentioned two are significantly connected to EE and organizational performance. The evidences are present in the literature to support significant positive impact of CSR on EE. Employees of the organization that participate in the CSR activities attach themselves with the goal of their organization due to its social role in society which generates self-concept among employees leading to improved affection [69]. The employees are more engaged when they feel meaningfulness in the mission of organization through CSR activities involvement. Employees’ perception of organizational participation in CSR is key to EE [70, 71]. CSR increases motivation among employees and generate purpose of employees; they feel that they are involved in greater good [72]. Other scholars argued that CSR establishes sense of belongingness among employees that shares the signal of organizational support and due care for wellbeing of society and employees [8, 73]. Employees feel valued when their organization provide due care through internal CSR practices; in return they deliver maximum output by engaging themselves emotionally, cognitively, and physically. Based on social exchange theory, the wellbeing is a two-way process which ensures mutual participation. The organization invest in internal CSR activities to take care of employees’ needs and wants, however, employees reciprocate by helping their organization to achieve desired objectives effectively and efficiently.

The CSR activities touch the emotional part of employees. They value emotional attachment with the organization more than anything else [74]. Generally, it has been recognized that people who are emotionally attached with anything always put their maximum potential. For example, ‘Love’. It is an emotional attachment regardless of rational decision. It is a general fact that people unconditionally accept the demands of person whom they love. However, this study employs social exchange theory which asserts that people reciprocate according to behavior of others [75]. Kang & Sung, (2019), while supporting this idea, argues that the level of love between employee and organization is related to EE which has connection with internal CSR. However, social exchange theory requires mutual response of employees and the organization [77]. On the bases of literature and social exchange theory, this study argues that internal CSR activities show organizational commitment toward wellbeing of employees, in return, employees ensure their maximum efforts in shape EE to meet expectations of the organization.

H1: Internal CSR has positive and significant effect on EE.

2.3 Mediating role of organizational pride

Pride is a key predictor of CSR impact on employees’ attitude and behavior. When there is positive perception of internal CSR activities, the employees show great pride over their relationship with the particular organization; the organization may evaluate the behavior of employees towards organizational goals and policies in order to measure their pride. According to Minor & Morgan (2011) CSR practices assist organization to create positive reputation among employees and in society to get affection of employees. It increases employees self-concept which create sense of belongingness among employees to relate themselves with the organization that actively participate in the welfare of its employees [24]. This notion of participation in internal CSR activities reveals its financial and moral strength in front of its employees. They perceive that the organization has enough resources and will take care of them in future unexpected circumstances such as natural disasters etc. It increases the affection for the organization among employees. Comparably, the employees consider their company better than the other firms [78]. Social identity theory explains this relation well. The organization’s involvement in the wellbeing of employees sends strong signal of ethically and morally responsible employer in job market which generates the will and wish among pool of candidates to work for and with such organization. This reputation creates indirect advertisement of the company through word of mouth (a term used in marketing for advertising purpose). Eventually, affiliation with the organization establishes place in the core of employee’s heart when they listen and talk proudly about their employer in their social groups in external environment or in their personal life. It fulfils their self-esteem need by developing positive image in the society [79]. It is also called social learning [80] which motivates employees by increasing their pride on organization reciprocating extraordinary efforts in the work. Further, it argues that employees’ values and beliefs are interconnected with the participation of organization, peers, and colleagues of employees in extracurricular activities which are in favor of employees or society. External sources deliver this information to the employees which they process unconditionally and value such information through deep thoughts while establishing their attitude and behavior accordingly. Consequently, the organizational participation in internal CSR activities shape the image of organization in the mind of its employees; they overwhelmingly respond to the external information about their organization and apply those during various circumstances [81]. It involves serious outcomes when it comes to negative perception or information delivered. In the end, it is the responsibility of supervisors and managers to keep the employees, environment and information regarding internal CSR practices integrated.

Various scholars are of the view that valuable achievement may cause variance in anger and pride, hence, it is important to base relationship of internal CSR and pride on rational [82, 83]. Employees’ opinion about internal CSR practices in which organization is involve is also vital due to its link with perception in external environment [84]. The literature has been repeatedly emphasizing on the importance of impact of external perception on employees cognitive process while constructing pride on organizational polices and goals. This relation between internal CSR and OP can be better explained through the lances of social identity theory which explains that individuals affiliate themselves with the group that contribute in greater good or has positive and high reputation in the society [85, 86]. Group members intend to influence their social circles through pride resulting from reputation of their employer which establishes their high social identification in the group [87]. When organizations invest employee welfare practices, it indulge sense of belongingness and due care in the environment which shapes positive general opinion regarding employer in internal and external environment. Based on arguments of scholars in the literature, it is expected that internal CSR may positively impact OP of employees which leads to EE.

H2: Internal CSR has a significant positive effect on OP.

H3: OP mediates between Internal CSR and EE.

2.4 Moderating role of empathy

Developing corporate environment lacks interest to ensure empathetic behavior among employees. Even though, many studies have recognized its role in development of employees’ engagement through cooperation among team members and between management and human capital. More importantly, empathetic behavior increases commitment and keep employees satisfied with work environment, ultimately, reducing employees’ physical and psychological absence [88]. Other scholars also support this idea [89]. For example, Roberge (2013) argues that in a diverse team, the empathy manage cooperation among members to increase their productivity. There are sufficient evidences in the literature to support the idea that empathetic employees remain morally and ethically engaged in their work. The employees consider ethics while making any decision regarding others and support morally accepted behavior [91, 92]. It is expected that employees’ social status is linked with the participation of their employer into well-being of society and its stakeholders including employees. Such organizational behavior promotes empathetic feelings which have positive impact on employees’ empathetic behavior. They feel their duty to show respect and support to others while closely monitoring the internal CSR activities of their employer. Little literature has been contributed in favor of relationship of empathy with internal CSR and EE. In this study, internal aspect of CSR has been investigated in relation with EE while measuring the role of empathy.

H4: Empathy moderates the relationship between Internal CSR and EE.

3 Methods

3.1 Participants

The target population was public sector organizations providing various administrative services, and employees were taken as the unit of analysis. Non-probability convenient sampling technique was used to gather responses through survey of government organizations (i.e., Inland revenue department, Health department and Accounts department). The timeframe for data collection was from July, 2022 to Sep, 2022. The purpose of the data collection was clearly communicated and participation was kept voluntary and anonymous. Moreover, we ensured participants that data is for research purpose only, and no personal or professional risk is associated with participation. Public sector was approached and 500 survey forms were shared. 448 questionnaires were responded which shows 89.6% response rate. We discarded 18 questionnaires during the data cleaning process and a total of 430 responses were included in the final analysis.

3.2 Measures

All measurement scales for this study were taken from previous studies. Five-point Likert scale ranging from 1 (Strongly Disagree) to 5 (Strongly Agree) was applied on all items to collect the responses. Total twenty items related to internal CSR dimensions were taken from Mory et al. (2016), which were also used by Y. Lee (2021). To measure internal CSR, four items of employment stability (α= 0.711), four items of working environment (α= 0.753), five items of skills development (α= 0.757), three items of work-force diversity (α= 0.741), and four items of work-life balance (α= 0.755) were considered. The seven items of employee engagement (α= 0.775) were adopted from Schaufeli & Bakker (2004). The items of EE are also used by Wang et al. (2020), Sandhya & Sulphey (2019), and S & M M (2020). The three items of organizational pride (α= 0.740) were adopted. Items were first established by Turban et al. (2001) and further modified by Cable & Turban (2003). The instrument has also been used by Raza et al. (2021) in their study. The ten items of empathy (α= 0.847) were adopted, which were first developed by M. H. Davis (1980), and further modified by Dietz & Kleinlogel (2014).

The Demographic profile of the respondents as shown in Table 1. There were 93 percent males and 7 percent females. Respondents currently work at a various job levels at public sector organizations, including staff level management/11–16 grade employees (n = 141, 32.8%), middle level management/17–19 grade employees (n = 267, 62.1%), top level management/20–22 grade employees (n = 22, 5.1%). The majority of respondents’ age was between 26yrs to 41yrs (75.8%, n = 326). About 50% of the participants (n = 215) responded that they have worked at public sector organization for at least above six years. Among the participants, about 5.1% of them (n = 22) secured a top-level management position within their organization. Most of the participants (n = 309, 71.9%) hold at least a bachelor’s degree.

Table 1
Demographical statistics of respondents (N = 430)

Demographics Frequency %

Gender Male 400 93

Female 30 7

Age 20–25 29 7

26–41 326 76

42–57 71 16

58 & above 4 1

Employment level

Top level managers 22 5

Middle level managers 267 62

Staff level 141 33

Qualification Under graduate 41 10

Graduate 309 72

Post graduate 80 18

Experience 0–3 years 43 10

4–5 years 172 40

6 & Above 215 50

Demographics		Frequency	%
Gender	Male	400	93
	Female	30	7
Age	20–25	29	7
	26–41	326	76
	42–57	71	16
	58 & above	4	1
Employment level
	Top level managers	22	5
	Middle level managers	267	62
	Staff level	141	33
Qualification	Under graduate	41	10
	Graduate	309	72
	Post graduate	80	18
Experience	0–3 years	43	10
	4–5 years	172	40
	6 & Above	215	50

4 Analysis

SmartPLS 3 was used for data analysis and partial least square structured equation modelling (PLS-SEM) was performed under the guidelines suggested by Hair [100, 101]. ICSR is assessed as a second order formative construct and two stage repeated measures technique was used [101, 102]. Analysis was performed in two phases; measurement model and structured model. Initially, measurement model is tested to check reliability and validity in first stage followed by structural model test in second stage which confirmed the hypotheses [100].

4.1 Measurement model

Measurement examined the relationship between observed variables and latent variables. Reliability and validity were major concerns of measurement model. Reliability was examined by Cronbatch Alpha, Composite reliability and rho. Overall Cronbach alpha of the variables was greater than the generally accepted value of 0.70. Lowest Cronbach alpha was 0.711 and the highest was 0.847. Hence, there was high internal consistency among the items of each variable. Moreover, composite reliability and Rho values were also above the benchmark value (0.7). AVE values should be greater than threshold of 0.5. Thus, all measures fulfill the reliability criterion suggested by F. Hair Jr [103].

Validity refers to truthfulness of the measurement scale [104]. The extent to which measurement scale produce error free results. The overall validity of the scale is assessed with the help of convergent and discriminant validity. Convergent validity established when AVE, CR and factor loading are greater than the threshold of 0.5 [105]. Discriminant validity of measures was checked through heterotrait–monotrait ratio (HTMT) and all values are under the acceptable range (below 0.1). Structural Equation of the study is below 0.08 which shows fitness of the model.

Table 2
Measurement model reliability

Item Loadings t-value Cronbach’s Alpha rho_A CR (AVE)

Employee Engagement (EE) EE2 0.732 0.775 0.784 0.847 0.526

EE3 0.758

EE4 0.714

EE6 0.777

EE7 0.636

Employee Stability (ES) ES1 0.600 0.711 0.763 0.818 0.533

ES2 0.758

ES3 0.705

ES4 0.836

Empathy E6 0.842 0.847 0.853 0.907 0.765

E8 0.887

E9 0.894

Organizational Pride (OP) OP1 0.794 0.740 0.762 0.850 0.655

OP2 0.846

OP3 0.786

Skills Development (SD) SD2 0.781 0.757 0.758 0.846 0.579

SD3 0.785

SD4 0.752

SD5 0.724

Working Environment (WE) WE1 0.653 0.753 0.763 0.844 0.577

WE2 0.798

WE3 0.792

WE4 0.786

Workforce Diversity (WFD) WFD1 0.772 0.741 0.745 0.853 0.659

WFD2 0.827

WFD3 0.836

Work life Balance (WLB) WLB1 0.687 0.755 0.756 0.845 0.578

WLB2 0.769

WLB3 0.818

WLB4 0.763

	Item	Loadings	t-value	Cronbach’s Alpha	rho_A	CR	(AVE)
Employee Engagement (EE)	EE2	0.732	0.775	0.784	0.847	0.526
	EE3	0.758
	EE4	0.714
	EE6	0.777
	EE7	0.636
Employee Stability (ES)	ES1	0.600	0.711	0.763	0.818	0.533
	ES2	0.758
	ES3	0.705
	ES4	0.836
Empathy	E6	0.842	0.847	0.853	0.907	0.765
	E8	0.887
	E9	0.894
Organizational Pride (OP)	OP1	0.794	0.740	0.762	0.850	0.655
	OP2	0.846
	OP3	0.786
Skills Development (SD)	SD2	0.781	0.757	0.758	0.846	0.579
	SD3	0.785
	SD4	0.752
	SD5	0.724
Working Environment (WE)	WE1	0.653	0.753	0.763	0.844	0.577
	WE2	0.798
	WE3	0.792
	WE4	0.786
Workforce Diversity (WFD)	WFD1	0.772	0.741	0.745	0.853	0.659
	WFD2	0.827
	WFD3	0.836
Work life Balance (WLB)	WLB1	0.687	0.755	0.756	0.845	0.578
	WLB2	0.769
	WLB3	0.818
	WLB4	0.763

4.2 Structural model

Structural model is used to check relationship of variables (hypotheses check) and capability of the model to predict the impact. It involves co-linearity assessment, path assessment, and R square assessment. Multicollinearity is an important concern in the second order construct. Multicollinearity can be analyzed with the help of variance inflation factor (VIF). VIF determines the strength of the correlation between the independent variables. It is predicted by taking a variable and regressing it against every other variable. VIF values in the Table 3 are below standard value of 5 which reveals that the co-linearity among variables is low and acceptable.

Table 3
Discriminant validity by Heterotrait–Monotrait Ratio (HTMT)

EE ES Empathy OP SD WE WFD WLB

Employee Engagement (EE)

Employee Stability (ES) 0.253

Empathy 0.383 0.145

Organizational Pride (OP) 0.532 0.225 0.068

Skills Development (SD) 0.497 0.327 0.318 0.153

Working Environment (WE) 0.530 0.270 0.358 0.343 0.652

Workforce Diversity (WFD) 0.573 0.124 0.479 0.273 0.657 0.589

Work life Balance (WLB) 0.593 0.153 0.638 0.246 0.636 0.606 0.735

	EE	ES	Empathy	OP	SD	WE	WFD	WLB
Employee Engagement (EE)
Employee Stability (ES)	0.253
Empathy	0.383	0.145
Organizational Pride (OP)	0.532	0.225	0.068
Skills Development (SD)	0.497	0.327	0.318	0.153
Working Environment (WE)	0.530	0.270	0.358	0.343	0.652
Workforce Diversity (WFD)	0.573	0.124	0.479	0.273	0.657	0.589
Work life Balance (WLB)	0.593	0.153	0.638	0.246	0.636	0.606	0.735

PLS SEM was performed by bootstrapping of 5000 subsamples two-tailed at the 0.05 significance level to test the hypothesized relationships.

The results show that internal CSR (β= 0.421; t = 9.010; p < 0.01) has positive and significant relationship with EE. It also reveals that there is significant influence of internal CSR (β= 0.270; t = 5.530; p < 0.01) on OP. The mediation role of OP (β= 0.079; t = 3.910; p < 0.01) between internal CSR and EE is also supported. However, the moderation of empathy between internal CSR and EE is not supported.

5 Discussion

This study aims to check theoretical model of the phenomenon of how internal CSR impact the EE. To answer this phenomenon, the study established theoretical framework to understand when, why, and how internal CSR cause changes in EE. This relation was tested through social identity theory and social exchange theory. To study deep relation between internal CSR and EE, the mediating impact of OP was checked. The moderating role of empathy was considered to further explore the internal CSR and EE relationship. The hypothesized relationship between ICSR and EE was supported by the results that shows the positive association of internal CSR with EE. It reveals that the employees of the organizations are more engaged in their job when their employer actively participate in the well-being of employees and other stakeholders. The results of this study suggest that the organizations should invest in ensuring the stable employment of their employees, providing healthy and work friendly environment, initiate the development programs, properly manage the diverse workforce, and keep employees socially connected to the personal life along with maintaining professional life. According to the results of the study, the organization can increase the EE through actively participating and investing in internal CSR practices. These results are aligned with the studies of Lee (2021), Chaudhary (2017), and Saks (2006). This study further includes OP as intervening variable to check the indirect impact of internal CSR on EE. Hence, the results supported the theoretical framework that internal CSR creates sense of belongingness and increases attachment of employees with their employer due to care and love they receive through organizational investment in employee related CSR activities. Ultimately, this relationship leads to increased EE. The employee after getting organizational support reciprocate by delivering their maximum potential and engage themselves to achieve organizational goals. Tyler & Blader (2003) argues that the pride is desired behavior which can be established by continuous influence. Hence, the organizations should invest in internal CSR to positively impact the pride of employees related to their employer. In last, the results do not support the moderating role of empathy between internal CSR and EE. However, the evidences are available in literature that support the moderation of empathy between internal CSR and EE. Empathy instigate ethical cognitive process and ethical behavior [108, 109]. Therefore, the favorable steps of employer for employees are key components of getting extra attention of empathetic employees for creating a healthy working environment. According to Batson (2010), the empathetic employees are expected to show more support and care for colleagues and the organization and expecting and promoting the same from others. Secondly, Turker (2009b) argues that the impact of CSR is increased when the individuals’ feelings for others are more sympathetic.

Table 4
Inner VIF values for co-linearity assessment

Criterion variables

Predictors EE ICSR OP

Employee Engagement (EE)

Employee Stability (ES) 1.100

Empathy 1.251

Organizational Pride (OP) 1.348 1.000

Skills Development (SD) 1.094

Working Environment (WE) 1.646

Workforce Diversity (WFD) 1.516

Work life Balance (WLB) 1.636

Employee Engagement (EE) 1.666

	Criterion variables
Predictors	EE	ICSR	OP
Employee Engagement (EE)
Employee Stability (ES)		1.100
Empathy	1.251
Organizational Pride (OP)	1.348		1.000
Skills Development (SD)	1.094
Working Environment (WE)		1.646
Workforce Diversity (WFD)		1.516
Work life Balance (WLB)		1.636
Employee Engagement (EE)		1.666

Table 5

Path coefficient (N = 430)

	Sample	Standard	T Statistics	P Values
	Mean (M)	Deviation (STDEV)	(\|O/STDEV\|)
Direct Relationship
Empathy – > EE	0.131	0.045	2.961	0.003
ICSR – > EE	0.423	0.047	9.010	0.000
ICSR – > OP	0.269	0.049	5.530	0.000
OP – > EE	0.293	0.048	6.112	0.000
Moderation Effect
empathy*ICSR – > EE	–0.064	0.040	1.609	0.108
Mediation Effect
ICSR – > OP – > EE	0.079	0.020	3.910	0.000
Model Fit
d_ULS	0.031	Chi-Square	41.617
d_G	0.019	NFI	0.988
SRMR	0.026

6 Conclusion

The study was conducted to find the role of ICSR in EE. In the contemporary world, employees evaluate their employer through the lenses of efforts the organization consider for the well-being of its human capital and society. They are well aware about social responsibilities of the organization; therefore, they act accordingly. Employees emotionally and physically attach themselves with their employer when they feel respected and cared. In this regard, the organizations must take care of the needs of their employees to get increased performance in return and also understand employees’ perception of their employer because it impacts the image of organization in internal and external environment. The developed countries have eliminated the distraction force at some extent. However, others are on the road to implement the strategies to keep their employees engaged. Specifically, the public sector organizations of third world countries have been criticized of being ineffective and inefficient which undermines the prosperity and development of the nation. Therefore, this study targeted the public sector organizations of Pakistan to understand the underlying causes of poor performance. Current research examines the employee-oriented CSR activities which assist organization to establish strong bond with its human capital and ensure their maximum input in achieving organizational goals. The results of this study are significantly helpful for scholars and practitioners to understand the role of employee-oriented CSR activities on EE and increasing the impact through OP and empathy. The public sector of Pakistan provides job security to its employees, however, it lacks to ensure performance oriented working environment and less concerned with right people on job which may compromise effective decision making in the organization. Secondly, the public sector organizations usually ignore the need assessment step of placing the right people on right training program which causes less interested people in training programs. Therefore, this study suggests to increase organizational participation in ICSR activities to increase the performance public sector institutions.

7 Theoretical contribution

This study contributes in the literature of internal CSR and EE in the public sector of Pakistan. We investigated the role of internal CSR in increasing EE which is also supported by the previous studies of Lee (2021) and Low (2016). Further, this study reveals the importance of internal CSR while managing EE. We further explored the relationship and conclude the organization’s participation in employee related CSR activities positively influence the behavior of their employees which ultimately leads to positive reciprocation of employees towards their employer. The individuals are more inclined and feel proud over the connection with the organizations and groups who are actively engaged in doing well for others. Considering this fact, this study contributes in the literature of internal CSR and EE through lances of OP. It provides uniqueness to the organization by ensuring loyalty of employees by generating sense of belongingness. It is therefore, suggested that employer should invest in activities that are directly related to increase employees’ pride over the organization. This study answers the question that why and how the internal CSR adds in employees’ intentions for extra efforts for the organization through enhancing employee’s pride. Further, this study explored the role of empathy as an essential component to maximize the impact of internal CSR on EE. The fact that empathetic employees are more influenced by internal CSR activities and more likely to reciprocate their extra efforts for the organization.

8 Managerial implication

The success of internal CSR with regards to EE depends on how the organization incorporate employee related CSR activities in their operations because it directly affects the employees. Most of the public organizations are enriched in resources, large in size and present in various geographic areas of a country. These organization can engage employees in the national issues of a country, if employees feel that their organization value them and doing a meaningful contribution towards society. In order to enhance internal CSR impact, the organizations should clearly communicate their efforts for employees. They can use various platforms like social media, and employees’ social groups. Further, the organizations should actively communicate their CSR activities to develop a sense of pride among employees that their organization is doing substantial work to serve employees and society. Public organizations should invest in the dimensions of internal CSR; such as, workforce diversity can be increased with the help of quota system for women and minorities. Workplace should follow physical and psychological safety standards and provide a productive working environment. Although, public organizations are very concerned about physical safety of the employees but mental and psychological support is still missing in most of the organizations. For skills development of employees, public organizations should focus on trainings and workshops, and also provide financial support for higher qualifications/certifications. Lastly, the organizations should ensure empathetic behavior in their working environment. It generates smooth and constructive cooperation among employees. The empathetic employees are more influenced by internal CSR and actively engaged in their work.

9 Limitations and future directions

This study primarily focused on public sector organization and future studies may include respondents from private sector for cross sector comparison. Although, PLS-SEM approach is widely used in social science and considered appropriate for testing causal relationships among variables, but it has some inherited limitations such as compromised model fit indices, CB-SEM may be applied in subsequent studies. Moreover, future studies may opt for complex model by adding more variables for better understanding of the phenomenon; for instance, organizational identification, leadership styles, CSR specific relative autonomy, self-efficacy, social-exchange relationship, and organizational reward system can be used to further specify relationship between internal CSR and EE. Further, this study only considered five dimensions of ICSR, however, the scholars and practitioners may incorporate other dimensions of ICSR to understand the ICSR and EE relationship deeply. Our study also limited to the public sector of Pakistan which undermines the generalizability of results. Further, this study is based on cross-sectional data, therefore, future studies may use longitudinal or experimental data to check the relationship.

Footnotes

Acknowledgments

We are thankful to respondents and anonymous reviewers for their time and valuable input for the study.

Author contributions

CONCEPTION: Farraz Ali and Zubair Nawaz

METHODOLOGY: Zubair Nawaz and Nilesh Kumar

DATA COLLECTION: Farraz Ali and Nilesh Kumar

INTERPRETATION OR ANALYSIS OF DATA: Farraz Ali and Zubair Nawaz

PREPARATION OF THE MANUSCRIPT: Farraz Ali

REVISION FOR IMPORTANT INTELLECTUAL CONTENT: Zubair Nawaz and Nilesh Kumar

SUPERVISION: Zubair Nawaz

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