Out

THE ROLE OF MULTINATIONAL COMPANIES IN SUSTAINABLE
SOCIOECONOMIC DEVELOPMENT: THE CASE
OF PALESTINE
__________________
Dissertation
Presented to the
Graduate Faculty of the
School of Management
Alliant International University
__________________
In Partial Fulfillment
of the Requirements for the Degree of
Doctor of Business Administration
__________________
by
Yousef A. Ibrahim
San Diego, 2012

UMI Number: 3503449
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Abstract of Dissertation
OF PALESTINE
by
Yousef A. Ibrahim, D.B.A.
Committee Chairperson: Gregory A. Lorton, D.B.A.
THE PROBLEM. This study investigated the role of multinational companies
(MNCs) and their impact on sustainable socioeconomic development in Palestine.
Integrating corporate social responsibility (CSR) into MNC’s core business would
improve the organization’s financial and social performance.
METHOD. The target population for this research included multinational
corporations (MNCs) and domestic Small and Medium Enterprises (SMEs) that had
operations in or were contemplating undertaking FDI investment in Palestine. An online
survey was used to collect responses from 11 companies for a correlational study. The
study investigated different aspects of the Strategic Success Paradigm developed by
Ansoff (1984) and examined the relationships among MNCs’ environmental turbulence,
MNC strategy aggressiveness, MNC capability responsiveness, and MNC corporate
social responsibility (CSR) posture. Two intervening variables, defined as gaps,
measured the absolute and actual differences between aggressiveness and turbulence and
responsiveness and turbulence and the financial and social performance of MNCs
operating in Palestine.
RESULTS. Nine hypotheses were tested using Spearman’s rho, a non-parametric
measure of statistical dependence between 2 variables for a significance level of 5% (p <
.05). Four hypotheses (1, 2, 3, and 4) tested the relationship between social and financial
performance relative to strategy aggressiveness and capability responsiveness gaps,
respectively, and found no significance; hence, they were not supported. Hypothesis 5,
relating strategy aggressiveness to MNC CSR posture, was not supported. Hypothesis 6,
the relationship between MNC capability responsiveness and MNC corporate social
responsibility (CSR) posture, was supported (r [11] = .642, p = .033). Hypothesis 7, the
relationship between MNC CSR posture and MNC financial performance, was supported
(r [11] = .735, p = .010). Hypothesis 8, the relationship between MNC CSR posture and
MNC social performance, was supported (r [11] = .642, p = .033). Finally, Hypothesis 9,
the relationship between MNC financial performance and MNC social performance, was
supported (r [11] = .665, p = .026).

OF PALESTINE
__________________
Dissertation
Presented to the
__________________
In Partial Fulfillment
of the Requirements for the Degree of
Doctor of Business Administration
__________________
by
Yousef A. Ibrahim
San Diego, 2012

 2012
YOUSEF A. IBRAHIM
ALL RIGHTS RESERVED

OF PALESTINE
__________________
Dissertation
Presented to the
__________________
by
Yousef A. Ibrahim
Approved by:
______________________________ ______________________________
Gregory A. Lorton, D.B.A. Date
Chairperson
______________________________ _____________________________
Jon Kevin Loebbaka, D.B.A. Chet Haskell, D.P.A.
Dean
______________________________
Rick Ansoff, Ph.D.
DEDICATION
This dissertation is dedicated to my family:
my wife, Suzanne, my daughter, Noelle,
and my son, Omar.
iv
ACKNOWLEDGEMENTS
I would like to thank my dissertation committee members, who provided me with
the guidance and support needed to complete this work. There is no doubt in my mind
that without their continued support and counsel, I could not have completed this process.
I would like to acknowledge the inspirational instruction, guidance, and thorough review
by Dr. Greg Lorton, my committee chair; Dr. Rick Ansoff; and Dr. Jon Kevin Loebbaka
during the development of my research and survey questions.
I would like to thank the instructors from whom I have taken classes at Alliant
International University, especially Dr. Alfred Lewis, who inspired me through his
teaching of strategic management and through his thoughtful ideas when I started my
dissertation research. I am also grateful for the helpful comments provided to me on the
draft proposal and questionnaire. Thanks to all my committee members for their support,
patience, encouragement, and useful suggestions.
Finally, I would like to thank my family, who gave me the moral support and
allowed me to devote the time to work on my dissertation. My wife, Suzanne, was very
supportive and proud of my work; my daughter, Noelle, was my initial editor, who spent
lots of time editing and restructuring my writing. And special thanks go to my son,
Omar, for his patience and support as I accomplished this research study about my
country. Also, I would like to thank my brother, Jamal, for his ideas and cooperation.
v
TABLE OF CONTENTS
Page
LIST OF TABLES ........................................................................................................ xiii
LIST OF FIGURES ........................................................................................................ xv
Chapter
1. THE RESEARCH PROBLEM ........................................................................ 1
Definitions and Abbreviations .................................................................. 2
Theoretical Background of the Problem ................................................... 5
Practical Background of the Problem ....................................................... 8
Economic and Political Environment .................................................... 11
External Political Environment ...................................................... 11
Geography ...................................................................................... 13
Political System Structure .............................................................. 17
External Socio-Economic Environment ................................................. 17
Demographics ................................................................................ 17
Unemployment Rate and Labor Force ........................................... 18
Working Conditions in Palestine ................................................... 19
Human Resource Development ..................................................... 19
Poverty Rate ................................................................................... 20
The External Macro-Economic Environment ......................................... 20
Structure of the Palestinian Economy ..................................................... 23
vi
Chapter Page
Infrastructure in Palestine ....................................................................... 25
Palestinian Financial Sector .................................................................... 25
Investment Climate ................................................................................ 26
Free Trade Zones .................................................................................... 27
Foreign Direct Investment (FDI) Statistics ............................................. 28
Palestinian Reform and Development Plan (PRDP) ............................... 29
External Legal Environment ................................................................... 31
Palestine Country Strengths/Weaknesses/Opportunities/

Threats (SWOT) Analysis.............................................................. 33
Multinational Companies (MNCs) ......................................................... 34
Statement of the Problem ........................................................................ 37
Contribution of the Study........................................................................ 38
2A. GENERAL THEORETICAL FRAMEWORK ........................................... 39
Global Model .......................................................................................... 39
CSR Change Management Framework .................................................. 49
Leadership Capabilities and Competencies ............................................ 52
CSR and Accountability ......................................................................... 53
Partnering With Stakeholders ................................................................. 54
CSR Implementation and Organizational Challenges ............................ 55
Performance Monitoring ......................................................................... 55
Environmental Turbulence of MNCs...................................................... 60
Factors Influencing FDI .......................................................................... 64
vii
Chapter Page
Political Risk Factors and FDI ................................................................ 67
Strategy and Social Responsibility ......................................................... 70
Strategic Corporate Social Responsibility (CSR) ................................... 74
Proactive and Reactive Corporate Social

Responsibility (CSR) ..................................................................... 78
2B. RESEARCH MODEL AND SUPPORTING

LITERATURE ........................................................................................ 87
Research Model ...................................................................................... 87
Strategic Success Paradigm .................................................................... 91
MNC Issue Turbulence ........................................................................... 91
CSR Strategy Aggressiveness ................................................................. 95
Process Dimension of CSR “Built-in” and “Bolt-on” ............................ 95
CSR Capability Responsiveness ........................................................... 100
CSR Management System Strategic Posture ........................................ 104
The Research Questions and Research Hypotheses.............................. 111
Research Variables: Conceptual and Operational

Definitions.................................................................................... 113
Independent Variables .......................................................................... 114
MNC Issue Turbulence ................................................................ 114
MNC Strategy Aggressiveness .................................................... 116
MNC Capability Responsiveness ................................................ 118
MNC CSR Posture ....................................................................... 120
Intervening Variables ............................................................................ 123
viii
Chapter Page
MNC Strategy Aggressiveness Gap............................................. 123
MNC Capability Responsiveness Gap ......................................... 123
Dependent Variables ............................................................................. 123
Control Variables .................................................................................. 125
3. RESEARCH METHODOLOGY.................................................................. 128
Research Strategy.................................................................................. 128
Data Sources ......................................................................................... 129
Instrument and Procedure ..................................................................... 130
Research Variables................................................................................ 130
Independent Variables .......................................................................... 131
MNC Issue Turbulence ................................................................ 131
MNC Strategy Aggressiveness .................................................... 132
MNC Capability Responsiveness ................................................ 132
MNC Corporate Social Responsibility

(CSR) Posture ..................................................................... 133
Intervening Variables ............................................................................ 134
MNC Strategy Aggressiveness Gap............................................. 134
MNC Capability Responsiveness Gap ......................................... 134
Dependent Variables ............................................................................. 135
MNC Financial Performance ....................................................... 135
MNC Social Performance ............................................................ 135
MNC Overall Performance .......................................................... 135
ix
Chapter Page
Validity and Reliability ......................................................................... 136
Data Analysis ........................................................................................ 136
Assumptions.......................................................................................... 137
Limitations ............................................................................................ 137
4. RESEARCH FINDINGS .............................................................................. 142
Hypothesis 1 (Not Supported) .............................................................. 143
Hypothesis 6 (Supported) ..................................................................... 145
Summary of Results .............................................................................. 147
5. SUMMARY CONCLUSIONS AND RECOMMENDATIONS ................. 150
Background of the Problem .................................................................. 150
Statement of the Problem ...................................................................... 151
Purpose of the Study ............................................................................. 152
Expected Contributions......................................................................... 152
Global Model ........................................................................................ 153
x
Chapter Page
Strategic Success Paradigm (SSP) ........................................................ 155
MNC Environmental Turbulence ......................................................... 156
MNC Strategy Aggressiveness ............................................................. 159
MNC Capability Responsiveness ......................................................... 159
Strategy and Strategic CSR ................................................................... 161
CSR Change Management Framework ................................................ 162
Research Model .................................................................................... 164
Research Variables................................................................................ 167
MNC Environmental Turbulence ......................................................... 167
MNC Strategy Aggressiveness ............................................................. 168
Process Dimension of CSR “Built-in” and “Bolt-on” .......................... 169
CSR Capability Responsiveness ........................................................... 173
CSR Management System Strategic Posture ........................................ 177
The Research Questions and Hypotheses ............................................. 179
Research Strategy.................................................................................. 181
Data Sources ......................................................................................... 185
Instrument and Procedure ..................................................................... 185
Validity and Reliability ......................................................................... 186
Data Analysis ........................................................................................ 188
Assumptions.......................................................................................... 188
Limitations ............................................................................................ 189
xi
Chapter Page
Research Findings ................................................................................. 190
Discussion of Findings .......................................................................... 192
Additional Findings .............................................................................. 194
Conclusions ........................................................................................... 199
Recommendations for Business Managers ........................................... 201
Contributions to the Academic Field of

Strategic Management ................................................................. 202
Contributions to the Practice of Management ...................................... 202
Recommendations for Further Research ............................................... 204
REFERENCES ............................................................................................................. 206
APPENDICES
A. PALESTINIAN TRADE CENTER – PALTRADE ..................................... 223
B. PALESTINIAN COMPANIES ON STOCK MARKET .............................. 245
C. SURVEY QUESTIONS................................................................................ 249
D. PALESTINIAN LABOR FORCE STATISTICS ......................................... 260
E. CALCULATED VARIABLES ..................................................................... 262
xii
LIST OF TABLES
Table Page
1. Palestine Country SWOT Analysis .................................................................. 33
2. Levels of Environmental Turbulence............................................................... 45
3. Matching Turbulence-Aggressiveness-Responsiveness .................................. 46
4. Strategic Stakeholder Criteria .......................................................................... 63
5. MNC Issue Turbulence .................................................................................... 94
6. CSR MNC Management System Aggressiveness

Verses MNC Issue Turbulence .................................................................. 98
7. CSR MNC Management System Responsiveness

Verses MNC Issue Turbulence ................................................................ 102
8. The Attributes of General Management Capability ....................................... 105
9. Research Questions and Research Hypotheses .............................................. 139
10. Summary of Statistical Tests ......................................................................... 140
11. Descriptive Statistics of the Research Variables ........................................... 143
12. Summary of Statistical Results ...................................................................... 148
13. Levels of Environmental Turbulence............................................................. 156
14. Matching Turbulence-Aggressiveness-Responsiveness ................................ 160
15. MNC Issue Turbulence .................................................................................. 168
16. CSR MNC Management System Aggressiveness Verses

MNC Issue Turbulence ............................................................................ 171
xiii
Table Page
17. CSR MNC Management System Responsiveness Verses

MNC Issue Turbulence ............................................................................ 175
18. The Attributes of General Management Capability ....................................... 178
19. Variables of the Research Study With Conceptual and

Operational Definitions ............................................................................ 182
20. Variable Reliability and Descriptive Statistics .............................................. 187
21. Summary of Statistical Results ...................................................................... 191
xiv
LIST OF FIGURES
Figure Page
1. Historic Divisions of Palestine......................................................................... 13
2. Map of Palestine: West Bank, Gaza, and Jerusalem ........................................ 15
3. Comparison of the 1947 Partition Plan Borders and the

Armistice Lines of 1949............................................................................. 16
4. Real GDP Palestinian Growth ......................................................................... 22
5. Palestinian Establishments ............................................................................... 24
6. Palestinian Security Exchange (PSE) Sectors.................................................. 26
7. Governance Indicators in Palestine.................................................................. 32
8. The Global Model ............................................................................................ 41
9. CSR Change Management ............................................................................... 51
10. MNC Company Governance and Stakeholders ............................................... 61
11. The Research Model ........................................................................................ 90
12. The Role of MNC in Sustainable Socioeconomic

Development: The Case of Palestine ....................................................... 154
13. MNC Company Governance and Stakeholders ............................................. 158
14. The Three Areas That Require Specific CSR Design ..................................... 164
15. The Research Model ...................................................................................... 166
xv
Chapter 1
THE RESEARCH PROBLEM
This study investigated the role of multinational companies (MNCs) and their
impact on sustainable socioeconomic development in Palestine. Integrating corporate
social responsibility (CSR) into MNC’s core business has become the center of
management decision-making. MNCs face challenges to provide products and services
that add value to society and to prompt economic development and social transformation
in host countries. According to Ansoff and McDonnell (1990), the firm of the future
would become a socioeconomic institution, and the firm’s business strategy would not be
based purely on financial performance, but would include political and social
considerations along with its commercial ones.
The turbulent political environment in Palestine, coupled with severe
socioeconomic conditions, presents multinational companies with external societal
challenges. Successful multinational companies operating in this challenging market
have diagnosed their environmental turbulence with inside-out and outside-in approaches
to optimize their long-term economic and social profitability. Trucker and Broom (1993)
defined an organization’s issue management as a management process wherein the goal is
to preserve its markets, reduce risks, and create opportunities to manage assets for the
benefit of the organization and the public. Saunders and Thorne (2002) agreed that there
is a need for ethical and socially responsible issues management to be integrated as part
of the organization’s strategic management decision-making.
1
This study examined the background of the MNC issue management and clarifies
the strategic approach of CSR as an integral part of the overall core business strategy for
optimal organizational performance for companies operating in Palestine. This chapter
presents definitions and abbreviations, the theoretical background of the problem, the
importance of integrating CSR as part of the overall MNC core strategy in Palestine, a
statement of the problem, and the expected contribution of this study to management
theory and practice.
Definitions and Abbreviations
The term emerging markets was originally cited by the International Finance
Corporation (IFC) (2010) to describe a fairly narrow list of middle-to-higher income
economies among developing countries with stock markets that allow foreigners to buy
securities (SustainAbility Ltd., 2002). Emerging markets describe countries’ economic,
social, and business activity growth towards industrialization. They are characterized by
lower per-capita incomes, socio-political instability, higher unemployment, and lower
levels of manufacturing relative to industrialized countries, such as the United States and
Europe (Investing Answers, 2011).
A multinational company (MNC) is an enterprise operating in two or more
countries. Generally, any firm or group that derives its revenue from operations outside
of its home country is considered a MNC (“Multinational Corporation,” 2010).
The term corporate social responsibility (CSR) is defined as the commitment by a
business to manage its activities in a responsible way with a comprehensive set of values
and principles integrated into the business operations through management system
2
policies, practices, and decision-making processes (International Chamber of Commerce
[ICC], 2002). It pertains to a business’s contribution to sustainable development—how a
business takes into account the economic, social, and environmental impact of its
operations on society.
The Center for Business and Government and the Kennedy School of
Government at Harvard University defined CSR as encompassing not only what
companies do with their profits, but also how they make the profit, going beyond
philanthropy and compliance and addressing how companies manage their economic,
social, and environmental impacts, as well as their relationships in all spheres of
influence: (a) the workplace, (b) the marketplace, (c) the supply chain, (d) the community
and (e) the public policy realm.
The World Business Council for Sustainable Development (WBCSD, 2010)
defined CSR as a continuing commitment by business to contribute to economic
development while improving the quality of life of the workforce members and their
families, as well as the community and society at large. The definition by the
International Organization for Standardization (IOS) (2010) standard guidance norm
stresses integration of CSR in all business processes, responsiveness to stakeholders’
expectations, and CSR activities that contribute to sustainable development. According
to this standard, CSR is the responsibility of an organization for the impact of its
decisions and activities on the society and the environment, through transparent and
ethical behavior that (a) contributes to sustainable development, health, and welfare of
the society; (b) takes into account the expectations of stakeholders; (c) is in compliance
3
with applicable laws and consistent with international norms and behaviors; and (d) is
integrated throughout the organization and practiced in its relationships.
Small and Medium Enterprises (SMEs) are defined as those enterprises that
employ between 10 and 99 employees. The small enterprises employ between 10 and 49
employees, whereas medium enterprises employ between 50 and 99 employees, with
measurable indicators of the following: (a) annual sales threshold of $1.4 million; (b)
assets threshold of $1.4 million; (c) enterprises that fall within either the annual sales
and/or the total assets threshold; and (d) if both indicators are above $1.4 million, the
enterprise cannot be considered an SME (United States Agency for International
Development [USAID], 2007).
Sustainable development is a pattern of resource use that aims to meet human
needs while preserving the environment so that these needs can be met not only in the
present, but also for future generations. The Brundtland Commission (Global Oneness,
n.d.), formerly known as the World Commission on Environment and Development
(WCED), used this term to coin what has become the most oft-quoted definition of
sustainable development: a development that meets the needs of the present without
compromising the ability of future generations to meet their own needs (United Nations
[UN], 1987).
The Palestinian Authority (PA) or Palestinian National Authority (PNA) is an
interim self-governing body responsible for areas of the West Bank and the Gaza Strip
under Palestinian control. The PA was authorized by the Oslo Accords (1993) and
subsequent Palestinian agreements with Israel and was established in 1994. It is
4
constituted by a president, prime minister, a cabinet, a legislative council, and security
forces (Palestinian National Authority [PNA], 2010).
The concept of shared value is defined as policies and operating practices to
enhance competitiveness of a company while simultaneously advancing economic and
social conditions in the communities in which the firm operates (Porter & Kramer, 2011).
Theoretical Background of the Problem
According to the World Bank (2009a), the political and the socioeconomic
environments in Palestine have seen frequent, unpredictable, and surprising upheaval.
This has contributed to delays and blockades on the movement of people and goods. The
constant upheaval has led to a deteriorated socioeconomic situation in Palestine. It has
impeded internal and local cross-border trade and reduced the ability of Palestinians to
hold their jobs. As a result, it has raised the level of unemployment, entrenched deep
poverty, and caused insignificant growth and fiscal collapse (World Bank, 2009a).
This research investigated the role of multinational companies (MNCs) in
sustainable socioeconomic development when they integrate strategic CSR (Corporate
Social Responsibility) into the overall business strategy of the company. The research
was built upon theoretical and empirical support drawn from a variety of disciplines. It
entailed exploration of environmental turbulence and managerial capabilities for
multinational companies’ strategic responses where strategic CSR was integrated into the
business strategy.
Emery and Trist (1963) proposed that the business environment was composed of
several distinct segments with different levels of turbulence. Based on this proposal,
5
Ansoff and McDonnell (1990) identified and defined environmental turbulence and how
it affects strategic business behavior. They introduced the Strategic Success Paradigm
(SSP) and stated that a firm’s potential was optimal when the following three conditions
were met:
1. Aggressiveness of the firm’s behavior matched the turbulence of its
environment.
2. Responsiveness of the firm’s capability matched the aggressiveness of its
strategy.
3. The components of the firm’s capability support one another.
Ansoff and McDonnell (1990) argued that the survival of a firm in a competitive
business environment required companies to evaluate the environmental turbulence by
defining the trends, threats, and opportunities facing the organization and recommended a
5-level scale, ranging from repetitive to unpredictable, to judge and thereby adjust
strategic aggressiveness and capability responsiveness. Otherwise, according to Ansoff
and McDonnell, the firm’s resources would be wasted, and opportunities would be
missed. Ansoff and McDonnell also noted that an overly aggressive strategy in a low-
turbulence environment was just as wasteful as slow responsiveness in a fast-paced
environment. Aligning Ansoff’s equation of turbulence, aggressiveness, and
responsiveness would help firms attain their objectives and capture all opportunities to
enhance their financial and social performance.
A business operating internationally will encounter multiple challenging factors
that pertain to socioeconomic, political, and cultural differences (Ansoff & McDonnell,
1990). Ansoff and McDonnell argued that the foreign environment would have a
6
different level of economic development relative to (a) the size of the total market for the
firm’s products, (b) the degree of saturation of the market, (c) consumer taste and buying
habits, (d) the ability to use technologically advanced products, (e) the regulation of
foreign investments, and (f) constraints and enablement under which the firm must
operate. Ansoff and McDonnell outlined various modes of strategic entries for firms
venturing abroad and added that selection of strategic business areas (SBAs),1 requires
copious information such that an analysis of pertinent economic, cultural, and
sociopolitical trends is completed prior to entry into the market.
Ansoff and McDonnell (1990) also stressed the need to develop a new
environmental surveillance and capability analysis for firms to succeed in foreign
markets and cited that a firm seeking to internationalize should outline clear objectives as
part of its strategy and conceived and offered a gradual-commitment entry-mode strategy
that starts by exporting, followed by stepwise commitment, further followed by a local
presence. When a firm reaches a multinational (MNC) status, the firm will begin to
optimize its global strategy through trade-off between global economies and local
responsiveness.
Multinational companies have become drivers for the provision of foreign
investments, employment, goods, and services produced, as well as for development of
technologies that assist developing countries in the promotion of their economic growth.
Businesses are considered crucial members of society, and corporate social responsibility
(CSR) has become an essential part of all successful companies’ strategies. Stakeholders,
1
Selection of strategic business areas (SBAs) is a process of strategic segmentation used to break down the
future-environment into areas of growth, risk, and profitability prospects with differing success-
opportunities relevant to a specific company industry.
7
including customers, suppliers, employees, shareholders, investors, the community,
special interest groups, non-governmental organization (NGOs), and international
organizations, expect businesses to understand and address relevant social and
community issues. According to Ansoff and McDonnell (1990), a firm’s business
strategy cannot be built on pure financial gains but has to include political and social
considerations along with its commercial ones.
According to Ansoff and McDonnell (1990), the preferred objectives should
reflect the aspirations of the constituencies and their interests in the firm. They
hypothesized that the initiatives for defining the preferred objectives and “rules of the
game” for environment-serving organizations (ESOs) had historically come, and
continued to come, from power centers outside the ESO. They stressed the importance of
legitimacy strategy as a future center-of-management preoccupation to pursue in seeking
to influence the rules of the game and to optimize its profit-seeking activities (Ansoff &
McDonnell, 1990).
Practical Background of the Problem
Political instability and tension continue to overshadow prospects for
socioeconomic growth in conflict zones around the world. The current conflict between
Palestinians and Israelis is an example of just such a challenging problem. It has created
disparities in per-capita gross domestic product (GDP) of more than 20:1 in favor of the
Israelis (Kidder, 2006). This has led to falling levels of per-capita income and brought
widespread poverty in Palestine (United Nations Relief and Works Agency [UNRWA],
2007). The Palestinian economy relies heavily on international aid for financial support.
8
It has generated insignificant growth and developed an increase in dependency on the
Israeli economy, leading to a fiscal collapse. As a result, the Palestinian economy has
declined, with productive sectors declining and the public sector growing, as more of the
population looks for employment and assistance (The World Bank, 2009c).
As global poverty becomes one of the most pressing challenges in the 21st
century, the international community has seen an increase in the growth of the corporate
social responsibility movement. This has been made manifest in a number of ways, one
of which is to form partnerships as a framework of engagement with stakeholders in
order to prompt sustainable socioeconomic change in host countries (Prahalad, 2004).
Multinational companies have become increasingly conscious of their ethical and
economic responsibility to provide products and services that add value to society, to
deploy entrepreneurialism, and to create jobs (Kidder, 2006). There are numerous
examples that multinational companies, NGOs, and local businesses are innovating along
these lines in emerging markets with great vigor, thus making a difference in the quality
of people’s lives (Prahalad & Hart, 2002).
A number of different theoretical frameworks have evolved to analyze the role of
socially responsible businesses. Friedman (1970) claimed a business could not have
responsibilities. The job of a business executive is to create wealth for shareholders. On
the other hand, Drucker (1984) opined that the first social responsibility of business is to
be profitable and create capital. The second responsibility is to convert social problems
into economic opportunities, benefits, productive capacity, human competence, good
jobs, and wealth. Drucker also said that if the first one is not fulfilled, the second one
will not be fulfilled either.
9
Ansoff (1984) asserted that the firm of the future would become a socioeconomic
institution. He presented management with two basic choices: first, to take Friedman’s
advice focusing on the business of business being profitable and allowing other
stakeholders to shape the role of the firm, and second, to take Barrowclough’s advice to
join the government and the public in determining the future of the firm’s objectives.
Based on these opinions of good corporate behavior, a growing number of
business experts began to argue that both profit and social good could be combined
through innovations aimed at improving the lives of the world’s poorest citizens. In a
2002 article on strategy and business titled “The Fortune at the Bottom of the Pyramid,”
Prahalad and Hart argued that real opportunities for both profit and socially responsible
investments lay in the 4 billion people at the bottom of the economic ladder. Tapping
into this market, they argued, would require multinational corporations to reconsider their
existing profit structures. They also stressed that the bottom of the pyramid should
become part of the firms’ core businesses and should not be left to CSR initiatives for
optimal performance to take on importance.
The current conflict between the Palestinians and Israelis is suitable for such an
economic intervention. According to Kidder (2006), one of the things that businesses do
well is to create jobs, and consequently they have significant potential for promoting
stability, reducing despair, and lowering tensions if initiated in a newly viable Palestinian
State. The escalated conflict in Palestine has left the Palestinian economy mired in an
economic crisis. The interim accords and subsequent agreements between the
Palestinians and Israelis have not yet led to a two-state solution or any other arrangement
agreeable to both parties. Despite the large influx of international aid, the economy has
10
continued to shrink with increasing poverty, and development has been stalled due to the
impeding of the entry of people and goods (World Bank, 2009c). A restriction on the
entry of people and exported goods into Palestine prevented the private sector from
realizing its potential in job creation and sustainable growth.
With these concerns and arguments for and against corporate social responsibility
(CSR), the contribution of this research paper is the investigation of the role of
multinational companies (MNCs) in leading sustainable socioeconomic development in
Palestine. Incorporating strategic CSR into a firm’s core business would improve the
organization’s financial and social performance. Multinational companies’ engagement
with stakeholders would allow for collaboration among their stakeholders, including
customers, investors, suppliers, the public, government, special interest groups, NGOs,
and international organizations, to achieve sustainable development.
Economic and Political Environment
External Political Environment
Palestine has been struggling to gain statehood since the breakup of the Ottoman
Empire in 1917 (Giridhar, 2006). Following the end of World War I in 1918,
Palestinians were faced with an unclear political future. Along with Arab countries,
Palestine was under the British Mandate to administer the affairs of the Arab world.
When Britain pulled out of the area in 1917, Arab countries gained independence,
excepting Palestine. Britain called for a Jewish nation to be created, and the region came
into more conflict due to mass immigration and violence between Palestinians and
Israelis (Gerner, 1994).
11
Under these circumstances, Britain handed the matter over to the United Nations.
On November 29, 1947, the General Assembly of the United Nations issued UN
Resolution 181-II, which called for a two-state solution: a separate Palestinian State and a
Jewish State (UN, 1947/1964). Two major wars were fought between the Arab world
and Israel in 1967 and 1973, upon which the United Nations Security Council passed
Resolutions 242 and 338 (UN, 1967, 1973). These two resolutions called for a peaceful
resolution of the Arab-Israeli conflict through territorial compromise. Subsequently, the
Oslo Accords between the Palestinians and Israelis was signed on September 13, 1993.
The Oslo Accords called for the formation and recognition of a Palestinian
National Authority (PNA) to carry out administrative responsibilities in the occupied
territories (Watson, 2000). However, the Palestinian National Authority (PNA) has not
yet transformed itself into a state due to stalled negotiations for a permanent solution
between the two parties. Currently, the PNA exhibits a self-rule government lacking
control over the resources of land and water, and most importantly, access to external
markets, jurisdiction over the legal and administrative systems, and geographic continuity
between the West Bank and Gaza.
Since then, the Israeli-Palestinian problem has dominated world politics. The
Palestinians live in areas officially known as “territories,” encompassing the Gaza Strip,
the West Bank, and East Jerusalem. The Palestinian territories face economic and social
hardships that require sustainable economic development (ProCon.org, 2009). Figure 1
reflects the historical divisions of Palestine from the Ottoman Empire to the present time.
12
Figure 1. Historic divisions of Palestine.
Adapted from Historic Divisions of Israel/Palestine by ProCon.org, 2009, retrieved April
17, 2010, from http:www.pipa.gov.ps/country_Profile.asp#gstruct
Geography
According to United Nations Resolution 181-II, the West Bank, Gaza Strip, and
East Jerusalem are part of Palestine (UN, 1947/1964). The West Bank is an area of
extensive tree crops and farming, rangelands, and water resources of 5,607 square-km
(2,165 square-miles). The West Bank has religious sites in Jerusalem, Hebron, and
Bethlehem. The land and its natural resources, as well as numerous archeological sites,
offer great prospects for economic development, including agriculture and tourism, as
well as urban and industrial growth. The Gaza Strip lies on the eastern coast of the
13
Mediterranean Sea. Gaza Strip borders Israel and Egypt. It has a total area of 360
square-km (139 square-miles) and is twice the size of Washington, D.C. Gaza has
occupied a dividing position between the desert of the south and the Mediterranean
climate of the north. This location lent the city the natural role of a prosperous trading
zone for the world’s products. Figure 2 presents the map of Palestine, and Figure 3
shows a comparison of the 1947 partition plan borders and the armistice lines of 1949.
14
Figure 2. Map of Palestine: West Bank, Gaza, and Jerusalem.
Adapted from “The 1967 war,” by Joel Beinin, lecture presented at Stanford University,
November 11, 2002, available from http://www.tomhull.comocston/projects/ajvp/
wp4.php
15
Figure 3. Comparison of the 1947 partition plan borders and the armistice lines of 1949.
Adapted from “The Palestine Papers: The ‘napkin map’ revealed,” in Aljazeera, 2011,
available from http://english.aljazeera.net/palestinepapers/2011/01/20111221142399
40577.html
16
Political System Structure
Pursuant to the Oslo Accords signed in 1993 between Israel and the Palestine
Liberation Organization (PLO), the Palestinian National Authority (PNA) acted as the
executive representation of the Palestinian Liberation Organization. The Oslo agreement
called for a final agreement that would lead to a final status between Israel and Palestine.
To date, a final agreement has not been reached. As outlined in the Declaration of
Principles, the Palestinian National Authority (PNA) is defined geographically as the
self-ruled territories and administratively as the two main organizations of the Palestinian
Legislative Council (PLC) and the Council of Ministers. The Palestinian Legislative
Council is the representative legislative body, or parliament, of Palestine. It is a
unicameral legislative council comprised of the president, who is elected to a 4-year term
by direct popular vote, and 132 members, also directly elected. The Council of Ministers
reports to the Palestine Legislative Council. Due to the geographical separation between
Gaza and the West Bank, each ministry currently maintains two offices and two staffs
(Program on International Policy Attitudes [PIPA], 2009).
External Socio-Economic Environment
Demographics
According to the World Fact Book (Central Intelligence Agency [CIA], 2009),
Palestinian demographic indicators in the West Bank and Gaza revealed an estimated
population of 2,461,267, with a growth rate of 3.4% in the West Bank, and a population
of 1,552,000, with growth rate of 3.9% in the Gaza Strip. The rate of population growth
in the West Bank and Gaza is currently among the highest in the world. Forty-five
17
percent of the Gaza Strip population is under 15 years of age, compared to 38% in the
West Bank (CIA, 2009). The Palestinian-controlled Gaza is one of the most densely
populated areas in the world, with more than 4,000 people per square kilometer.
Palestinians exhibit a high level of literacy; among those 15 years and older, literacy is
97% for males and 88% for females (CIA, 2009). The population in Gaza Strip is mainly
Palestinian Arabs. In the West Bank, 83% are Palestinian Arabs and 17% are Jewish
(CIA, 2009).
Unemployment Rate and Labor Force
Unemployment and underemployment recorded figures were very high in the
Palestinian territories. Unemployment figures reached approximately 45.5% in the Gaza
Strip and 16.3% in the West Bank (International Labor Organization [ILO], 2008).
Jobless Palestinian men, women, and children ventured into unsafe areas along with
Israelis every day, looking for any work they could find. The number of Palestinian
workers in Israel had declined in response to closure policies and reduction in work
permits for non-Israelis, leading to enormous local unemployment (World Bank, 2006).
The labor force participation rate of the working age population (15+ years) stood at
43.5% in the West Bank and 38% in Gaza (Palestinian Central Bureau of Statistics
[PCBS], 2008). Employment in the West Bank and Gaza Strip sectors of the economy
showed that an average of 12.1% of people employed worked in mining, quarrying, and
manufacturing, and an average of 10.8 % of the employed worked in construction (PCBS,
2008) (see Palestinian Labor Force Statistics, Appendix D).
18
Working Conditions in Palestine
According to the International Labor Organization (ILO) (2008), and based on
working conditions, a survey conducted by PCBS (see Appendix D) revealed that 61.1%
of men in private sector employment did not get annual paid leave, compared to 37% of
women. Also, the survey highlighted that 57.1% of men did not have paid sick leave,
compared to 31.4% for women. The survey added that 34.8% of men had written
contracts, compared to 54.8% for women. While health insurance is considered an
important indicator of work security, figures indicated that 58.8% of women employed in
the private sector had no private health insurance compared to 67.5% of male employees.
Further, the survey indicated that 94.1% of women employed in the public sector had no
health insurance, compared to 96.4% of male employees (see Appendix D). The report
cited a preliminary study addressing working conditions in Palestine and concluded that
workers in informal enterprises work long hours for low income, sometimes without a
weekly day off, and they lacked minimum infrastructure support system and occupational
safety procedures (ILO, 2008).
Human Resource Development
According to the United Nations Conference on Trade and Development
(UNCTAD) (1995), the most pressing need confronting Palestine is the high level of
unemployment. The need to create sustainable jobs to absorb the unemployed into
Palestinian economic and social structures requires appropriate action plans (UNCTAD,
1995). The existing labor force largely lacks specific technical skills to meet job
requirements. The report outlined the necessity to assess the extent and nature of training
19
programs as compared to the immediate needs of workers. Briefly, the imperative of
achieving rapid improvement in the living conditions of the Palestinian people cut across
all levels of society and all sectors of economic activity. The report recommended that an
essential ingredient to the long-term success of the Palestinian economic development
effort would be to create a well-educated, technically competent, and diverse labor force
with vigorous participation by women through the framework of entrepreneurship.
Poverty Rate
The socioeconomic situation in the West Bank and Gaza has seen a steady
decline. Palestinians remain under severe economic deprivation and experience rising
levels of unemployment and food insecurity. In Gaza, the most vulnerable, the number
of households below the poverty line is at 51.8%, and this figure continues to grow
despite emergency humanitarian assistance (UNRWA, 2007). Economically, this
translates into a lack of access to markets, lack of raw materials and means of production,
and lack of job opportunities for Palestinians (UNRWA, 2007).
The External Macro-Economic Environment
According to the United Nations (2008), the West Bank and Gaza (WBG) region
showed negative growth, minimal savings, and minimal investment in recent years due to
instability between Israel and Palestine, and there were massive deficits in the balance of
trade. The growth in the Palestinian territories depended on maintaining trade among
neighboring countries, such as Egypt and Jordan. The vast majority of trade flows are
with Israel. In recent history, this has totaled nearly 85% of trade (Palestine Trade Center
20
[PalTrade], 2009). Security closure policies and the blockades they affect disrupt labor
flows, manufacturing, and commerce across the West Bank and have caused complete
closure of the Gaza Strip (PalTrade, 2009). According to the World Fact Book (CIA,
2009), the lack of access to land and resources, as well as import and export restrictions,
had the biggest impact on growth. The May 2007 World Bank report summarized this as
follows:
In economic terms, the restrictions arising from closure not only increase
transaction costs, but create such a high level of uncertainty and inefficiency that
the normal conduct of business becomes exceedingly difficult and stymies the
growth and investment which is necessary to fuel economic revival. . . without
efficient and predictable movement of people and goods, there is very little
prospect for a sustainable Palestinian economic recovery. (p.1)
Since the imposition of restrictions, the private sector lost jobs in the industrial,
commercial, construction, agricultural, and service sectors (UN, 2009). The potential
growth of various industry sectors faces external and internal constraints due to shortages
of investment capital, human capabilities, and open markets. The lack of administrative
capabilities, inadequate infrastructure, deficiencies in public utilities, potable water, and
commercial and international airports posed constraints on the absorption of capital flows
(UN, 2009). The PNA lacked effective taxing authority and money reserves to power a
central bank. Most of the income taxes generated were derived from transfers by the
Israeli authorities.
A lack of appropriate institutions presented the Palestinian Authority with
obstacles. These hindered future economic growth. Local businesses consisted primarily
of small-scale firms lacking technical capacity and limited capital. Research and
development were minimal in the West Bank and Gaza. Most banks operating in the
21
West Bank and Gaza were branches of either Israeli or Jordanian Banks with limited
lending capacity (Segal, 1996). The economic performance of the Palestinian economy
weakened since the uprising in 2000 under the imposition of restriction on movement and
access to the territories. While the Real GDP growth averaged 8.5 during 1995-1999, it
fell virtually to zero over the period from 2000-2008, with the exception of a brief
recovery during 2003-2005 (International Monetary Fund [IMF], 2009). Figure 4 shows
the Real Gross Domestic Product (GDP) from 1997-2008.
Figure 4. Real GDP Palestinian growth.

Adapted from Labor Force Survey Report, by the Palestinian Central Bureau of Statistics
(PCBS), 2008, retrieved September 30, 2010, from http://www.google.com/search?q=
ilo+and+PSCB&sourceid=ie7&rls=com.microsoft:en-US&ie=utf8&oe=utf8&rlz
=1I7ADFA_en
22
Structure of the Palestinian Economy
Palestine, including East Jerusalem, is considered a small and resource-poor
economy (World Bank, 2008a). However, the composition of the Palestinian economy
by sectors contributing to the GDP was stable throughout the second half of the 1990s.
After the creation of the Palestinian Monetary Authority (PMA) in 1994, the financial
sector grew very rapidly. Between 1994 and 2000, the contribution of financial
intermediation to GDP increased from 1.1% to 4.4%. The communication and
transportation sectors doubled their share of GDP from 4.4% to 8.7% during the same
period. Despite rampant financial crisis, the construction sector increased rapidly during
the late 1990s due to high demand from the fast-growing population and improved access
to financing by the development of a banking system to fund itself. Remarkable
economic progress was achieved by 1999, of which construction accounted for 14.3% of
GDP (compared to only 7% in 1995), but since the uprising in 2000, it has contracted
significantly (Bennett, Nashashibi, Beidas, Reichold, & Toujas-Bernaté, 2003).
Briefly, the post-Oslo period (1994-2005) witnessed three distinct phases in
economic development: (a) the growth phase in 1994-1999, which extended into the
outbreak of the Intifada in September 2000; (b) the regression phase in 2000-2002; and
(c) the relative recovery phase in 2003–2005. UNCTAD (2009a) showed the average
annual rate of growth of GDP more than doubled following the Oslo Agreement, but the
rate subsequently fell to a negative 8% over 2000-2002 to record a similar rebound in
2003-2005, and then continued to fall again between 2006-2008.
Figure 5 shows Palestinian establishments by economic activity, ownership, size,
and legal status, reflecting that 90.7% of all businesses are private sector establishments,
23
characterized by largely family-based, small-sized, low-capacity businesses, and a labor-
intensive sector that needs to be modernized to link up with the rest of the international
economy due to detachment and isolation for decades (Samhouri, 2007).
Figure 5. Palestinian establishments.

Adapted from Labor Force Survey Report, by the Palestinian Central Bureau of Statistics
(PCBS), (2008, April-June), retrieved September 30, 2010, from http://www.google.com/
search?q=ilo+and+PSCB&sourceid=ie7&rls=com.microsoft:en-S&ie=utf8&oe=utf8&rlz
=1I7ADFA_en
24
Infrastructure in Palestine
The infrastructure of Palestine is comprised of water and power systems,
sanitation, roads, and telephone networks in need of substantial upgrades and expansion.
According to the World Bank (2008b), the infrastructure of Palestine has improved
greatly over the past few years. The Palestinian Authority (PA) depends on Israel for
electricity (World Bank, 2008b). The lack of adequate physical infrastructure for electric
power and insufficient water supply affects business operations in the West Bank and
Gaza.
Palestinian Financial Sector
Pursuant to the signing of the Oslo Accords in 1993 and the Paris Protocol in
1994, a formal financial sector emerged and provided Palestinians the authority to
administer monetary and fiscal affairs that would support expected economic growth.
Despite the difficult environment, a financial sector was established, composed of banks,
a securities exchange market, insurance companies, a payment system, housing finance
companies, a micro-finance institution, and financial leasing companies. With this
infrastructure in place, there is great potential for the West Bank and Gaza economy to
enjoy remarkable growth if closure policies cease (World Bank, 2008c).
The Palestinian Security Exchange (PSE) (2010) has a future plan to modernize
the structure of private sector companies, moving away from a family-owned model to a
more formal one, as in being “listed” on an exchange. There are five main sectors on the
PSE: (a) banking, (b) insurance, (c) investment, (d) industry, and (e) services, with the
heaviest trading (by volume) occurring in the investment sector, while services has the
25
highest market capitalization (The Palestinian Securities Exchange, 2010). Figure 6
presents the Palestinian Security Exchange (PSE) sectors.
Figure 6. Palestinian Security Exchange (PSE) sectors.
Adapted from The Portland Trust [Economic Feature], by the Palestinian Securities
Exchange (PSE), 2010, retrieved October 1, 2010, from http://www.mondovisione.com/
pdf/Palestine%20Securities%20Exchange-1.pdf
Investment Climate
Palestine has a strategic location, and the infrastructure’s future development is an
untapped emerging market with great investment potential (Institute of International
Finance [IIF], 2010). The economy is market-based with the private sector playing a
leading role. The West Bank and Gaza have abundant high quality, skilled labor (albeit
with deficits in the high tech sector). The Palestinian economy is export-oriented and
outward-looking with the potential to integrate with regional and international economies
through a network of free trade agreements and trade associations.
26
The Palestinian Authority (PA) encourages foreign investment in the WBG to
promote growth, reduce unemployment, and support reconstruction efforts. The current
investment laws guarantee repatriation of foreign capital and prohibit expropriation and
nationalization of approved foreign investments. The investment law provides
exemptions from income taxes, and other regulations provide exemptions for exports of
machinery (PIPA, 2009).
According to the International Finance Corporation (IFC), the protection of
investors based on the Organization for Economic Cooperation and Development
(OECD) average indicated a strength of investor protection index of 7 above the OECD
average indexes (IFC, 2011). Among the important factors that negatively influence
Foreign Direct Investment (FDI) in the near-term are the continuation of violence, border
crossing, and cessation of negotiations in the West Bank and Gaza (United States Agency
for International Development [USAID], 2002). According to USAID (2002),
franchising investments such as Kentucky Fried Chicken, Pizza Hut, Kinko’s, and
partnerships such as Pepsi and Coco-Cola, as well as public-private partnerships that
enhance the infrastructure in the West Bank and Gaza, are just a few of the significant
FDI investments in the West Bank and Gaza.
Free Trade Zones
USAID (2002) addressed the proliferation of free zones and special economic
zones in the Middle East and the North Africa region (MENA) as a general trend to avoid
the regulatory and bureaucratic inefficiencies and attract FDIs. The free zone regimes
attract FDI where there exist a higher-quality infrastructure and a grouping together of
27
industries that have the needed services. The PA, Israel, and the international donor
community outlined a plan to establish industrial zones in Palestine to stimulate growth
and economic activity. Efforts focus on pilot zones to house export-oriented industries.
According to the Industrial Market Research Commercial Guide for the West
Bank and Gaza, the International Donor Countries will help to establish several free
zones to contain 200,000 to 600,000 square-meters of industrial and construction space to
employ tens of thousands of workers and will offer tax exemptions and incentives. This
will help create jobs and increase employment and prompt economic growth in Palestine.
Due to closure policies, a supply chain to transport products and raw material
needs to be identified for successful implementation of the shared interest and to ensure
stability and building capacity between the two borders (Sneh, 2007). Few countries
have taken the initiative to strategically plan manufacturing plants in free zones.
Germany, for instance, has laid a conceptual plan for a joint industrial zone in the West
Bank, while Turkish industrialists work to rebuild another industrial zone in the northern
Gaza Strip. Japan has initiated an agro-industry park for processing agricultural products
(Sneh, 2007).
Foreign Direct Investment (FDI) Statistics
According to USAID (2002), the West Bank and Gaza had successfully attracted
FDI from the United States, Europe, and Japan, and major firms—including Coca-Cola,
Pepsi, Procter and Gamble, and Siemens—joined the fray. UNCTAD (2009b) statistics
showed FDI amounted to USD 45 million in 2008, which was down from USD 129
28
million in 2006. There were limited foreign investment flows in 1994-1995, with the
majority coming from Palestinian investors.
The Palestine Development and Investment Company (PADICO) invested over
USD 500 million in the economy and was a major holder of shares in the Palestinian
Exchange stock market. Key PADICO investors include diaspora Palestinians from
Jordan, Great Britain, and the Gulf. For instance, PADICO (the largest single non-
resident investor company owned by Palestinians from outside Palestine) has made
significant investments in telecommunications, housing, and the establishment of the
Palestinian Securities Exchange (PSE) (2010). The Palestinian Authority has taken steps
since 1995 to increase foreign trade. Several free trade agreements were signed with the
European Union, the European Free Trade Association (EFTA), the United States,
Canada, and Turkey, and other trade agreements with Russia, Jordan, Egypt, the Gulf
States, Morocco, and Tunisia have been finalized. The PA participated in the 2005 and
2009 World Trade Organization (WTO) ministerial meetings as an ad hoc observer.
Palestinian Reform and Development

Plan (PRDP)
Due to prevailing political instability, which effectively has prevented the
development of a robust economy, the Palestinian National Authority (PNA), with the
help of international community donors, has outlined a reform development plan for a
Palestinian State. The Palestinian Reform Development Plan (PRDP) set out a strategy to
implement this future union (PNA, 2007). This strategy represents a 3-year plan that
reflects an assessment of the PNA’s capacity to absorb project development. The plan
29
mentions several very important premises for implementation. The key national priorities
outlined are (a) to bring the rule of law to the occupied territory and to combat violence,
(b) to manage Palestinian internal administrative affairs, and (c) to implement
institutional reforms in the PNA. The proposal acknowledged Gaza and its 1.5 million
people as an integral part of the future Palestinian state and suggested reform and
development in Gaza as an essential part of the plan for bringing stability and prosperity
to all Palestinians. The roles of the international community in supporting Palestinian
development and the role of Israel in taking immediate steps to facilitate movement of
people and goods were issues emphasized in the document.
Many sectors of development were mentioned in the PRDP. Establishing good
governance, justice, security, and the rule of law were some of the first issues named in
the document. Fiscal reform, local government reform, and social development in areas
such as education, health, and social protection; economic and private sector
development; agriculture, tourism, industrial development, service provision, housing
projects, public infrastructure development, and many other sectors of development were
identified. An international conference in Paris in December 2007 by the world
community pledged $7.4 million to aid the Palestinian Authority and support Palestinian
reformation (Anderson, 2007).
Despite the pledge from the international community to support the Palestinian
Authority, the situation regarding implementation of the PRDP plan had not changed.
Excluding Gaza from the plan has led to the creation of two separate economies: one in
the West Bank, which is showing some progress; and the other in Gaza, where
restrictions are not confronted in parallel with the development plan. According to the
30
World Bank (2009a), because there is no movement of people and products due to
security closure policies, the PA is hindered, if not entirely prevented, from reviving the
Palestinian economy. There were three constraints to the Palestinian economic stimulus:
First, there was limited access to economies of scale that hindered Palestinian businesses
in their attempts to achieve critical mass for additional investment and business growth;
second, there were limits on access to natural resources, which stifled growth
opportunities; and third, limited access to an investment horizon brought financial talks
where vital connections are made to a standstill (World Bank, 2009a).
According to the International Bank for Reconstruction and Development (IBRD)
(World Bank. IBRD, 2008), assessment of the investment climate in the West Bank and
Gaza yielded three major areas where the creation of an investment climate to help the
Palestinian private sector existed: (a) restoring movement and access, (b) developing
Palestinian private enterprise capabilities, and (c) continuing to measure and improve the
investment climate.
External Legal Environment
According to the Worldwide Governance Indicators (1996-2008) (World Bank,
2009c), six aggregate governance sectors were described that reflected the governance in
Palestine as compared to the Organization for Economic Cooperation and Development
(OECD), which is made up of 34 developed countries. The report displayed the
country’s performance for all available years between 1996 and 2008 in six dimensions:
(a) voice and accountability, (b) political stability and lack of violence/terrorism, (c)
government effectiveness, (d) regulatory quality, (e) rule of law, and (f) control of
31
corruption. The value dimensions reflected low scores on governance indicators in
Palestine as compared to the OECD rating. The Palestinian Reform and Development
Plan (PRDP) outlined key national priorities essential to bringing the rule of law to the
occupied territory, to managing Palestinian internal administrative affairs, to
implementing institutional reforms in the PNA, and to the creation of a supportive foreign
investment climate for companies seeking foreign direct investment (FDI) in Palestine.
Figure 7 outlines the governance indicators in Palestine that are important for investment
consideration. The lower bars correspond to OECD, while the upper bars correspond to
Palestine.
90th-100th Percentile 50th-75th Percentile 10th-25th Percentile

75th-90th Percentile 25th-50th Percentile 0th-10th Percentile
Figure 7. Governance indicators in Palestine.

Adapted from Worldwide governance indicators (1996-2008), by World Bank, 2009c,
retrieved April 26, 2010, from http://info.worldbank.org/governance/wgi/sc_chart.asp#
32
Palestine Country Strengths/Weaknesses/Opportunities/
Threats (SWOT) Analysis
Based on the researcher’s assessment of the Palestinian business environment,
Table 1 presents the SWOT analysis of Palestine, showing the strengths, weaknesses,
threats, and opportunities that are helpful for investment considerations.
Table 1
Palestine Country SWOT Analysis
Strengths Weaknesses
 Highly educated workforce  High poverty and unemployment

 Strategic location  Underdeveloped infrastructure
 Active civil society, NGOs, and  Geographic disconnection between Gaza
international aid organizations and West Bank
 New Reform and Development Plan to  Rule of law/corruption/weak institutions
promote foreign investment climate,  Different laws in Gaza and West Bank
rebuild government institutions with help  Lack of stability and security
of international community donors  High dependence on Israeli economy
 Private sector adaptability to change  Private sector lack of capabilities
Opportunities Threats
 MNC economic intervention through peace  Instability and chaos

process to prompt economic growth in  Economic dependence on Israel
Palestinian territories  Lack of progress of redevelopment plan by
 Regional and international cooperation the PA and commitment of International
 Opening new markets for exports donors to rebuild government institutions
 Establishing free zones for manufacturing and infrastructure
 Natural gas resources in Gaza  No control over resources and borders,
 Huge development projects for electricity, seaports and airports
housing, airports, and infrastructure
33
Multinational Companies (MNCs)
Multinational companies (MNCs) have played an important role in global
economic, social, and political changes (Held & McGrew, 2000). The United Nations
defined MNC as “an enterprise which controls assets, factories, mines, sales offices and
the like in two or more countries” (Bartlett, Ghoshal, & Birkinshaw, 2003). However,
the scope has changed to comprise two crucial qualifications: First, MNCs have
substantial direct investment in foreign countries, not just an export business; and second,
MNCs are engaged in active management of offshore operations rather than passive
investment in a financial portfolio (Bartlett et al., 2003).
MNCs are important because they engage in foreign direct investments (FDIs)
around the world (Dunning, 2001). According to the United Nations Conference on
Trade and Development (UNCTAD, 2009b), there is a total of more than 889,416
multinational companies (MNCs) around the world, of which 82,053 are parent
corporations and 807,363 are affiliates. In 2008, the 100 largest MNCs’ sales combined
mounted to nearly $8.5 trillion. The Multilateral Investment Guarantee Agency (MIGA),
an agency that promotes FDI in developing countries, has reported that FDI surged to
record levels in developed and emerging markets despite the recent economic downturn
(MIGA, 2009). Corporate investors maintained a positive outlook on business prospects
in emerging markets and signaled improved investor confidence with the willingness to
take risks for potential returns in emerging market assets (MIGA, 2009).
Multinational companies operating in emerging markets had been plagued with
political, economic, environmental, and social instability. According to PCBS statistics,
FDI amounted to USD 45 million in 2008, down from USD 129 million in 2006, but even
34
129 million is negligible compared to the funding other areas in the Middle East region
receive. According to the Economic Commission for Western Asia (ESCWA), Palestine
barely benefited from increased FDI inflows to the region (as cited in PCBS, 2008).
Several principal factors explained the considerable gaps in FDI inflows to Palestine.
These factors included the slow pace of economic and investment reforms, the
assessment of political risks by potential investors, access to inexpensive production
factors (land, energy, physical and human capital), and integration into regional and
global markets (UN ESCWA, 2008).
The strategic posture of multinational companies has been addressed through
numerous international business (IB) journals. Flores and Aguilera (2007) addressed
economic and non-economic factors pertinent to MNC foreign location choices and
found that the host country’s GDP had become a less important deciding factor in the
attraction of FDI. Dunning (1998) argued that instead, market size factors drive MNC
location choice. Populations, Dunning argued, are a critical factor.
Prahalad and Lieberthal (2003) suggested that MNCs should target countries with
large populations regardless of the per capita income. Henisz and Delios (2001) argued
that both country-level political and legal institutions influence cross-cultural practices
with the effect that a host country’s government policy might cause MNCs to steer away
from foreign investment. Loree and Guisinger (1995) indicated that equity FDI is
positively linked to political stability. Physical infrastructure is an overarching construct
that captures infrastructure quality, roads, ports, airports, and telecommunication (Flores
& Aguilera, 2007). Empirical research has indicated that physical infrastructure
influences MNC decisions in that it forms the basis of calculations regarding the expected
35
costs of moving raw materials and finished goods to and from a MNC home base (Loree
& Guisinger, 1995; Root & Ahmad, 1978).
Another key determinant of MNC location choice deals with labor costs and
wages. Flores and Aguilera (2007) believed that countries with lower wages were more
likely to be considered by MNCs, as they represented potential reduced costs to the firm.
Kumar (1994) found a direct relationship between the host country wage rates and the
attraction of FDI in various countries. Prahalad and Hart (2002) argued that transaction
governance capacity (TGC) was a fundamental dimension of a transparent market for
capital, land, labor, commodities, and knowledge, which further set the stage for a
supportive investment climate. Prahalad and Hart defined TGC as the capacity of a
society to guarantee transparency in the processes of economic transactions and the
ability to enforce commercial contracts with specifications that create transparency and
eliminate uncertainty and risk in commercial transactions and added that processes for
changing the laws governing property rights should be clear and unambiguous, with a
system of regulations that accommodate complex transactions and institutions that allow
these laws to be implemented fairly and with transparency.
According to the International Market Research for West Bank and Gaza (2000),
present-day rights and protections for private ownership need updating. For instance, the
right to private ownership in Gaza is controlled by British Mandate Law. The West Bank
is under Jordanian law for areas under the jurisdiction of the Palestinian Civil Authority
and under the Israeli Civil Administration for areas located outside the Palestinian
population centers.
36
In summary, a supportive investment environment for companies seeking
FDI in Palestine needs a transparent, stable, and predictable investment climate
(International Market Research for West Bank and Gaza, 2000). This will consist of
proper contract enforcement, updated property rights, and adequate infrastructure
embedded with sound macroeconomic policies and institutional reforms.
Statement of the Problem
Foreign direct investment (FDI) in conflict-prone countries has increased in the
emerging markets (IIF, 2010). These emerging markets have been plagued with political,
economic, environmental, and social instability, thus exerting more externalities on
firms’ strategic behaviors. This research looked at integrating CSR into firms’ core
business as part of MNCs’ strategic corporate social responsibility posture, which in turn
would optimize the firms’ financial and social profitability. A new paradigm shift of
MNCs’ strategic behavior to integrate societal change with their core business has been
the work of many organizations (IFF, 2010). This new form of engagement would
promote economic development, create employment, ameliorate poverty, and promote
stability in host countries.
The study examined the relationships among MNCs’ environmental turbulence,
MNC strategy aggressiveness, MNC capability responsiveness, MNC corporate social
responsibility (CSR) posture, and the overall performance of MNCs operating in
Palestine. There currently is no research on this topic. This study hypothesized that
organizational performance is improved when MNC strategy aggressiveness and MNC
capability responsiveness are aligned with MNC issue turbulence level.
37
Contribution of the Study
It is posited that good social responsibility is good business. This study
contributes to the field of strategic management by empirically testing and validating
hypotheses regarding the relationships between environmental turbulence, MNC strategy
aggressiveness, and MNC capability responsiveness for MNCs operating in a conflict-
prone zone such as Palestine. The study provides researchers and professionals with
tools for aligning the business environment with the political environment and for
maximizing stakeholder legitimacy strategy and CSR for optimal financial and social
performance.
38
Chapter 2A
GENERAL THEORETICAL FRAMEWORK
The general theoretical framework for this study was presented in two parts.
Chapter 2A presents the global model of multinational companies (MNCs) operating in
Palestine. The global model shows several constituencies that are affected by the firm’s
decision-making behavior. The global model reflects analysis of the environment,
legitimizing forces, threats, and opportunities perceived by management of the firm. The
global model shows MNC business strategy and MNC social responsibility strategy as an
integral part of the overall MNC business strategy. The strategic posture of the
organization provides a framework for optimal financial and social performance of the
MNC.
Chapter 2B presents the research domain of the study relative to MNC social
responsibility (CSR) strategy variables and a summary of these variables.
Global Model
As a strategy concept, social responsibility and moral ethical values have been
addressed by many pioneers since the 1960s. According to Ansoff (1965), there are non-
economic influences that affect the objectives of the firm. These non-economic
influences comprise philanthropy, social responsibility, ethics, social status, and
reputation. Ansoff argued that in order to understand these non-economic influences,
there was a need to single out those with a strong bearing on the firm’s objectives and to
39
assess them as to their effects on the master list of the firm. The idea of corporate social
responsibility (CSR) has been addressed by many authors attempting to integrate ethics
and strategy without drawing attention to means they’ve employed that contribute to
competitive advantage of their firms. The present study was based on the concept that
corporate social responsibility (CSR), as part of the core business of multinational
companies (MNCs), is integral to sustainable socio-economic development in Palestine.
Ansoff and McDonnell (1990) provided a strategic management approach to
optimize the organizational performance and postulated that for a firm to optimize its
competitiveness and profitability, the firm had to match its strategy and capability with
the environment. Ansoff (1984) developed a strategic success paradigm for firms to do
this. This paradigm has been researched, tested, tried, and proved in many industries
around the world.
The global model outlined in Figure 8 presents the environment with a complex
set of relationships among the multinational company (MNC) and its various
stakeholders. This is characterized by interrelationships among MNC corporate
management, employees, civil society, NGOs, international organizations, customers,
suppliers, governments, and special interest groups. According to Ansoff (1984), each
constituency had its own objectives. Ansoff added that the preferred objectives of these
constituencies should be analyzed according to a legitimacy strategy based on a
bargaining process. Based on Ansoff’s approach, the environment was a determining
factor for the firm’s strategy and its capability profile. Part of the business firm
environment was the “rules of the game,” defined by Ansoff (1979) as a set of constraints
under which the business could conduct, but must limit, its activities.
40
Figure 8. The global model.
41
The left side of Figure 8 depicts the strategic posture of the MNC organizational
management based on the strategic success paradigm. This forms the basis of Ansoff’s
model of strategic management at the corporate MNC level. The center side of Figure 8
depicts the corporate social responsibility (CSR) posture, where CSR strategy is
addressed as an integral part of business strategy in the research study. According to
Ansoff (1979), the firm’s adaptation to its external environment was hinged on how
strategic information perceived and understood by management. Ansoff argued that
when threats or opportunities first appeared on the horizon, they should be brought for
further analysis to the firm by the environmental surveillance forecasting system. The
signals that came through to stakeholders should be processed by a surveillance filter and
further through two additional filters where decisions were made (Ansoff, 1979). These
were the mentality and the power filters where skilled managers would identify
environmental discontinuities that had major implications in the decision-making
processes (Ansoff, 1979).
Ansoff (1984) developed the concept of environmental turbulence to describe the
different environments. He classified different environments upon which firms operate
according to five distinct turbulence levels. Ansoff identified a concomitant level of
success for every level of turbulence. Ansoff and McDonnell (1990) defined four
characteristics that define environmental turbulence. Table 2 reflects these levels of
environmental turbulence. The four characteristics are the following: (a) complexity,
where the business environment becomes more complex and the pace of change
increases, resulting in an increase of turbulence level; (b) familiarity of events; (c)
rapidity of change, and (d) visibility of the future.
42
Ansoff and McDonnell (1990) described two factors for the business’s strategic
approach: strategy aggressiveness and capability responsiveness. Strategy aggressiveness
was characterized by the firm’s application of tools, techniques, and know-how to enable
it to position itself in the environment. Ansoff described a firm’s strategy aggressiveness
according to two characteristics: first, the degree of discontinuity of the firm’s successive
strategic moves, such as between successive products that the firm introduces to the
market; and second, the timeliness of introduction of the firm’s new products.
Timeliness in this case ranges from reactive to anticipatory and to innovative and
proactive. On the other hand, organizational responsiveness was characterized as the
firm’s ability to respond, and it included the manager’s capabilities and those of the
organizational system as a whole.
Ansoff (1984) characterized organizational responsiveness according to the
manner in which a firm handles change. The correct strategy is matching capabilities to
turbulence for different environmental turbulence levels. Different types of environments
require different sets of capability-strategy that are appropriate for different levels of
environmental turbulence in which companies operate. Ansoff and McDonnell (1990)
characterized the firm’s responsiveness as the degree to which its organization is either
introverted or extroverted and identified three organizational components for the firm’s
capability responsiveness:
1. Managers: mentality, power, competency, and capacity
2. Climate: culture, risk propensity, time perspective, and change triggers
3. Competence: problems-solving skills, information technology, organizational
structure, rewards, and total headcount
43
Table 3, Matching Aggressiveness and Responsiveness to Turbulence, describes
the appropriate strategy aggressiveness and responsiveness levels that are necessary for
success through each turbulence level. Ansoff (1984), on one extreme, outlined the
stable, placid environment where nothing changes, which is also known as the “repetitive
environment”; on the other extreme, he outlined the creative environment, also known as
the “surpriseful and unpredictable environment,” which is characterized by major
technological breakthroughs and sociopolitical upheavals.
To summarize Ansoff’s (1984) strategic success paradigm, the optimal
performance of an organization is where strategy aggressiveness and organizational
capability responsiveness match the level of environmental turbulence in which the firm
operates. Realizing that there are different types of environments, different strategy-
capability couplings are required for successful operation of the firm (Ansoff &
McDonnell, 1990). The levels of environmental turbulence are described in Table 2, and
Table 3 describes the matching turbulence-aggressiveness-responsiveness.
44
Table 2
Levels of Environmental Turbulence
Level 1 2 3 4 5
Turbulence
Characteristics Repetitive Expanding Changing Discontinuous Surprising l
Complexity National + Regional + Global
Familiarity of Familiar Extrapolable Discontinuous Discontinuous

Events Novel
Rapidity of Change Slower than Response Comparable to Faster to Response

Response
Visibility of Future Recurring Forecastable Predictable Partially Unpredictable

predictable
45
Table 3
Matching Turbulence-Aggressiveness-Responsiveness
Environmental Repetitive Expanding Changing Discontinuous Surpriseful

Turbulence Repetitive Slow incremental Fast Discontinuous Discontinuous
predictable Unpredictable
Strategy Stable Reactive Anticipatory Entrepreneurial Creative

Aggressiveness Stable based on Incremental based on Incremental based on Discontinuous Discontinuous novel
precedents experience extrapolation New based on based on creativity
observable
opportunities
Capability Stability seeking Efficiency driven Market driven Environmental driven Environment creating
Responsiveness Rejects change Adapts to change Seeks familiar change Seeks related change Seeks novel change
Closed System Open System
LEVEL 1 2 3 4 5
46
At Turbulence Level 1 is the “repetitive environment,” where the environment is
stable and is based on precedents and predictable change. Companies in this environment
do not change their products and services unless they are forced to do so. Company
executives work according to precise job descriptions (Ansoff, 1984).
At Turbulence Level 2, “expanding environment-slow incremental” can be found
in the segment of the economy that is growing rapidly. In this environment, demand
usually exceeds supply, and customers’ needs are basic and undifferentiated. Price is the
main determinant in the purchase decision, and production efficiency is the key success
factor (Ansoff, 1984).
At Turbulence Level 3, “changing environment-fast incremental,” customer
demands are differentiated by different buying power and product preferences. The key
success factor shifts from production efficiency to marketing effectiveness (Ansoff,
1984).
At Turbulence Level 4, “discontinuous environment – predictable,” rapid shifts in
customer needs and attitudes are seen with an influx of technological substitution, social
change, and foreign competition. An entrepreneurial approach of strategic management
is a key success factor. The majority of companies today are operating in this complex
and discontinuous environment (Ansoff, 1984)
At Turbulence Level 5, “surpriseful environment- unpredictable,” technological
leadership is the key success factor. New technologies and new industries develop
rapidly and customers are prepared to pay for the most advanced technology. In the
environments of Turbulence Levels 4-5, profits do not follow growth, extrapolation of the
past into the future is dangerous, surprises are frequent, historical strengths can become
47
weaknesses, and what were successful strategies in the past might not be successful in the
future (Ansoff, 1984).
This research study was based on Ansoff’s success model and supporting
empirical research. The perception of the environment in Palestine is currently
characterized by political instability and severe socio-economic development that
influences the strategic behavior and the decision-making of MNC activities. The region
has seen frequent and even unpredictable and surprising exercise of uprising and
blockage of movement of people and goods. It has impeded internal and local cross-
border trade and reduced ability of Palestinians to hold their jobs, thus raising the level of
unemployment, deepening poverty and assuring insignificant growth and fiscal collapse
(World Bank, 2009c). According to the World Bank (2006), the overall impact of the
security regime on the current cost of doing business was substantial due to higher
transport fees and longer delivery times.
The use of CSR instruments as part of the research would facilitate the integration
of sustainability concerns as part of the company operations and create economic, as well
a social-organizational performance. For example, engaging stakeholders in the decision-
making process would help define the preferred objectives of MNCs operating in
Palestine through a legitimacy strategy.
As indicated in the global model in Figure 8, it was hypothesized that the
integration of the (CSR) strategy as an integral part of the firm’s business strategy would
lead to optimal economic and social organizational performance. The corporate social
responsibility (CSR) aggressiveness and corporate social responsibility (CSR)
responsiveness would lead to overall corporate philosophy that has the capacity to
48
respond to changes in the environment. Corporate social responsibility (CSR) was
central to the research study and was believed to have a significant effect on the overall
organizational performance of MNCs operating in Palestine.
CSR Change Management Framework
Ansoff and McDonnell (1990) defined a change management sequence of three
major components to deal with discontinuous change and defined discontinuous change
as a novel change, where the past does not prepare the organizations for the future,
requiring major revisions in the culture, power structure, reward/incentive systems,
organizational structures, and relationships with the external environment. The three
major components are the following: (a) a change strategy to introduce new products and
services; (b) changes in the systemic competence of the firm’s systems, structure, skills,
and knowledge; and (c) a behavioral change including norms, perceptions, values,
models, and distribution of power (Ansoff & McDonnell, 1990).
Ansoff and McDonnell (1990) recommended a managed resistance change
strategy that looks like an accordion, where each panel is a separate project/module that
builds the final process. Each module consisted of two parts, one comprising capability
and the other, strategy projects. On one hand, there lay the capability that focuses on the
reduction of resistance to skill development and simultaneously lays down strategy that
focuses on direction, plans, and strategic positioning. The uniqueness of the process is
that each module can be modified based on inputs from previous modules and new
information from the external environment. Ansoff and McDonnell listed three areas that
49
needed to be addressed before and during the application of change management: (a)
strategy choice, (b) building the launching platform, and (c) launching the transformation.
Another framework for embedding CSR into business strategies and practices has
also been recommended by the United Nations Economic and Social Commission for
Asia and the Pacific (ESCAP) (2009). The framework consists of three major categories:
(a) designing, (b) execution, and (c) mainstreaming. Figure 9 outlines three areas that
require specific CSR design, including (a) preparing for CSR embarkation to raise CSR
awareness inside the company, (b) assembling a CSR team, and (c) stakeholder
engagement in the CSR process. The second category is the execution of the CSR
strategic plan that outlines the implementation of the CSR integrated strategy, followed
by monitoring and evaluation of the CSR plan. The last category outlines internalizing
CSR into organizational systems, as well as corporate culture and values.
50
Figure 9. CSR change management.
51
Leadership Capabilities and Competencies
The United Nations Economic and Social Commission for Asia and the Pacific
(ESCAP) (2009) recommended a framework for embedding CSR into core business
strategies and practices. The framework it proposed is composed of three stages:
designing, executing, and mainstreaming. Eight steps were included in the framework:
(a) preparation of CSR instruments, (b) stakeholder engagement, (c) development of CSR
plans, (d) implementation, (e) monitoring, (f) evaluation, (g) institutionalization, and (h)
communication. CSR requires time to reach maturity before it becomes part of
mainstream business practice.
The speed of achieving CSR is dependent on CSR knowledge through
management training, leadership development, and organizational capabilities that
integrate CSR policy into the firm’s core business. The role of leaders to guide business
towards sustainable social responsibility practices requires a unique array of leadership
skills. D’Amato, Henderson, and Florence (2009) defined responsible leaders as people
of the highest integrity, who embody deep understanding of the difficult concept that is
sustainable development. Pruzan and Miller (2006) portrayed leaders in the business
world first as true planetary citizens because they have globally relevant skills and
strengths that can affect local economies, as well as entire societies or even continents.
According to Schraa-Liu and Trompenaars (2006), in a challenging, ambiguous,
and uncertain environment, the challenge for leaders was to perform effectively to
reconcile diversity of interests and the demands of multiple stakeholders. Bossink (2006)
addressed the need for a charismatic leadership style to communicate an innovative
vision that accelerated the CSR process and empowered employees to become innovative
52
leaders. Jones (2000) stressed the need for a transformational and visionary leadership
style together with a need for transparency. The Department of Trade and Industry
(2004) outlined the following six characteristics to help integrate CSR into business
decision-making across the full spectrum of business operations:
1. Understanding society: Understanding the role of each stakeholder in the
society.
2. Building capacity: Creating strategic networks and alliances.
3. Questioning business-as-usual: Being open to new ideas and adapting to new
ways of thinking.
4. Stakeholder relations: Identifying stakeholders, building relations with
internal and external stakeholders, engagement, and balancing competing interests.
5. Strategic view: View the environment in a strategic way.
6. Harnessing diversity: Respecting diversity and adjusting to different
situations.
CSR and Accountability
CSR accountability is complex and yet is required by all leaders, organizations,
stakeholders, and individuals seeking to insure integrity in their decision-making
(D’Amato et al., 2009). Dolan (2004) illustrated the factors that influence the
effectiveness of corporate accountability and sustainable leadership. He introduced the
following general principles:
1. The need for a leader to consider the business as part of a larger,
interconnected web of relationships that affect the company’s business long-term.
53
2. The need to realize the business culture that leaders create in reacting to
sustainable challenges.
3. The need to understand that leaders must see people as sources and not
resources of sustainability and acknowledge their contribution.
4. The need for a proactive stance to realize sustainability in the business process.
Frame (2005) addressed the need for behavior changes in donor organizations that
engendered cohesive processes for the evaluation of competitive bids that influenced the
supply chain towards achievement of CSR measures and promulgated company
disclosures regarding socially responsible investments.
Partnering With Stakeholders
Blowfield and Googins (2006) stressed that today’s business environment is
comprised of a multitude of business “actors,” each with a new role. The authors used
CSR as an umbrella term for various theories and practices that could encompass the
following:
1. Companies should have a responsibility for their impact on society beyond
legal compliance and liability for individuals.
2. Companies should have a responsibility for the behavior of other stakeholders
with whom they are doing business.
3. Businesses should manage their relationships with wider society for reasons of
commercial viability and to add value to society.
54
Hee (2007) showed that corporate leadership should have a holistic approach to
engaging with stakeholders and that the vital link between business and stakeholders was
leadership.
CSR Implementation and Organizational

Challenges
Lewicka-Stralecka (2006) identified opportunities for CSR implementation, as
well as limitations that required cooperation between business representatives and
stakeholders at all levels in order to mitigate. The author identified obstacles, such as (a)
the widespread negative image of business, (b) dysfunctional legal history, (c) corruption,
(d) companies in financial straits, (e) lack of ethical standards, and (f) high
unemployment. Successful CSR implementation requires transformational efforts by
government authorities, business leaders, and non-governmental organizations. Hatcher
(2002) voiced the need for business to speak up for business, push for greater
transparency, venture beyond mere compliance with national regulatory systems, fashion
new regulatory and trading environments, and shoulder the burdens of shaping a
modernized agenda. Integration of these elements into core business strategy would
greatly further the cause of CSR implementation at MNCs doing business in Palestine.
Performance Monitoring
Wood (1991) defined corporate social performance (CSP) for business
organizations as a system of principles, processes, programs, and observable policies as
they relate to the societal relationships of the firm. The author described three principles
55
of corporate social responsibility: (a) legitimacy, or authority, to define the relationship
between business and society; (b) public responsibility related to a company’s behavior;
and (c) managerial discretion. Wood further conceptualized processes of corporate social
responsiveness as comprised of environmental assessment, stakeholder management, and
issue management, which serve to minimize surprises emanating from a turbulent
environment and to facilitate apt response to changes in that environment (as cited in
Ansoff, 1984).
The outcome of the management system framework included corporate
expediting of social policies and development of social programs to achieve social
impacts. Steg et al. (2003) identified performance variables for their ability to model
sustainable development, which included three dimensions: economic, social, and
environmental. Economic performance refers to profitability and growth in the market.
Steg et al. described sustainable economic performance as consisting of value-added,
value chain, and economic externalities. Social performance focuses on relationships
with stakeholders. Steg et al. defined the social impact of performance variables on
stakeholders to include the well-being of employees, customers, community, suppliers
and competitors and listed specific performance indicators to measure a firm’s outcomes
in this arena.
The Global Reporting Initiative (GRI) (2006) devised by the United Nations
(UNGC, 2007) recommended an alternative framework to assess corporate social
performance. The (GRI) provides economic, social, and environmental sustainability
guidelines for measurement and reporting purposes. These guidelines recommend that
five sections be included in the reporting mechanism: (a) the vision and strategic view of
56
sustainability; (b) a profile of the company’s organization and how it is organized, its
operations, and stakeholders; (c) its governance structure; (d) its GRI content index, and
(e) environmental, social, and governance (ESG) performance indicators for
sustainability. Sharfman (1996) identified a widely known and accepted measure of
corporate social performance called the Kinder, Lydenberg, and Domini (KLD) (2010)
Social Performance Index. The author demonstrated construct validity of the KLD and
encouraged researchers to have confidence in the measure. The purpose of the KLD
index is to influence corporate proactive behavior towards sustainability. The KLD
Index is a rich source for the evaluation of social performance because it is based on a
wide range of data sources, including company surveys, expert panel assessments, and
disclosures made to the public. The index includes companies that have positive
environmental, social, and governance (ESG) records based on various standard
measures, such as (a) environmental stewardship, (b) community relations, (c) diversity,
(d) employee relations, (e) human rights, (f) product quality, (g) safety, and (h) corporate
governance.
Company performance measurements are based on the KLD’s evaluation of
attributes in terms of strengths (+) and concerns (-) that are further converted to scores
(KLD, 2010). For example, social ratings include the following: (a) the strength that is
an innovative giving program that supports non-profit organizations and that dedicates a
significant figure to charitable giving, (b) support for education, (c) support for
public/private partnerships pertinent to housing initiatives for the economically
disadvantaged, (d) retirement benefits, (e) health and safety programs, (f) innovative
initiatives primarily related to labor rights in its supply chain, (g) commitment to
57
management systems through ISO 14001 certification, and (h) reporting on a wide range
of social and environmental performance measures to increase transparency.
The KLD Social Concerns rating, which outlines weaknesses in corporate social
programming, on the other hand, provides a look at the negative social impacts of a
company’s activities in contrast to its social performance positives. The social
performance measure is determined by taking the net score of total social strengths and
total social concern and is labeled the “net KLD social score.”
The Global Reporting Initiative (GRI) (2006) is a non-binding and globally
recognized reporting tool. It is managed by an international NGO, and its certification is
managed by third parties. Some complain that GRI reports do not reflect an adequate
picture of progress towards sustainability but rather are a purchasable service to boost a
firm’s image. By contrast, the KLD is a socially responsible investment index, and its
judgments are based on past performance that projects future performance. According to
Ansoff and McDonnell (1990), extrapolation of performance by organizational units in
turbulent environments is unreliable. They added that to optimize a firm’s return on
investment (ROI), both the firm’s strategy and its responsiveness must match the
turbulence of the environment. Bowman and Haire (1975) explained that “while there is
not a one-to-one relationship between CSR and financial performance, nevertheless, CSR
is ‘a signal of the presence of a style of management that exceeds broadly across the
entire business function and leads to more profitable operation’” (p. 54).
Bruyn (1987) predicted a positive link between social performance and economic
performance. He dismissed the notion that there might be a tradeoff between them and
stated that the relationship between CSR and traditional performance was a synergistic
58
one. He added that social considerations in the investment process could enhance the
possibilities of economic returns, and the social and economic realms could be
maximized together. Porter and Kramer (2011) stated that the purpose of the corporation
must be defined as creating shared value that involved creating economic value for
society by addressing its needs and challenges. He added that a shared value perspective
should focus on improving growing techniques for better resource utilization and
strengthening a local cluster of supporting stakeholders to increase efficiency and yield
product quality and sustainability. Strategic CSR is integral to a company’s profitability
and competitive position. It leverages the unique resources and expertise of the company
to create economic value by creating social value.
Hillman and Keim (2001) found that CSR is positively related to shareholders’
values if activities are concerned with stakeholders who are directly related to the
organization (for instance, employees and customers, as opposed to mere participation in
social issues like community development or the environment). Goll and Rasheed (2002)
concluded that a positive relationship is dependent upon the business environment in
which the firm is operating. Lorton (2006) stated that performance on environmental
issues is greater in organizations where the environmental management system (EMS)
aggressiveness and EMS responsiveness were closely aligned with the level of
environmental issue turbulence experienced by the organization. Loebbaka (2008)
further promulgated that a significant positive relationship exists between an
organization’s safety management system (SMS) aggressiveness, its SMS
responsiveness, and the safety management system (SMS) posture and its performance on
safety issues.
59
Environmental Turbulence of MNCs
MNCs are faced with diverse stakeholder environments across their international
operations. Multiple constituencies with various objectives affect the firm’s strategic
behavior in addressing the final preferred objectives and rules of the game (Ansoff,
1984).
According to Ansoff (1984), determination of the preferred objectives is meant to
help a firm adapt through a legitimacy strategy that is part of the societal strategy. He
added that the legitimacy strategy analysis should bring together three ingredients: (a)
Stakeholder’s objectives are analyzed, (b) the legitimacy strategy analyses constraints,
and (c) the power field environment is analysed. Various researches have addressed gaps
in the business environment through forming alliances and interpersonal ties to manage
the firm boundaries. Prahalad (2004) stressed the involvement of multiple players in an
MNC’s strategic management of CSR issues, including local government authorities,
non-governmental organizations (NGOs), financial institutions, development agencies,
private enterprise, and civic organizations.
PCBS (2008) outlined the percentage of establishments in Palestine by ownership
as previously mentioned in Figure 5: NGOs 3.3%, central government 4.9%, local
authority .7%, and UNRWA and international organizations .4%. The remaining 90.7%
is constituted by private sector establishments. Figure 10 presents a prototypical MNC
with multi-stakeholders and provides the extent of their influence on the corporation’s
governance.
60
Host Country Gov. Customers and Stockholders Israeli policies of
(Palestine) users pose a Socially responsible closure regime and
Policies & continuing investment (SRI) restriction of
Regulations challenge to and engagement movement of people
(Investment laws) & business strategy activism and goods in West
PRDP Bank & Gaza
Multilateral Local civil society

institutions (World organizations and
Bank, IMF, etc.) to social and special
support lending interest groups
partnerships activism
MNC
Corporate
Int’l civil society Other companies
Organizations, leading CSR
NGOs aimed at benchmarks for
affecting MNCs sustainability in the
behavior market place
National & Int’l Suppliers Employee Local Unions and labor

Industry associations, Collaborate with Company HRM and & Int’l Labor
Chambers of suppliers for product work practices and Organization (ILO)
Commerce, WBCSD, design and services commitment to relations
code of conduct sustainability sustainability New regulations
Figure 10. MNC company governance and stakeholders.
61
Figure 10 depicts the multinational company (MNC) and its key stakeholders.
Key stakeholders include consumers, governments, international aid organizations, civic
groups, national and international industry associations, suppliers, employees, the
International Labor Organization (ILO), special interest groups, and other companies
acting as CSR leaders. Advocates and activists believe that the goal of any economic
actor should not be limited to economic gains but should aim to further the social welfare
of the host countries in which the MNCs operate. The significance of stakeholders’
engagement is to build social capital as a foundation for a company’s “license to
operate.” Stakeholders’ involvement can reduce risk by providing feedback such as early
warning signs of product safety issues, human rights violations, or environmental
concerns.
Some companies use the engagement process to identify ideas for new products
and services (United Nations Economic and Social Commission for Asia and the Pacific
[ESCAP], 2009). According to Jonker and Foster (2002), stakeholders could be
identified based on categories and the interests and concerns that come out of their
categories. This would facilitate incorporation of these interests and concerns into the
corporate strategy and avert misallocation of resources to non-stakeholders with
illegitimate interests and concerns. Jonker and Foster presented a table based on
categorization developed by CSR Asia, which outlined strategic stakeholder criteria.
They argued that for most companies it was best to avoid having too many stakeholders
in the process. This criterion defines the significance and effect of actions taken by
stakeholders. Table 4, below, displays strategic stakeholder criteria.
62
Table 4
Strategic Stakeholder Criteria
Broad Type Category Criteria
People or organizations that have already

Interest identified themselves as company
stakeholders by expressing an interest in the
company or concern about its activities.
Stakeholders who are likely to have a big

Reflective Stakeholders Impact impact on a company’s decision making and
potential performance (such as government
regulations and stockholders)
Stakeholders who are identified to make

Inclusive sure that the company’s coverage of
organizational issues is complete and ensure
all social expectations are addressed.
Stakeholders who are able to influence other

Influence stakeholders and the company’s
management and are therefore important to
help reach objectives.
Stakeholders who have particular

knowledge about a company, industry or
Strategic Stakeholders Informative
issues central to performance now and in
the future.
Stakeholders who are themselves highly

informed leaders to the extent that they are
able to identify and comment on future
Inclusive
trends, priorities, and critical events (i.e.,
other business leaders).
Adapted from Creating Business and Social Value: The Asian Way to Integrate CST Into
Business Strategies, by United Nations (UN), Economic and Social Commission for Asia
and the Pacific (ESCAP), 2009, p. 74, retrieved June 25, 2010, from http://www.unescap.
org/tid/publication/indpub2565.pdf
63
Understanding the impact of stakeholders’ issues and concerns helps MNCs
articulate their values, mission, strategy, and commitments and indicates how they
implement regulatory approvals processes, participation in measurement and reporting,
crises management, and their proactive involvement in their network of relationships (UN
ESCAP, 2009).
Factors Influencing FDI
This section cites research studies that explored the relationship between entry
barriers and foreign direct investment (FDI). Kahler (1983) summarized major strategies
for MNCs entering international markets. The commonly employed strategies are the
following:
1. Foreign licensing entry mode, wherein a firm in one country agrees to permit a
firm in another country to use the manufacturing, processing, know-how and trademark
or other skills provided by the licensor.
2. Joint venture entry mode, wherein an enterprise’s assets are pooled and
wherein shared ownership and control over property rights and operations are shared.
3. Wholly-owned subsidiary entry mode, wherein a company is completely
owned by the parent firm.
4. Turnkey operations entry mode, wherein a contractor handles all the details of
a project and hands over a facility as ready for operation. The contractor agrees to design
and build the physical plant and train local personnel in management of the company’s
processes.
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Robock and Simmonds (1989) presented alternative approaches by which MNCs
could penetrate the market. The alternative approaches they outlined dealt with licensing
and full-scale production and marketing. Harrigan (1984) presented another strategy of
entry mode pertinent to strategic partnership or the strategic alliance of two or more
multinationals. This strategic entry mode allows new ventures to combine technologies
and increase research capability, while offering cost reduction through joint production.
According to Business International Corporation (1980), the best choice of entry
mode depends upon both external and internal factors. The external factors address host-
country policies and controls, as well as size of markets and competitive conditions in
foreign markets. Concomitantly, the internal factors are comprised of characteristics-
related technology and products, minimum economic size-to-produce units, and company
willingness to assume risk.
In another study by the National Industrial Conference Board (1962), major
investment obstacles were addressed, such as shortages of managerial level employees,
unsatisfactory employment regulations and tax policies, unstable exchange rates,
inadequate infrastructure, and price controls. The study alluded to the idea that some
investors abandon plans due to lack of skilled labor, although labor is abundant. By
contrast, other investors reported that the low cost of labor compensated for any loss of
productivity due to skill level. According to the World Bank (2006), the Palestinian
territories faced closure policies due to the high cost to foreign investors per transaction.
The closure policies ruled out participation of foreign investment in Palestinian territories
in the following three distinct ways:
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1. Workers’ remittance
2. Current movement of goods and services
3. Future capacity to export
The closure policies had their biggest impact in the area of foreign investment.
They prevented producers from attaining minimum efficient scale, increased
transportation and other costs, and limited access to strategic planning, marketing, and
technology transfer mechanisms. All were important concerns and amounted to serious
impediments to the creation of an investment climate that encouraged foreign investment
(World Bank, 2006). Based on the above concerns, the PNA outlined a reform plan for
investment guarantees and incentives for foreign investors. It was derived from the
Investment Promotion Law No. 1 of 1998. The law guarantees foreign investors the
following:
1. The right to freely transfer financial resources outside Palestine, including
profits, capital, dividends and capital profits, wages and salaries, debt payments, interest,
management fees, and compensation for cancellation of licenses.
2. Investment Promotion Law: Article 22 of the Investment Promotion Law,
providing specific fixed asset exemptions (Israel/Palestine Center for Research and
Information [IPCRI], 2009).
According to the International Bank for Reconstruction and Development (IBRD)
(World Bank. IBRD, 2008), assessment of the investment climate in the West Bank and
Gaza identified and addressed three major areas necessary to the creation of an
investment climate to help the Palestinian private sector. These entailed the following:
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(a) restoring movement and access, (b) developing Palestinian private enterprise
capabilities, and (c) monitoring the performance of the investment climate.
In the article “Businesses for Middle East Peace-Building: A Framework for
Engagement,” Kidder (2006) argued that socially responsible MNCs could leverage their
participation for mutual economic advancement and encourage all sides to cooperate in
business dealings that promoted cross-border knowledge creation along the supply chain.
Kidder added that a carefully crafted coalition of international businesses, NGOs, and
prominent businesses could be organized to improve economic conditions for the two
nations. While the government lacked the financial ability to fund projects, MNCs were
likely to possess the capital required to design projects that were viable for the area.
According to Kidder (2006), the key argument for corporate involvement was the
prospect that significant investment in the region would reap substantial financial returns.
Where socially responsible businesses understood the stakes in creating sustainable
development in the region, there were profits to be made. Kidder added that businesses
wishing to support socioeconomic development could design strategies that ranged from
building and operating manufacturing facilities between the two borders to helping
Palestinians develop cottage industries to provide services, produce products, or assemble
parts for global corporations (Kidder, 2006).
Political Risk Factors and FDI
Schmidt’s research study (1986) explored the impact of political risk on foreign
investment. The study defined political risk as the application of host government
policies that constrained the business operations of a given foreign investor. He
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subdivided risk into three main categories: (a) transfer risk, concerned with capital
payments; (b) operational risk, concerned with threats over local source or content; and
(c) ownership control risk, concerned with the possibilities of expropriation or
confiscation. Kennedy (1988) defined political risk as the risk to strategic, financial, and
social policies or events related to political instability (terrorism, riots, coups, civil war,
and insurrection).
Political risk was a top concern for corporate foreign investors when venturing
into emerging markets (MIGA, 2009). For developing countries, political risk was a
major factor in the investment decision-making of foreign investors (Okoroafa, 1986).
Due to financial crises, market volatility, and shrinking of FDI investment in developing
countries, the prominence of political risk would increase in the coming years.
According to MIGA survey reports, the major constraints to foreign investment in
emerging markets were the following:
1. Increased government intervention
2. Limited market opportunities
3. Infrastructure capacity
4. Access to qualified staff
5. Corruption
6. Access to financing
7. Macroeconomic instability
8. Political risk
Corporate investors who were surveyed for this report ranked political risk among
their top three concerns when investing in developing countries; the other two included
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macroeconomic stability and access to financing (MIGA, 2009). The report cited that
sustained need to manage risk through informal mitigation mechanisms, such as
government and local community intervention, was present. The study suggested that
most investors regarded political risk in their investment destinations as manageable;
however, a much larger proportion of investors seemed to seek political risk insurance
(PRI) when venturing into markets considered the riskiest.
El-Said and El-Hennawi (1982) found that favorable conditions for profit
repatriation and capital had a positive impact on management decisions to invest in
developing countries. In his research The Private Sector and Conflict Prevention
Mainstreaming: Risk Analysis and Conflict Impact Assessment Tools for Multinational
Corporations, Campbell (2002) addressed five main factors that affected the investment
and operational decisions of MNCs. They were as follows:
1. Geographic impact of conflict
2. Severity of conflict
3. Attitudes and policies of the government and opposition
4. Sector of industry
5. Investment structure
According to MIGA (2009), the relationship supported the view between political
risk variables and FDI that multinational companies did take into account political risk in
their investment decisions.
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Strategy and Social Responsibility
As a strategic concept, social responsibility and ethical values have been
addressed by business pioneers and authors since the 1950s. Bowen published his
influential book Social Responsibility of the Businessman in 1953, marking the beginning
of social responsibility as an entity in academic literature. Bowen explained that social
responsibility referred to the obligation of business people to pursue policies, make
decisions, and follow those actions and objectives that relate to the values of a given
society. Andrews (1971) acknowledged that there was no way to divorce the decision
determining the most sensible economic strategy from the personal values of those who
made the choice. According to Andrews, corporations should act in accordance with
ethical norms that embraced social responsibility as those mores would reflect the beliefs
of societal leaders as to what was right and what was wrong.
Ansoff (1965) also purported that there are non-economic, socially-based
influences that affect the objectives of the firm. These non-economic influences are
comprised of philanthropy, social responsibility, ethics, social status, and reputation.
Ansoff argued that in order to understand these non-economic influences, evaluators and
CSR decision-makers should single out those influences that have strong bearing on the
firm’s objectives and assess the extent of their effects on the master list of the firm’s CSR
goals.
The social responsibility concept has been accepted by many companies, with just
as many critical voices holding forth against it. Friedman (1970) claimed a business
could not have responsibilities: The job of a business executive was to create wealth for
shareholders and do whatever the shareholders wanted, i.e., to make money. Friedman
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reduced to one the social function of business: to benefit shareholders, but he did not
deny the role of ethics in an organizational operation (i.e., avoid fraud and honor
contracts). On the other hand, Drucker (1984) believed that the first social responsibility
of business was to be profitable and form capital, and the second responsibility of a
business was to transform social problems into economic opportunities. He also claimed
that if the first one was not fulfilled, the second would not be fulfilled either. He argued
that the second social responsibility included turning social problems into economic
opportunities and benefits, productive capacity, human competence, good jobs, and
wealth.
While the notion of corporate social responsibility was abstract and generic when
it began in the 1950s, it began to be replaced by corporate social responsiveness or CSR
(Ansoff, 1984). This raised the questions of whether, how exactly, and with what
consequences companies could and should adapt to specific societal goals (Ackermann &
Bauer 1976; Frederick, 1978). When the concept of corporate social performance (CSP)
emerged, Sethi (1975) differentiated between corporate social performance and corporate
social responsiveness. He argued that behind the idea of social responsiveness was the
concept that businesses must not only respond to but anticipate public concerns.
A comprehensive framework that included corporate social responsibility and
corporate social responsiveness was integrated into the concept of corporate social
performance (Jamali, 2007). In 1979, Carroll differentiated between four types of
corporate social responsibilities: economic, legal, ethical, and discretionary. In 1991, he
revisited this definition of CSR and organized it into a conceptual pyramid of multiple
corporate social responsibilities. He added that economic and legal responsibilities were
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“socially required” (i.e., mandatory), ethical responsibility was socially expected, and
philanthropy was socially desired. Each of these responsibilities comprised an essential
component of the total social responsibility of the business (Jamali, 2007). Early models
of corporate social performance focused on differentiating between different dimensions
of the CSR concept, such as the prospective, perspective, and dimension content of CSP.
Wood (1991) revised Carroll’s model and looked into previously unexamined aspects of
corporate responsible behavior. She differentiated CSP into principles and processes,
where CSR was expected to create positive outcomes through socially responsible
behavior:
1. Principles of corporate social responsibility, including legitimacy (on the
institutional level), public responsibility (on the organizational level), and managerial
discretion (on the individual level).
2. Processes of corporate social responsiveness, such as environmental
assessment, stakeholders’ management issues.
3. Outcomes of corporate behavior, ranging from social policies and social
programs to social impacts.
According to the Rhetoric and Realities in CSR (RARE) (2005) project approach
to analyzing CSR in Europe, two different forms of CSR processes exist (p. 18). RARE
holds that the two legs it forms of CSR are the “built-in” and “bolt-on.” When CSR is
“built-in,” it constitutes an integral part of the company’s operations and includes efforts
to (a) make corporate processes more sustainable; (b) improve the social properties of
products and services; (c) promote sustainable marketing; (d) manage raw material
extraction and “greening” of material sources; (e) create sustainable production and
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distribution processes; and (f) promote fair trade practices and consumer information and
compliance with ILO labor standards, including the renunciation of child labor. The
instrument of CSR is defined as a tool to facilitate the incorporation of sustainability
concerns into a company’s operation.
On the other hand, when CSR is “bolt-on,” companies engage in socially
beneficial initiatives and activities beyond their core business operations by collaborating
with external stakeholders to integrate the objectives of the company as part of their
mission statement.
Other authors detailed economic and environmental outcomes and impacts into
their analysis that extended far beyond the social ones (Steg et al., 2003; Swanson, 1995).
The Triple Bottom Line approach, where a firm’s performance is measured by not only
its financial results but also its societal and environmental impact, is one of the firm’s
accountability paradigms to consider (Elkington, 1998). On the other hand, the
stakeholder theory made an important contribution to CSR discourse by challenging the
stockholder paradigm made famous by Milton Friedman (1970), who considered the
maximization of financial returns to stockholders a major social responsibility of a
company. According to Freeman (1984), putting the stakeholder theory into practice is
the most responsible and effective management of any company, as it requires balanced
consideration and attention to the legitimate interests of all stakeholders.
Based on these doctrines of what constitutes good management behavior, a
growing number of business experts have begun to argue that profit and social good can
be integrated into a company’s mission. The business will “do well by doing good”
through innovating practices and products aimed at improving the lives of the world’s
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poorest citizens. In a 2002 article on strategy and business titled “The Fortune at the
Bottom of the Pyramid,” Prahalad and Hart argued that real opportunities for both profit
and socially responsible investment lay in the 4 billion people at the bottom of the
economic ladder. Tapping into this market, they argued, would require multinational
corporations to reconsider their existing profit structures. Further, they stressed that the
bottom-of-the-pyramid markets ought to become part of a firm’s core business, and these
markets could not be left solely to corporate social responsibility (CSR) initiatives that
were after the fact.
Strategic Corporate Social Responsibility (CSR)
Multinational companies face massive challenges in their business operations, a
number of which are classified under “sustainable development.” Based on the literature,
there is an increasingly intense expectation that businesses could contribute to sustainable
development by changing their strategies and decision-making processes with regard to
socially responsible practices. The United Nations Conference on Environment and
Development (UNCED) (1992), also known as the Earth Summit, which took place in
Rio de Janeiro, Brazil, discussed solutions for global problems pertaining to sustainable
development, such as poverty, war, and preservation of natural resources. The
conference stressed that multinational corporations can play a role in the preservation of
natural resources by taking effective measures to prevent environmental degradation. For
example, the Organization for Economic Cooperation and Development (OECD) (2006),
an organization that acts as meeting grounds for 30 countries, proposed guidelines
pertinent to the disclosure of information, employee relations, environmental
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management, and bribery and competition, and then endorsed comprehensive self-
policing rules to investigate violations of these rules.
Gugler and Shi (2008) addressed corporate social responsibility for developing
multinational corporations in developing regions and explored the practical gap between
them and the developed countries in relation to CSR. They concluded in their study that
corporations ought to instigate innovative restructuring processes and technological
upgrades in order to enhance productivity and efficiency. These upgrades compensate
for the initial costs of such innovations and lead to competitiveness; hence, CSR becomes
strategic in nature. The Global Competitiveness Report confirmed that CSR is an
important component of a firm’s sophistication (World Economic Forum [WEF], 2006).
One of the well-known pioneers in strategic CSR is Michael Porter. His studies
were the first to link CSR and the profitability potential of companies that interlaced
social goals with financial ones. Porter and Kramer (2006) wrote that for CSR to be
strategic, it should contribute to the firm’s value chain practices and/or improve the
context of competitiveness. Porter (1990) identified 10 cost drivers vital to value chain
activities. Some of these drivers are economies of scale, capacity utilization, and the
firm’s policy of cost differentiation, wherein a firm develops its cost advantage by
controlling these drivers better than its competitors. According to Porter, two dimensions
for competitiveness should be addressed: a macroeconomic dimension that deals with the
political, legal, and social context of generating prosperity; and the ability of a firm to
create valuable goods and services using efficient methods. Porter added that the
microeconomic foundations of productivity rest on three interrelated areas: (a) the
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sophistication of, (b) the capabilities of, and (c) the quality of the microeconomic
business environment in which they operate.
Burke and Logsdon (1996) explored what it means for CSR to be strategic. They
conceptualized five dimensions of strategic CSR that represent possible features, results,
and outcomes from CSR behavior: (a) centrality, (b) specificity, (c) proactivity, (d)
voluntarism, and (e) visibility. They postulated that CSR activities are of strategic
importance to the firm, and CSR initiatives should satisfy the criteria of the dimensions
presented as follows:
1. Centrality: Strategic CSR initiatives should be close to the firm’s mission and
objectives and linked with organizational goals to yield expected benefits.
2. Specificity: Strategic CSR initiatives are expected to be designed specifically
to benefit the firm and should be able to capture and assimilate benefits from CSR
initiatives concerned with social and environmental issues.
3. Proactivity: Strategic CSR initiatives should anticipate the dynamics of
stakeholders’ expectations of changed socioeconomic, political, and technological trends
and opportunities. Pro-activity refers to the propensity of a company to take measures in
advance to counter future social and environmental issues.
4. Voluntarism: A strategic CSR initiative denotes the willingness to engage in
pro-active social responsibility.
5. Visibility: A strategic CSR initiative refers to the extent to which internal and
external stakeholders can view and recognize CSR.
Porter and Kramer (2006) addressed the link between competitive advantage and
the corporate social responsibility (CSR) to embed a social dimension into the core
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business strategy. They offered inside-out and outside-in approaches to map the social
impact of the value chain and shift from reactive-defensive posture to a proactive-
integrated posture. This would help to identify positive and negative social impacts in
the value chain process. These inside-out links might range from hiring policies, layoffs,
and health benefits to employee retention. In addition to understanding the social
ramifications of the value chain, effective CSR requires better understanding of the
company’s competitive context to improve productivity and execute strategic CSR.
According to Porter and Kramer (2006), responsive CSR depends on addressing
the social harm the business creates. They argued that companies should address social
harm issues and capture opportunities that make real differences to society by integrating
them into their core businesses. According to RARE (2005), management carries out a
strategic approach when companies proactively integrate sustainability management
issues into their operations.
The need to focus on CSR in developing countries has been strenuously debated.
Visser (2007) questioned the role of business in tackling these critical issues and the
rationale for focusing on CSR in developing countries. These countries potentially have
rapidly expanding economies and represent lucrative growth for business (IMF, 2006),
where globalization, economic growth, investment, and business are likely to have the
most dramatic social impacts (United Nations Development Programme [UNDP], 2006;
World Resources Institute [WRI], 2005) and where a distinctive set of CSR challenges
face these countries.
London and Hart (2004), in their article “Reinventing Strategies for Emerging
Markets: Beyond the Transnational Model,” suggested that firms entering the markets of
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developing countries might not be able to rely on strategies that are, like traditional
models, based on overcoming limitations in the business environment, but rather are
based on social context. They recommended that multinational companies reinvent their
strategies by developing relationships with host countries.
Porter and Kramer (2011) wrote that the most important thing a corporation could
do was to contribute to a prosperous economy because with that contribution, the
corporation could change the state of affairs with regard to social welfare. Porter and
Kramer added that CSR was not about making philanthropic contributions to local
charities or lending a hand during disasters, but about efforts to find shared values in
operating practices and in the social dimensions of the competitive context. They added
that NGOs, governments, and companies must stop thinking in terms of corporate social
responsibility and start thinking in terms of corporate social integration, which fosters
economic development; the difference in the former is about periodic social rescue and
the latter is about being a constant, reliable, big-picture presence.
Proactive and Reactive Corporate Social

Responsibility (CSR)
The United Nations Research Institute for Social Development (UNRISD) (2008)
proposed four CSR approaches: (a) in-active, (b) reactive, (c) active, and (d) pro-active
(cf. Preston & Post, 1975; Tulder & Zwart, 2006). The continuum of CSR business
strategies was conceptually related to what was required and what was desired, or
between the “morality of duty” and the “morality of aspiration” (Michaelson, 2006). The
four approaches are summarized herein:
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1. The in-active approach reflects the classical notion of Friedman that the only
responsibility companies can have is to generate profits. This is an inward-looking
(inside-in) business perspective. The firm’s behavior is concerned with “doing things
right.” CSR thus amounts to “Corporate Self Responsibility.”
2. The re-active approach focuses on efficiency but with particular attention to
the mitigation of wrong-doings. This approach requires an outside-in orientation. It aims
at minimizing any economic impact, bad labor conditions, corruption, human right
abuses, and the management of primary stakeholders. Management in this case takes the
reactive approach to protect the firm’s reputation and restore corporate legitimacy (Lodge
& Wilson, 2006). CSR thus translates into “Corporate Social Responsiveness.”
3. An active approach to CSR is inspired by ethical values and virtues.
Management’s perspective is strongly outward-looking (inside-out), with a premium on
positive contribution to societal good and substantial philanthropic initiatives as an
integrated core activity. For instance, companies create jobs with appropriate wages,
which in turn helps to alleviate poverty in order to penetrate new markets. CSR takes the
form of “Corporate Social Responsibility.”
4. The pro-active CSR approach is characterized by interactive business
practices, where the management involves external stakeholders’ rights from the
beginning of an issues life-cycle. The “inside-out” and the “outside-in” approaches
define trends, threats, and opportunities in and to the firm’s business environment
(Ansoff & McDonnell, 1990). This form of corporate social responsibility creates
strategic networks of entrepreneurial partnerships between government organizations,
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NGOs, civil society social organizations, and local business enterprises. The CSR
approach implies medium-term profitability and long-term sustainability.
Tulder and Zwart (2006), in their book International Business-Society
Management: Linking Corporate Responsibility and Globalization, discussed “linking
social responsibility” and listed four approaches that a company could adopt when
responding to management issues. They suggested that the occurrence of events to be
managed was bound to context and time: that which could be considered a problem in
one societal system might not be a problem in another societal setting or another moment
in time. They added that an MNC’s management should diagnose the environment based
on “inside-out” and “outside-in” approaches and proactively respond to societal
challenges through dialogue with stakeholders.
In the case of sustainable development in Palestine, the drivers for CSR are needed
for political stability, socioeconomic priorities, and governance. This is where an MNC
with stakeholder engagement can take leadership in the definition of the societal needs
pertinent to its location in Palestine through a social agenda that is part of the core
business strategy. With a substantially responsive CSR program, a company chooses to
be a good corporate citizen and serve social concerns for stockholders, and it might help
mitigate existing or anticipated adverse effects from its business activities along with its
value chain. Porter and Kramer (2006) proposed a framework that could help companies
strategize societal concerns that fall into three categories:
1. Generic issues that are important to society but either could affect the
company’s operations or influence their long-term profitability.
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2. Value chains that are significantly affected by the company’s activities in the
ordinary course of business.
3. The social dimensions of a competitive context that relates to the external
environment, which would affect the underlying drivers of competitiveness in locations
where the company operates.
There is an increasing political and business debate about a proactive role for
companies, governments, and communities wherein they would mutually develop a
process aimed at balancing economic growth with environmental sustainability and social
cohesion. According to the World Business Council on Sustainable Development
(WBCSD) (2010), the new meaning of corporate social responsibility embraces the
integration of social and environmental values within a company’s core business
operations, with engagement of its stakeholders in the process, to improve the welfare of
societies.
From a business perspective, CSR has different meanings depending on the
MNC’s strategic behavior in terms of forming its responses to its environment. In this
research, CSR is defined as a means to respond to sustainability challenges. Ansoff and
McDonnell (1990) postulated that an MNC’s strategic behavior could take the course of
either a responsive-reactive or a strategic-proactive way to respond to the environment
based on its turbulence level. In the responsive-reactive approach, companies perceive
sustainability issues as risks that should be mitigated to maintain the firm’s reputation for
appropriate behavior and be worthy of its license to operate. On the other hand, when
companies proactively integrate a strategic issue management system into their
operations, management would perceive it as an opportunity rather than a risk to their
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reputation or operations. The strategic and systematic integration of CSR into the
company’s strategy allows companies to respond to societal needs while satisfying
company and stakeholder financial goals. From the perspective of stakeholders,
proactive CSR can be viewed as a specific form of socioeconomic relationship wherein
social and financial goals are negotiated in an ongoing way between the company and its
stakeholders (Ansoff, 1984). According to Porter and Kramer (2006), companies should
design their affirmative corporate social agenda to extend beyond harm avoidance to
embrace programs for social progress.
According to Kidder (2006), a carefully crafted coalition of international
businesses, NGOs, and prominent businesses could be organized to improve economic
conditions for the two nations (Israel and Palestine), irrespective of the political conflict
shadowing the region. The Palestinian-Israeli business region is ripe for such socially
responsible behavior, where MNCs could have significant impact through pro-social
programs. Such programs would create jobs, lower despair, reduce tension, and promote
stability in the region. Kidder argued that socially responsible MNCs could leverage
their participation for economic advancement and encourage Palestinians and Israelis to
cooperate in business dealings to promote cross-border cooperation along the supply
chain. He supported partnerships for manufacturing, development of cottage industries to
provide products and services, and creating micro-lending enterprises for local
entrepreneurs to promote economic growth and create jobs as a form of sustainable
development in Palestine.
The case of the National Beverage Company (NBC), a local franchise of Coca-
Cola and one of the few franchises of a foreign multinational with a branch in the West
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Bank/Gaza, exemplifies a corporate social responsibility initiative in practice. A report
conducted by Harvard’s Kennedy School, entitled the Harvard Kennedy School:
Corporate Social Responsibility Initiative: Business Partnership for Development: The
Case of National Beverage Company in the West Bank and Gaza (Murphy & Nelson,
2009), detailed NBC’s contribution to local sustainable development in Palestine.
Specifically, it discussed the company’s contribution to job creation, investment in
human capital, the production of safe and affordable products, their support of local
enterprise development, and, mainly, their ability and willingness to sustain operations in
a conflict-affected zone. The report also advocated the development of partnerships of
this pro-social nature between other additional local corporations, NGOs, local and
international donors, and government. Again, the alliance is formed around a
combination of financial strategies and programs for social good that benefit the
community.
Complex and constantly changing, the situation on the ground poses both
challenges and opportunities for companies seeking to do business in Palestine. Despite
the business climate shaped in part by political instability, weak institutions, security
concerns, challenged access to resources, and restrictions on the movement of people and
goods, a number of private firms achieved financial success and, in parallel, facilitated
local development outcomes through innovative strategies. Murphy and Nelson (2009)
emphasized that supporting the creation and growth of enterprises could bolster
employment and build local capacity, both essential to the development of a private
sector and to the strength of a community.
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Micro-enterprises are those with four or fewer employees, as defined by the
World Bank (2009b). They are informally organized or firm-owned businesses, and they
number around 110,000 in the area around Palestine. The employment impact of NBC
on the community seemed to have made a blueprint for other companies to follow, with
NBC’s outright employment of 350 and an indirect employment of 3,000 more in the
company’s three Palestinian plants. On the other hand, the United States Department of
State (2008), in its West Bank and Gaza Investment Climate Report (Murphy & Nelson,
2009), indicated that the Israeli-Palestinian conflict, coupled with internal Palestinian
issues, had a significant negative impact on the development of the Palestinian economy.
The restricted transport of goods and people raises transaction costs and limits economies
of scale for firms operating in Palestine. For instance, because of check-point
restrictions, NBC’s logistics cost is reported to be three times that of other bottlers in the
Middle East.
To respond to challenges regarding product safety and sustainability in its value
chain, NBC was able to implement Coca-Cola quality control global standards and
processes for the production of safe and affordable products. NBC was able to secure
and execute more than 30 monitoring programs along its production lines that included
daily testing of physical, chemical, and microbiological conditions, thus transferring
technical knowledge to local managers. The company invested in local consumer
research that led to the introduction of new products, including water and juice that are
more affordable. NBC decreased production cost-per-case by an average of 25% due to
efficiency practices and innovations in manufacturing and logistics and by fleet updating.
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NBC responded to the challenges of closure policies to create distribution by innovating
along its supply chain.
The company employed satellite depots outside main cities that could respond to
changes in road blocks and delivery routes and that further maintained drivers’
autonomy. These measures improved the bottom line and enabled the company to serve
consumers and thus sustain employment. The company increased the heights of its
warehouses to allow for stockpiling, which is better utilization of storage space, and built
its own water wells to maintain operations in a region where water is scarce. According
to the Harvard Kennedy School report (Murphy & Nelson, 2009), NBC is one of the
smallest of Coca-Cola bottlers in the Middle East and the most profitable. NBC’s
profitability and financial success demonstrate that it is possible to be financially
successful under these challenging conditions in Palestine and yet respond to societal
needs to support local economic and social development.
NBC’s corporate social responsibility initiative is a prime example of the “built-
in” and “bolt-on” processes as legitimate forms of CSR. Where CSR is “built-in,” NBC’s
efforts make processes more sustainable, improve social properties, and promote
sustainable marketing, sustainable resource management in raw material extraction, and
the greening of sourcing decisions, as well as production and distribution processes
resulting in success on all the important levels. The company supported philanthropic
activities to meet local humanitarian needs, developed local human capital by focusing on
training and vocational programs, provided benefits and incentives for its employees,
paid employees in Gaza irrespective of their ceased operation, and provided equal
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opportunity for women. The instrument of CSR was defined as a tool to facilitate the
incorporation of sustainability concerns into a company’s operation.
On the other hand, where NBC’s CSR policies were “bolt-on,” the company
engaged in socially beneficial initiatives and activities beyond its core business
operations by cooperating and collaborating with external stakeholders. Murphy and
Nelson (2009) stated that lack of access to capital is one of the most difficult issues
facing Palestine, and this lack of access is due in large part to the struggles MNCs face
when attempting to establish branches in undeveloped, strife-torn countries.
To combat reluctance of investors to put financial resources in unstable regions,
aid agencies and private investors have created programs to reduce political risk and
uncertainty. For instance, in partnership with the non-profit Middle East Investment
Initiative (MEII), the Overseas Private Investment Corporation (OPIC) established three
initiatives to leverage public and private funding. These initiatives established a political
risk insurance policy that covers losses from trade disruption and political violence and a
loan guarantee program for increasing access to affordable home mortgages. According
to the Palestinian Reform and Development Plan, the private sector is the engine for
sustainable development and a critical source for the stable employment that is the
foundation of a productive economy in the West Bank and Gaza (2008-2010).
To conclude, this study investigated the role of multinational companies in
sustainable socioeconomic development in Palestine. It explored the role of
multinational corporations in the socioeconomic welfare of their host countries, as
evidenced by their corporate social responsibility policies.
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Chapter 2B
RESEARCH MODEL AND SUPPORTING
LITERATURE
This chapter presents the research model and a literature review. The research
questions and associated hypotheses, as well as conceptual and operational definitions of
the variables relevant to the research study are also provided. The primary framework of
this research study was based on Dr. Igor Ansoff’s Strategic Success Paradigm and on
Michael Porter’s Corporate Social Responsibility Strategy Integration and Stakeholder’s
models.
Research Model
Generally speaking, a multinational corporation’s social responsibility program
should be an integral part of the overall strategic management of the organization. The
research model was identified as part of the Global Model shown in Figure 8 and
illustrated the close relationship between legitimacy and social responsibility programs.
The legitimacy strategy is based on the stakeholders’ intent to provide a bargaining
approach to deal with environmental needs and to define the preferred objectives of the
firm by way of pro-social activities. Corporate social responsibilities (CSRs) are the
result of the constant interplay between the needs of the business and its stakeholders and
the needs of the society in which the company operates, in this case, a “host country,”
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where ostensibly the culture and everything that springs from it is different from the
country where the company is headquartered.
Based on an MNC’s perception of turbulence, a range of strategies exist from
which the firm can select to overcome the turbulence and even thrive as the turbulence is
embraced. The success of the CSR strategy depends on the internal CSR capabilities of
the firm, which are functional, such as research and development, marketing, production,
or general management capability. As the environmental turbulence level changes
quantitatively and qualitatively, so does the firm’s strategy—capability couplings have to
change to fit the turbulence level for optimal organizational performance.
The research model reflects MNC strategy “aggressiveness” and MNC capability
“responsiveness,” both of which influence the strategic CSR posture of the MNC. The
research model describes two gaps, the MNC strategy aggressiveness gap and the MNC
capability responsiveness gap. These are defined respectively as the difference between
the perceived level of environmental turbulence and the reactive-to-proactive nature of
MNC CSR posture to MNC activities. This study hypothesized that as the absolute value
of MNC strategy aggressiveness gap decreased, performance of the MNC increased.
Similarly, as the absolute value of MNC capability responsiveness gap decreased,
performance of the MNC increased. The MNC CSR strategic posture is, then, theorized
to have a significant relationship to the overall performance of MNC.
This research aimed to answer some fundamental questions regarding the needs of
the Palestine region in terms of business development in the 21st century. It also aimed to
provide a very current picture of why the area is ripe for CSR policy and why and how
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multinational companies that move into the market there can enact change that will be
both good business and good corporate social behavior.
The social, political, and business environment in Palestine is characterized by
instability and severely challenged socioeconomic development that influences every
facet of MNC strategic behavior, from stakeholder relations to human resources to
environmental impacts. The region has seen the frequent, unpredictable, and surprising
occurrence of uprisings and blockades that make the business environment complex,
constantly changing, and volatile. The level of environmental turbulence in the West
Bank/Gaza region is reflected in the complexity of the business environment. Change is
often reactive rather than proactive due to the constancy of chaos. Successful, that is,
proactive rather than reactive, corporate responsibility strategy requires its integration
into MNC’s core business strategy. Multinational corporations’ responsibilities (CSRs)
are illustrated in Figure 11, The Research Model, below.
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Figure 11. The research model.
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Strategic Success Paradigm
Ansoff and McDonnell (1990) formulated the Strategic Success Paradigm (SSP)
to define the relationships between a firm’s performance and its environmental
turbulence and between strategy aggressiveness and capability responsiveness, as they
ultimately relate to strategic posture. The Strategic Success Paradigm provides a
framework for diagnosing the future prospects of a given firm. This model has been
empirically validated through the work of several authors, including Lewis (1989),
Moussetis (1996), Abu-Rahma (1999), Lorton (2006), Kelly (2008), and Loebbaka
(2008). This research study evaluated the role of sustainable corporate social
responsibility programs (CSRs) as related to Ansoff’s Strategic Success Paradigm.
MNC Issue Turbulence
The level of “environmental turbulence” describes the types of opportunities,
threats, and trends in the environment that an MNC faces in its international operations.
Palestine is characterized by, and encumbered by, a small market and an uncertain
political and business environment, which creates multifaceted threats, surprising trends,
and bountiful opportunities. MNCs must vigilantly watch and measure these conditions
for relevance to their processes and policies. On the other hand, the continuation of
violence, border crossing, and security procedures all hamper the free movement of
goods and people. Consequently, MNCs require review of their economic viability, as
well as their political risk, such that they protect their FDI.
There are also important issues that must be resolved by the Palestinian Authority
(PA), such that MNCs continue to attract FDI and to promote a confident investment
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climate. In addition, there are key national priorities that the PA outlines in its PRDP
plan that promote a viable climate for investors. These are comprised of contingencies,
such as (a) bringing the rule of law to the Palestinian territories, (b) combating violence,
(c) managing the Palestinian internal administrative affairs, (d) implementing institutional
reforms, and (e) developing a supportable infrastructure and economy.
According to Ramirez, Selsky, and Heijden (2008), CSRs serve as a platform for
common grounds where organizations and their stakeholders can realize both their
corporate objectives and societal needs. Their findings suggested that turbulence might
be mitigated with the help of CSR, if CSRs were implemented in a manner that ensured a
positive, stabilizing influence. Ramirez et al. added that stakeholders used the channels
of CSR to promote their societal objectives. For instance, stakeholders might exert
influence on the firm from within, influencing investors in socially responsible
investments (SRIs). Employees might exert pressure on the firm for better working
conditions and better pay. Non-governmental organizations (NGOs) might exert pressure
on the firm that challenges corporate legitimacy through boycotts. Society at large might
exert pressure in one form or another, if the members’ interests were not taken up
adequately by the political system.
The delivery of shareholder value, while also promoting societal value for doing
well while doing good, is a desirable scenario for businesses in developing countries. In
developing countries, CSRs tend to be weak, with serious macroeconomic constraints
that might concentrate company attention onto issues of basic viability and on securing
shareholders’ returns (Jamali, 2007). To respond to high levels of turbulence in the
environment, Ansoff and McDonnell (1990) developed a “real time” issue management
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response system to deal with fast-moving discontinuities that surface and affect a firm’s
ability to operate. This issue management system helps organizations rapidly detect and
respond to changes in the socio-political environment as they emerge. The turbulence
characteristics of these trends may crystallize into an issue that elicits the attention of
organizational management and stakeholders, such that leadership decision-making
processes get underway. The characteristics of MNC environmental turbulence presented
in Table 5 are drawn from Lorton (2006) and Loebbaka’s (2008) environmental
management systems dissertations and Ansoff and McDonnell’s Strategic Success
Paradigm. The five levels of MNC issue turbulence correspond to the spectrum of
strategic behaviors that are applicable to this research study.
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Table 5
Level 1 2 3 4 5
Turbulence Repetitive Expanding Changing Discontinuous Surprising

Characteristics
Complexity of Not at all Slightly Moderately Usually very Always

Issues complex complex complex complex highly
complex
Pace of Rare Time to Must respond Must catch up Always

Change respond quickly to change changing
Predictability Changes are Easily Usually Predictable, Unpredictable

of Change rare predictable predictable but some
surprises
The complex way organizations understand themselves in relation to stakeholders
sometimes requires major transformations with respect to policies and, in this case, to
policies specific to sustainable development (D’Amato, Henderson, & Florence, 2009).
According to Berkhout (2005), corporate social responsibility can be a strategic engine
for long-term corporate profit and responsible social development, even where there are
complex, dire issues to be dealt with. While there are challenges to daily operations
under the principles of CSR, companies can still balance their social and environmental
responsibilities with their responsibility to earn a profit (Berkhout, 2005).
To date, there has been little discussion about transformational efforts to build an
MNC role in sustainable socioeconomic development around the world (Boyle &
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Boguslaw, 2007). This research, which studied the role of MNCs in sustainable
socioeconomic development, specifically in the troubled region around Palestine, is
unique as it hypothesized strategic CSR integration with core MNC business strategies
with the larger goal of creating sustainable development that further leads to a secure,
peaceful, sustainable world.
MNC Strategy Aggressiveness
This study examined the advantages of integrating strategic CSR into a firm’s
core business strategy. Successful corporate responsibility involves policy development
between an MNC and its stakeholders. The CSR management system aggressiveness
concept represents the mindset that MNC managers conceive to enact an overall CSR
perspective more strategically into their business operations. To not do so, for instance,
failure to satisfy consumer demands or provide acceptable pricing for safe products,
affects consumer confidence. To counter this requires organizational capability
responsiveness that meets the changing demands of various stakeholders, as well as
consumers. According to Clarkson (1995), an organization’s capability of satisfying
stakeholders’ demands is a key factor that determines the organization’s competitive
advantage.
Process Dimension of CSR “Built-in” and “Bolt-on”
According to the RARE project’s Rhetoric and Realities: Analyzing Corporate
Social Responsibility in Europe, CSR sustainable management systems take two different
forms: the “built-in approach” and the “bolt-on” approach. The “built-in approach” deals
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with building responsible behavior into the process. In addition, it includes efforts to
make corporate processes more sustainable, thereby improving the social properties of
the products and services tailored to host countries. Specifically, it strives to promote
sustainable consumption, sustainable extraction of raw material, greening of production
and distribution processes, fair trade practices, and consumer information. Additionally,
it works to enforce compliance with ISO 26000 guidelines for corporate social
responsibility with respect to human rights and with the ILO’s labor standards, especially
as regards renunciation of child labor, and it supports efforts to increase women’s
participation on different management levels. Through a CSR management system,
“change management” becomes an integral part of a firm’s strategic posture and can
create a bottom line impact.
The second form, the “bolt-on” approach, deals with company engagement with
pro-social initiatives beyond its core business operations and strategically can be linked
to the scope of business as the very raison d’être of the company. It is comprised of
strategic philanthropic activities, partnerships, and, most importantly, policies to manage
negative externalities in cooperation with external stakeholders.
The two processes can be considered as a continuum with management systems
“building in” responsibilities beyond compliance with regard to both goals and measures
followed by codes of conduct and reporting activities, while contributing at the same time
to sustainable development. The CSR management system aggressiveness requires that
the firm’s top management craft a CSR plan to transform the firm’s behavior. The
elements that contribute to CSR sustainable management system aggressiveness are
derived from the elements of strategic aggressiveness in Ansoff’s Strategic Success
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Paradigm (Ansoff & McDonnell, 1990). Table 6 summarizes the five levels of CSR
management system aggressiveness that correspond to the five levels of MNC issue
turbulence.
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Table 6
CSR MNC Management System Aggressiveness Verses MNC Issue Turbulence
Turbulence Level
1 2 3 4 5
Turbulence Static/ Repetitive Slowly changing Rapidly changing Discontinuous Surpriseful

Characteristics
CSR Company Fiduciary duty Corporate Corporate communications Strategic issue management Strategic CSR
Approach management reputation Business ethics leadership
Profit Philanthropy Strategic philanthropic
Maximization Public affairs Corporate identity activities
Public relations
CSR Stakeholder Stakeholder Stakeholder Stakeholder dialogue and Interactive strategic Partnerships and
Approach information with debate informal contacts stakeholder dialogue alliances
no interaction
Use of Technologies Use only current Adapt to new Implement Implement Seek novel
existing technologies and periodic/incremental continuous/incremental technologies
technologies quality control technologies creative technologies
management
systems
(table continues)
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Table 6 (continued)
Turbulence Level
1 2 3 4 5
Change Management Reject change and Welcome change Adapt to change for new Change for potential risk and Integrate creative
seek stability for existing CSR instruments opportunity change
instruments
Maintain Strategic CSR as

Maintain profit Strategic issue management
CSR Strategy Maintain CSR financial a form of
maximization with limited and strategic philanthropic
Integration Mindset strategy isolation responsibility to engagement with
philanthropic activities activities
shareholders stakeholders
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CSR Capability Responsiveness
CSR management system responsiveness represents the ability of the CSR
management system to respond to stakeholders’ demands regarding societal needs while
optimizing the MNC’s economic performance. Ansoff and McDonnell (1990) defined
the general management capability of an organization as consisting of two key factors,
the capabilities of the general managers and the capabilities of the management
organization. According to Ansoff and McDonnell, levels of strategic aggressiveness and
capability responsiveness appropriate to the level of environmental turbulence are
required for business success.
Basically, the CSR management system represents the capabilities of the top
management to craft the CSR initiatives. This includes the formation of a socially
diverse CSR team that represents different departments. Such a team makes clear the
organizational mindset and goal-setting, which can then implement state-of-the-art
technologies and maintain continuous knowledge of globally, accepted CSR instruments.
D’Amato, Henderson, and Florence (2009) cited that leadership competencies included
courage, business acumen, and a vision of the company’s legacy. They added that a
leader should be remembered as a person who designed, not just a company, but a society
that is educated and economically sustainable.
Ansoff and McDonnell (1990) stressed that business strategy should be aligned
with organizational strategy. Based on this concept, sustainability and CSR should be
aligned and integrated with organizational business strategy. The design structures and
systems should address sustainability and CSR societal needs, implement CSR change
management, overcome organizational resistance to change, empower team engagement
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with stakeholders, and support performance to build a new culture to support the CSR
implementation process.
The hypothesis presented in this research was that MNC performance was
optimized when MNC strategy aggressiveness and MNC capability responsiveness were
aligned with MNC issue turbulence. In the research model, the difference between MNC
issue turbulence and MNC strategy aggressiveness was named MNC strategy
aggressiveness gap. Similarly, the difference between MNC issue turbulence and MNC
capability responsiveness was named MNC capability responsiveness gap. The research
model also indicated the CSR strategic posture reflecting the influence of MNC issue
turbulence, CSR management system aggressiveness, and CSR management system
responsiveness for MNC CSR continuum.
Table 7 outlines the five levels of CSR management system responsiveness that
correspond to the five levels of MNC issue turbulence.
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Table 7
CSR MNC Management System Responsiveness Verses MNC Issue Turbulence
Turbulence Level
1 2 3 4 5
Turbulence
Static/Repetitive Slowly Changing Rapidly Changing Discontinuous Surpriseful
Characteristics
No commitment to
Focuses on risk Creates awareness Creates new form of
Top Management address CSR issues Implements CSR
mitigation and harm and understanding of engagement with
Involvement in CSR Political change management
avoidance CSR issues stakeholders
Public relations
Charismatic and
Leadership Skills Political
transformational
Forms cross-
Explores CSR added Plans for new CSR Acts as CSR agents
Primary roles and functional CSR
CSR Team roles and roles and to implement change
responsibilities teams within
responsibilities responsibilities management
departments
(table continues)
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Table 7 (continued)
Turbulence Level
1 2 3 4 5
CSR Policies, CSR policies,

Programs, Policies, programs standards, and
International and standards are not programs are
Standards, and part of organization formalized to
Guidelines stakeholders
Staff Knowledge of Expert Knowledge of

Effective knowledge
CSR Policies, Knowledge of Some knowledge of Moderate knowledge new CSR policies,
of CSR policies,
Programs, existing internal CSR policies, of CSR policies, programs and
programs, and/or
International policies programs and/or programs, and/or international
standards
standards and/or standards/guidelines standards/guidelines standards and/or
and guidelines
Guidelines Guidelines
Seek novel and

Reject Accept familiar risks Seek familiar risks Seek unfamiliar risks
CSR Risk Propensity creative risks and
and opportunities And opportunities and opportunities
opportunities
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CSR Management System Strategic
Posture
Ansoff and McDonnell (1990) referred to the combination of the firm’s strategic
aggressiveness, its capability responsiveness, and its change management as the
“strategic posture” of the firm. The strategic posture of the firm is derived through
diagnosing the future levels of environmental turbulence and the desired strategic
aggressiveness and capability responsiveness of the firm, based on the gap analysis
approach. They stated that the outcome of the gap analysis and the closure of these gaps
are the basis for implementing change management and further establishing the strategic
aggressiveness and general management responsiveness required for optimum
performance. According to Ansoff and McDonnell, the general management capability
responsiveness includes the general management and the supporting organization. The
closure of the gaps in general management capability responsiveness that supports
strategy aggressiveness requires significant change in organizational behavior in order to
overcome resistance (Ansoff & McDonnell, 1990).
Table 8 depicts the attributes of general management capability.
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Table 8
The Attributes of General Management Capability
Attribute Managers Organization
Climate Mentality Culture

Will to Respond Power Position Power Structure
Competence Talents Structure

Ability to Respond Skills Systems
Shared Knowledge
Capacity Personal Organizational

Volume to Response
Based on research of Palestine, the drivers of CSR include the following: (a)
socioeconomic priorities, (b) governance gaps, (c) market access, (d) political stability
and reform, (e) investment incentives, (f) supply chain factors, (g) stakeholder activism,
and (h) international standardization. The firm’s CSR strategic posture should
specifically target the impact of the MNCs’ activities in the workplace; that is, labor
standards, human resources, organizational development, and the marketing that defines
the MNC to its customers, including product manufacturing and quality, distribution
access, and selling practices should be transparent to employees, as should concerns
about the sustainability of company technologies. The CSR should address the
socioeconomic development challenges facing Palestine. This would include generating
employment to alleviate poverty; capacity building; health-care provision; infrastructure
development; peace-building; helping to rebuild weak government institutions; political
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reforms; and human rights, as well as challenging governance gaps regarding social
services and anti-corruption issues.
Prahalad and Hart (2002) argued that companies could assume this role based on
CSR and bottom-of-the-pyramid strategies. The International Standard Organization
(ISO) 26000 guidelines set forth general principles regarding utilization of “outside-in”
and “inside-out” frameworks that strategically position organizations in the marketplace
and map the social impact of the value chain (Porter & Kramer, 2006).
According to ESCAP (2009), the following three components maintain corporate
sustainability:
1. Economic sustainability, where companies must guarantee sufficient cash flow
to ensure liquidity and above-average returns for their shareholders.
2. Environmental sustainability, where socially responsible businesses do not
engage in activities that degrade ecosystems.
3. Social sustainability, where company operations not only depend on financial
and natural resources but also on social resources such as human capital.
The human capital aspect is concerned with skills, motivation, loyalty of
employees, and business partners. Social capital also includes quality of public services,
the education system, infrastructure, and a supportive entrepreneurial culture.
ESCAP (2009) further outlined CSR approaches to achieve sustainability in a
five-fold process:
1. Adopting global principles of business practices pertinent to economic,
environmental, and social sustainability constructs. For instance, the United Nations
Global Compact set forth 10 core principles in the areas of human rights, labor standards,
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environmental and anti-corruption measures. These address natural resources, human
capital, societal capital, and financial sustainability.
2. Setting out guidelines of practices to support a precautionary proactive
approach to environmental challenges.
3. Contributing to corporate sustainability by providing moral arguments as to
why socially responsible business behavior should be integrated into core strategy.
4. Aiming to engage internal and external stakeholders by addressing needs, such
as a safe workplace, quality goods, services at a fair price, and job creation.
5. Encouraging more accountability in business practices by defining the
relationship of the company to the rest of society.
In the case of the West Bank and Gaza, post-conflict reconstruction and
development would present unwieldy multilateral alliances. According to the World
Bank Operations Evaluation Department (WBOED) (1998), there were 50-plus bilateral
and multilateral active donors for post-conflict reconstruction that could form alliances
with multinational companies and the government. The report added that one aspect of
successful post-conflict rebuilding was the necessity of interdependent and mutually
reinforcing political, economic, and military pillars to consolidate the peace. The
deterioration of these pillars would be detrimental to the survival of the peace process. A
strong economic recovery could not be built on a fragile peace, and a strong peace could
not be built on a fragile economy (WBOED, 1998).
MNC strategic posture planning requires integration of international instruments
in framing the CSR plan. ESCAP (2009) defined general international initiatives to help
develop standards for CSR instruments and sustainability- related reporting. For
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instance, the United Nations Global Compact defined internationally agreed upon norms
and standards for responsible business conduct: (a) The International Labor Organization
Standards (ILO) addressed abolition of child labor and right of workers, anti-corruption
laws, and economic responsibility; (b) ISO 26000 aimed to provide practical guidance on
a range of methods and options to implement social corporate responsibility (CSR); (c)
the Global Reporting Initiative (GRI) (2006) developed globally applicable CSR
sustainability reporting guidelines that encompass economic, environmental, and social
dimensions; and (d) the Accountability Principles Standards AA1000 addressed standards
for CSR accountability performance. In addition, a new instrument called Kinder,
Lydenberg, and Domini (KLD) rating method assesses environmental, social, and
governance aspects of corporations using a “propriety” framework with positive and
negative indicators. It assigns strengths and concerns relative to these issues by rating
seven (7) major qualitative issue areas: (a) environment, (b) community, (c) corporate
governance, (d) diversity, (e) employee relations, (f) human rights, (g) product quality,
and (h) safety (KLD, 2010).
Samaratunge (2009) explored the reasons for less-than-optimal levels of social
responsibility among companies doing business in developing countries and found that
corruption, patron-client relationships, and weak judiciary and legal systems were the
most corrosive problems undermining economic and social development. The author
added that adoption of responsible practices by MNCs would allow them to take the lead
as role models by their compliance with standards, obedience to laws, and, in general,
setting good examples for local companies to follow.
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According to the U.S. Department of State (2008), Palestinian community leaders,
media, and non-governmental organizations have been working together to raise public
awareness and promote anti-corruption initiatives. According to the Dow Jones
Sustainability Index (DJSI) (2010), there are more corporations worldwide that are
integrating sustainability strategies into their core businesses. The dimension of strategic
CSR, this index cited, includes new principles for codes of conduct, a wider scope of
social programs, more extensive environmental performance measurement, increases in
corporate governance, and increased sustainability in annual reporting.
Dyllick and Hockerts (2002) asserted that a profitable business could be sustained
even as it shifted from profit maximization to value creation maximization. They added
that corporate sustainability could be accordingly defined as meeting the needs of a
firm’s direct and indirect stakeholders without compromising its ability to meet
stakeholder’s future needs. According to the Institute for Corporate Culture Affairs
(ICCA) (2007) survey of the top 100’s MNC activities (2005-2007), there are benefits
associated with the implementation of CSR programs and initiatives. These positive
effects of CSR are summarized as follows:
1. Enhanced capabilities in managing social, environmental, legal, economic, and
other risks.
2. Improved competitiveness and market positioning through product
differentiation and increased ability to attract trading partners.
3. Enhanced operational efficiencies and cost-savings through efficient resource
usage and effective human resource management.
4. Enhanced ability to respond to regulatory, economic, and social changes.
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5. Effective and efficient supply chain.
6. Secured license to operate globally through improved relations with
government and local communities.
7. Improved access to capital through transparency and effective management of
social and environmental issues.
8. Increased customer satisfaction.
9. Improved employee morale, productivity, and loyalty.
10. Improved management of brand reputation and equity.
According to the CSR Middle East Survey conducted by the Sustainability
Advisory Group (SAG) (2010), about 90% of respondents thought credible CSR
programs could enable companies to build and maintain company reputation; 80%
believed that CSR could attract new customers and foster innovation; and over 70%
believed that CSR could create new markets and market shares. However, the survey
report added that these positive findings were tempered by worrying signs that businesses
were complacent about critical issues facing the Middle East region. High numbers of
businesses rated water conservation, climate change, waste, and poverty alleviation as
unimportant to their businesses (SAG, 2010).
The Grant Thornton (2008) International Business Report survey found that 71%
of privately held businesses rated the active promotion of workforce health and well-
being as one of the most salient CSR initiatives, followed by 67% for provision of
apprentices and work experience, and 64% for promotion and diversity in the workplace.
The European Competitiveness Report (ECR) (2008), which provides an overview of the
links between CSR and competitiveness, addressed six determinants of firm-level
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competitiveness that included (a) cost structure, (b) human resources performance, (c)
customer innovation, (d) risk, (e) reputation management, and (f) financial performance.
The report cited an Economist Intelligence Unit (2008) research program that stated that
the benefit of pursuing sustainable practices outweighed the costs (Economist
Intelligence Unit, 2008). Mendibil, Hernandez, Espinach, Garriga, and Mcgregor (2007),
described how in practice innovation and social responsibility appear to come together
through strong engagement with employees and external stakeholders. The report added
that CSR needs to be part of core business strategy if it is to be a competitive
differentiator.
The Research Questions and

Research Hypotheses
The questions focused primarily on management issues that relate to improved
MNC financial and social performance. The following list of research questions was
constructed based on the above information:
Research Question 1. What is the relationship between the MNC strategy
aggressiveness gap and the MNC’s financial performance?
Hypothesis 1. There is a reliable relationship between MNC strategy
aggressiveness gap and MNC financial performance.
aggressiveness gap and the MNC’s social performance?
aggressiveness gap and MNC social performance.
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Research Question 3. What is the relationship between the MNC capability
responsiveness gap and the MNC’s financial performance?
Hypothesis 3. There is a reliable relationship between MNC capability
responsiveness gap and MNC financial performance.
responsiveness gap and the MNC’s social performance?
responsiveness gap and MNC social performance.
Research Question 5. What is the relationship between the MNC’s strategy
aggressiveness and the MNC’s social responsibility (CSR) posture?
aggressiveness and MNC social responsibility (CSR) posture.
Research Question 6. What is the relationship between the MNC’s capability
responsiveness and the MNC’s social responsibility (CSR) posture?
responsiveness and MNC social responsibility (CSR) posture.
Research Question 7. What is the relationship between the MNC’s CSR posture
and the MNC’s financial performance?
Hypothesis 7. There is a reliable relationship between MNC CSR posture and
MNC financial performance.
and the MNC’s social performance?
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MNC social performance.
Research Question 9. What is the relationship between the MNC’s financial
performance and the MNC’s social performance?
Hypothesis 9. There is a reliable relationship between MNC financial
performance and MNC social performance.
Research Variables: Conceptual and Operational

Definitions
Definitions of the independent, intervening, controlled, and dependent variables
are based on the research model. MNC issue turbulence is an independent variable, and
it is measured to evaluate Hypotheses 1, 2, 3, and 4. MNC strategy aggressiveness and
MNC capability responsiveness are independent variables and are measured to evaluate
Hypotheses 5 and 6, respectively, where MNC CSR posture acts as the dependent
variable in this case of the research study. An MNC’s CSR posture is an independent
variable, and it is measured to evaluate Hypotheses 7 and 8, where financial and social
performance act as dependent variables.
MNC aggressiveness gap is an intervening variable, and it is measured to evaluate
Hypotheses 1 and 2. MNC capability responsiveness gap is an intervening variable, and
it is measured to evaluate Hypotheses 3 and 4.
MNC financial performance is a dependent variable, and it is measured to
evaluate Hypotheses 1, 3, and 7. MNC social performance is a dependent variable, and it
is measured to evaluate Hypotheses 2, 4, and 8. MNC financial performance and MNC
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social performance are dependent variables and are measured to evaluate Hypothesis 9,
where social performance acts as the independent variable, in this case of the research
study.
Industry type of business classification, business sector, and activity are control
variables, and they are held constant and will not form a part of any hypothesis in this
research. These data were collected to support future investigation and research.
Independent Variables
MNC issue turbulence was measured through a series of questions to examine the
pace, predictability, and complexity of the business environment in Palestine. The
conceptual definition measured the company’s response relative to changes in the
business environment that entailed factors pertaining to (a) achieving national
governance; (b) development of viable infrastructure; (c) enhancing government
institutions; (d) investment climate; (e) political stability; (f) viable national economy; (g)
predictability of changes in the economic, political, and closure policies; and (h)
complexity of the regulations and financial framework policies that affect the firm’s
organizational activities in Palestine.
The operational definition of MNC issue turbulence is measured through an
arithmetic mean calculation from each respondent for the following questions: 1, 2, 3, 4,
5, 6, 7, and 8, using a 5-point numerical (Likert) scale.
Question. What is your company’s perception of the pace of change in the
business environment in Palestine (six factors listed below)? (1 means change is much
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slower than the speed of the organization response; 5 means change is much faster than
the organization’s response.)
Q1. Achieving national governance
Q2. Development of viable infrastructure
Q3. Enhancing government institutions
Q4. Investment climate
Q5. Political stability
Q6. Viable national economy
Q7. How predictable are the changes in economic, political, and security closure
policies that affect your company’s investment activities in Palestine?
1. Changes are usually rare and we do not worry about them.
2. We know what changes are coming well ahead of time.
3. We can usually anticipate changes that will occur but not always when.
4. Changes are usually predictable but occasionally surprising.
5. Changes are unpredictable and usually surprising.
Q8. How complex and difficult are the regulations and financial framework
policies that affect your organizational activities in Palestine?
1. Not at all difficult or complex
2. Slightly difficult and complex
3. Moderately difficult and complex
4. Usually very difficult and complex
5. Always highly difficult and complex
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CSR aggressiveness was measured through a series of questions to examine
implementation of strategic CSR. The conceptual definition measured the MNC’s
behavior toward the integration of CSR as an integral part of its core business operations,
the company’s approach to change on issues pertaining to CSR, the top management’s
mindset and CSR goals, whether CSR is conceived of in the organization as a new form
of engagement with stakeholders, and how receptive the company is to new technologies
for the production of high quality and safe products.
The operational definition of MNC aggressiveness is measured through
calculating the arithmetic mean from each respondent for the following questions: 9, 10,
11, 12, and 13, using 5-point Likert scales.
Q9. What is your company’s approach to change on issues pertaining to
corporate social responsibility (CSR)?
1. Reject change and seek stability.
2. Welcome change only for existing instruments (principles, policies,
guidelines, and programs).
3. Adapt to change for new CSR instruments (principles, policies,
guidelines, and programs).
4. Change for potential risk and opportunity.
5. Integrate creative change.
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Q10. How important do you rate corporate social responsibility (CSR) as a
central component of your company’s core strategy? (1 means CSR is not important to
our company’s core strategy; 5 means CSR is an extremely important aspect of
company’s core strategy.)
Q11. What is the overarching corporate social responsibility (CSR) goal and
mindset of your organization?
1. Maintain financial responsibility to shareholders.
2. Maintain profitability and engage in limited philanthropic activities.
3. Look at CSR as a positive contribution to societal good with substantial
philanthropic activities.
4. Look at CSR as a strategic issue management and value creation to our
organizational culture.
5. Look at CSR as strategic and a new framework of engagement with
stakeholders.
Q12. How receptive is your company to the implementation of innovative
technologies to produce high quality and safe products as part of its operation?
1. We use our existing technology.
2. We adapt to new technologies and quality control management systems
to improve our product line.
3. We implement periodic/incremental technologies that add value to our
product line.
4. We implement continuous/incremental steady streams of new products.
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5. We create periodic/discontinuous novel technologies to produce
products .
Q13. How would you characterize your company's CSR approach for interacting
with stakeholders?
1. We think about stakeholder demands and concerns.
2. We react to our stakeholder demands and concerns.
3. We anticipate the desires of internal and external stakeholder demands
and concerns.
4. We are proactive to address internal and external stakeholder demands
and concerns.
5. We developed creative and effective engagement process to respond to
stakeholder demands and concerns.
MNC Capability Responsiveness
MNC responsiveness was measured through a series of questions that examined
top management’s involvement in CSR issues, organizational leadership that supports
CSR initiatives, and CSR policies and programs developed for stakeholders.
Additionally, MNC responsiveness looks at management’s knowledge of international
standards, initiatives, and various factors that MNCs consider when contemplating
investment in Palestine. These factors included (a) access to resources, (b) availability of
political risk insurance, (c) restrictions on flow of foreign currency, (d) tax incentives and
exemptions, (e) opportunity to innovate products and services tailored to host country
needs, (f) building production capacity, (g) leadership and managerial skills, and (h)
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investment in human resources. The conceptual definition of MNC responsiveness is
characterized by the ability of management and its organizational system to respond to
CSR issues in the business environment.
The operational definition of MNC responsiveness is measured by calculating the
arithmetic mean for the following questions: 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25,
and 26, using 5-point Likert scales.
Q14. How would you characterize your organization’s top management
involvement in corporate social responsibility (CSR)?
1. No involvement or commitment to address CSR issues.
2. We focus on mitigating risk and harm to our organization.
3. We created awareness and understanding of CSR issues and initiatives
throughout the organization.
4. We integrated CSR strategy as part of core business activities to
address stakeholders’ preferred objectives.
5. We implemented CSR change management into organizational systems
to meet societal needs.
Q15. To what extent are corporate social responsibility policies, standards, and
programs disseminated to stakeholders? (1 means no CSR policies, standards, and/or
programs built-in our organization; 5 means policies, standards, and programs are
disseminated to all employees and outside stakeholders, N/A means not applicable.)
Q16. What is management’s overall level of knowledge of CSR international
standards, guidelines, and initiatives? (1 means minimal knowledge, relying on
consultants; 5 means expert knowledge; N/A means not applicable.)
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Question. How important are the following to your organization's decision-
making regarding investment in Palestine? (1 means not important at all, 2 Means
somewhat important, 3 means important, 4 means very important, 5 means extremely
important, and N/A means not applicable.)
Q17. Access to resources
Q18. Availability of cheap labor
Q19. Availability of political risk insurance coverage
Q20. Free inflow and outflow of foreign currency
Q21. Opportunity to innovate products/services tailored to host country
Q22. Tax incentives and exemptions
Q23. Increase production capacity
Q24. Leadership skills (inspiring and empowering employees to insure the firm's
direction and manage change)
Q25. Managerial skills (creating knowledgeable employees to enhance
productivity and efficiency of firm’s operations)
Q26. Investment in human resources
MNC CSR Posture
The MNC’s posture was measured through a series of questions pertinent to the
firm’s strategic aggressiveness, its capability responsiveness, and its change management
stance. The conceptual definition of MNC posture articulates the two approaches, the
“built-in,” which deals with building responsible behavior in the organization; and the
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“bolt-on,” which deals with company engagement using pro-social initiatives that extend
beyond the core business operations.
The operational definition of MNC posture is measured by calculating the
arithmetic mean for the following questions: 27, 28, 29, 30, 31, 32, 33, 34, 35, and 36,
using 5-point Likert scales.
Q27. What is your management staff ’s main CSR focus?
1. Focus on corporate self responsibility and conduct business as usual.
2. Focus on corporate social responsiveness to minimize economic
impact.
3. Focus on the needs of stakeholders inside the organization (i.e.,
production employees).
4. Focus on the shared interests of stakeholders outside the organization.
5. Focus on strategic alliances and partnerships with stakeholders.
Q28. Of the methods of investment opportunities in Palestine, your organization
has committed to launching operations using different entry mode to penetrate the
market. Which entry modes are best suited for your organization to enter the market (or
other method of entry)? (Please specify.)
1. No appropriate mode of entry exists.
2. Enter into agreement to develop cottage industries to provide services,
produce products, or assemble parts for global corporations.
3. Enter into a franchise agreement.
4. Set up a production facility in a free zone located on the borders and
jointly owned.
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5. Set up a wholly owned production facility in West Bank and Gaza.
Q29. Does your company’s CSR strategic posture include the whole business and
its supply chain? Please select one answer only.
1. There is no plan at all.
2. There is no immediate plan, but we are thinking of developing one.
3. We are developing a plan.
4. Yes, our plan covers the business, but not the supply chain.
5. Yes, our plan covers the whole business and supply chain.
Question. For each of the following factors, please rate the importance of your
cooperation with stakeholders operating in Palestine? (1 means not important at
all, 2 means somewhat important, 3 means important, 4 means very important, and 5
means extremely important, don’t know.)
Q30. Collaboration among multinational companies (MNCs)
Q31. Non-governmental organizations (NGOs)
Q32. Not-for-profit (NFP) and aid agencies
Q33. Local private enterprises n
Q34. Civic organizations and local government
Q35. Incorporating CSR as part of core business strategy
Q36. Creating transparency in commercial transactions
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Intervening Variables
MNC Aggressiveness Gap
The conceptual definition of the MNC aggressiveness gap is a measure of how
much an organization’s MNC aggressiveness differs from its issue turbulence. The
operational definition of the MNC aggressiveness gap is calculated as the absolute
difference between the scores of MNC aggressiveness and MNC issue turbulence from
each respondent. The MNC aggressiveness gap can range in value from 0 to 4.
MNC Responsiveness Gap
The conceptual definition of the MNC responsiveness gap is a measure of how
much an organization’s MNC responsiveness differs from its MNC issue turbulence. The
operational definition of the MNC responsiveness gap is calculated as the absolute
difference between the scores of MNC responsiveness and MNC issue turbulence of each
respondent. The MNC responsiveness gap can range in value from 0 to 4.
Dependent Variables
The conceptual definition of overall MNC performance is that it is a measure of
the financial and social performance of the CSR management system. This includes the
MNC’s impact on stakeholders and the firm’s finances. The operational definition of the
financial performance was calculated as the arithmetic mean from each respondent for
Question 37. The operational definition of the social performance was calculated as the
arithmetic mean from each respondent for the following questions: 38, 39, 40, 41, 42, 43,
44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, and 55. The financial performance measures the
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MNC’s return on investment of its operations. The social performance measures
important programs that affect stakeholders for the following questionnaire:
Q37. Please indicate your company’s average return on equity (ratio of income to
shareholder's equity) or (ROE) of operations over the last 3 years percentages.
(respondents to input percentages in the boxes).
1. Positive (ROE) %
2. Negative (ROE) %
Question. Has your organization implemented programs that would contribute to
the CSR performance of your organization? How well have the following programs
contributed to employee social needs? (1 means not well, 5 means very well, and N/A
means not applicable.)
Q38. Employee retirement, pension plan, and/or after service plan
Q39. Employee health benefit plan (package for health, dental and life)
Q40. Employee disability benefit plan
Q41. Employee training programs (leadership, managerial and technical)
Q42. Enforcement of % minimum wage within labor law regulations
Q43. Enforcement of child labor prohibition
Q44. Integration of women in the workforce
Q45. Security and safety programs
Question. For each of the following factors, please rate the importance of your
company’s contribution to socioeconomic developments in Palestine. (1 means not
important at all, 2 means somewhat important, 3 means important, 4 means very
important, 5 means extremely important, and N/A means not applicable.)
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Q46. Sustainable job creation.
Q47. Provide funding and managerial support to build the capacity of
government services.
Q48. Support NGOs active in reconciliation & peace building efforts.
Q49. Sponsor research on issues of local importance to business start-ups.
Q50. Support the creation of charity bank that uses partially contributed funds to
provide low-interest loans to start ups in the region.
Q51. Support internal and cross border business-to-business forums.
Q52. Support work of humanitarian and government development efforts.
Q53. Build capacity of local civic society organizations.
Q54. Support initiatives to attract foreign direct investment to post-conflict areas.
Q55. Support local education, health, and enterprise development programs.
Control Variables
Industry type, business sector, and business activity are control variables, and they
are held constant and will not form a part of any hypothesis in this research. The data
were collected to support future investigation or research. The conceptual definition of
industry type is a measure to categorize business classification, sector, and activities of
the MNC’s operations. Types of MNC business classification are identified in Question
56, type of MNC business sector is identified in Question 57, and type of MNC business
activity is identified in Question 58 of the attached survey questionnaire. The
operational definition of industry type, sector, and business activity was measured
through the responses to Questions 56, 57, and 58.
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Q56. Which one of the following describes the business classification that is most
appropriate for your organization?
1. Multinational company
2. Small to medium enterprise (SME)
3. Consortium (MNC-government and international organizations)
4. Other (please specify)
Q57. Which the following describes the business sector to which your
organization belongs?
1. Manufacturing
2. Wholesale/retail
3. Information systems/networking
4. Consultants
5. Construction
6. Telecoms
7. Banking/finance/investing
8. Real estate
9. Government
10. Healthcare/pharmaceutical
Q58. What type of business activity does your organization operate in Palestine?
1. Consortium with government and international organizations
2. Technology transfer of products and/or services
3. Franchise business
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4. Fully owned multinational company in a free zone
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Chapter 3
RESEARCH METHODOLOGY
This chapter describes the research methods and procedures used to evaluate the
proposed hypotheses in Chapter 2B. The chapter is composed of the research strategy,
data sources, data collection procedures, data analysis methodology, assumptions,
probable limitations in reliability and validity, and delimitations.
Research Strategy
The methodology for this research study was based on the Strategic Success
Paradigm presented by Ansoff and McDonnell (1990). This methodology was
operationalized in this study through the relationship between MNC environmental
turbulence, MNC aggressiveness, and MNC capability responsiveness. Specifically, the
study hypothesized that organizational performance was improved when MNC strategy
aggressiveness, MNC capability responsiveness, and MNC CSR strategic posture were
aligned with MNC issue turbulence. The environmental turbulence was the driving
variable that determined whether the firm’s strategic behavior would succeed in an
environment. As part of the MNC’s strategy, CSR was considered an integral part of the
overall core business strategy to optimize economic and social performance for
companies operating in Palestine.
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This study evaluated four independent variables: (a) MNC issue turbulence, (b)
MNC strategy aggressiveness, (c) MNC capability responsiveness, and (d) MNC CSR
strategic posture. The MNC strategy aggressiveness gap and the MNC capability
responsiveness gap were the two intervening variables. The two dependent variables
were the MNC’s financial performance and the MNC’s social performance. The data for
each variable were evaluated based on interval scales. The research consisted of
statistical hypothesis testing using a descriptive correlation approach.
Data Sources
The target population for this research included multinational corporations
(MNCs) and domestic Small and Medium Enterprises (SMEs) that had operations in or
were contemplating undertaking FDI investment in Palestine. The intended survey
respondents must have had the knowledge and expertise regarding the political and
socioeconomic challenges in the Middle East, mainly of a conflict-prone region such as
Palestine.
Two multiple sets of samples were downloaded into a Microsoft Excel
spreadsheet from two Web site sources: the Palestinian Trade Center (PalTrade) and
Palestine Stock Exchange (PSE), respectively. PalTrade is a national trade development
organization that has 339 memberships for Palestinian leading businesses of various
industry sectors in the West Bank and Gaza (see Appendix A). There are 43 companies
listed on the Palestine Stock Exchange in various industries, and they are actively traded
on the PSE market (see Appendix B). These companies are mainly located in the West
Bank, except for one company, which is located in Gaza. Company names, contact
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persons, industry sectors, e-mail addresses, and telephone and fax numbers were
tabulated.
Instrument and Procedure
The questionnaire was set up online using SurveyMonkey.com, and a link to
survey was e-mailed to listed companies on Pal Trade and PSE to participate in the
survey. An introductory page that briefly described the purpose of the study, with
information required by the Institutional Review Board (IRB) and instructions for
completing the survey, was attached to survey. Massar International, a private
consulting firm working to promote sustainable development in Palestine was consulted
to communicate with companies in Palestine to either participate through on-line
SurveyMonley.com and/or provide companies with a printed questionnaire in pdf
format downloaded from the Survey Monkey Web site on both sides of 8½ x 11-inch
white paper (http://www.massar.com/).
Research Variables
This research investigated the independent, intervening, and dependent variables
that comprised the data under analysis in the study. The issues under investigation were
MNC issue turbulence, MNC strategy aggressiveness, MNC capability responsiveness,
and MNC corporate social responsibility (CSR) posture. The survey included the
intervening variables of the MNC strategy aggressiveness gap and the MNC capability
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responsiveness gap. The dependent variables were first, financial performance correlated
with strategy aggressiveness gap, and second, social performance correlated with
capability responsiveness gap.
Independent Variables
Calculation: (Q1 + Q2 + Q3+ Q4 + Q5 + Q6 + Q7 + Q8) / 8
Questions 1 through 8 measured MNC issue turbulence. Questions 1 through 6
measured the perception of rate of change in the business environment in Palestine.
Question 7 measured the predictability of change in the economic, political, and security
closure policies relative to foreign direct investment activities. Question 8 measured the
complexity of the host country’s regulations and financial policies that affected the firm’s
behavior.
The MNC issue turbulence was calculated through averaging the scores on a
Likert scale of 1-5 for a series of questions: where 1 means changes are rare and we don’t
worry about them; 2 means when changes come, we usually react easily; 3 means when
changes come, we usually react in time; 4 means when changes come, we are usually
trying to catch up; and 5 means changes are extremely fast and chaotic, and we struggle
to keep up. Mainly, turbulence in the business environment requires new strategic
responses, and management capability must be developed to assure the firm’s successful
operations (Ansoff & McDonnell, 1990).
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Calculation: (Q9 + Q10 + Q11 + Q12 + Q13) / 5
Questions 9 through 13 measured MNC strategy aggressiveness. Question 9 was
designed to measure the company’s approach to change on issues pertaining to corporate
social responsibility (CSR). Question 10 was designed to measure the importance of
CSR as an integral part of the firm’s core business strategy. Question 11 measured the
corporate social responsibility (CSR) mindset and goals of the organization. Question 12
measured the firm’s receptivity to new technologies for development of high quality and
safe products. Question 13 measured MNCs’ approaches or their interaction with
stakeholders.
Survey respondents rated each aspect of MNC strategy aggressiveness as they
corresponded to five choices for each question. The scores for possible answers for each
question ranged from 1 to 5. If a question was not answered, the score was based on the
average of the remaining questions.
Calculations: (Q14 + Q15 + Q16 + Q17 + Q18 + Q19 + Q20 + Q21 + Q22 + Q23
+ Q24 + Q25 + Q26) / 13
Questions 14 through 26 measured MNC capability responsiveness. Question 8
measured top management’s involvement in corporate social responsibility; this question
was based on five choices for a respondent to answer, scored from 1 to 5. Questions 15
and 16 measured the extent to which CSR policies, standards, and programs were
disseminated to stakeholders and the overall management-staff’s level of knowledge of
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international CSR standards, guidelines, and initiatives. Questions 17 through 26
measured 10 elements of importance to the firm’s decision-making regarding investment
in Palestine.
The scores for possible answers for these questions ranged from 1 to 5.
Unanswered questions were not included in the arithmetic mean calculation for this
variable.
MNC Corporate Social Responsibility

(CSR) Posture
Calculations: (Q27 + Q28 + Q29 + Q30 + Q31 + Q32 + Q33 + Q34 + Q35 + Q36)
/ 10
Questions 27 through 36 measured MNC corporate social responsibility (CSR)
posture. These questions measured the company’s CSR posture as follows:
1. Question 27 measured the managerial staff’s CSR focus.
2. Question 28 measured appropriate investment modes of entry into Palestine.
3. Question 29 measured strategy of the firm’s operations to include the whole
business and its supply chain.
4. Questions 30 through 36 measured the importance of cooperation by
stakeholders operating in Palestine for success in the marketplace.
Question 27, 28, and 29 were based on five choices, and the scores for possible
answers for each question ranged from 1 to 5. Question 28 included a box for
respondents to answer the questions with “Other,” which further allowed them to briefly
state other answers than those provided. Questions 30 through 36 allowed the respondent
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to rate the importance of stakeholder engagement. Questions 27 through 36 were
calculated through averaging the possible scores for each question. The value for MNC
CSR posture was calculated as follows for each respondent: (Q27 + Q 28 + ... + Q35 +
Q36) / 10.
Intervening Variables
MNC Strategy Aggressiveness Gap
Calculation: │MNC issue turbulence – MNC strategy aggressiveness │
The MNC strategy aggressiveness gap was an intervening variable with scores
ranging from 0 to 4. It measured the alignment between MNC environmental turbulence
and strategy aggressiveness. The MNC strategy aggressiveness gap was calculated by
taking the absolute value of the difference between MNC strategy aggressiveness and
MNC issue turbulence for each respondent.
MNC Capability Responsiveness Gap
Calculation: │MNC issue turbulence – MNC capability responsiveness │
The MNC capability responsiveness gap was an intervening variable with scores
ranging from 0 to 4. It measured the alignment between MNC environmental turbulence
and management responsiveness. The MNC capability responsiveness gap was
calculated by taking the absolute value of the difference between MNC capability
responsiveness and MNC issue turbulence for each respondent.
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Dependent Variables
MNC Financial Performance
Calculation: (Q37)
Question 37 measured the MNC’s financial performance and the average firm’s
return on equity (ROE) over the last 3 years’ percentage of MNC operations (ratio of
income to shareholder’s equity). The respondents filled out the ROE percentage in the
box to input whether it was positive or negative ROE.
MNC Social Performance
Calculations: (Q38 + Q39 + Q40 + Q41 + Q42 + Q43 + Q44 + Q45 Q46 + Q47 +
Q48 + Q49 + Q50 + Q51 + Q52 + Q53 + Q54 + Q55) /18
Questions 38 through 45 measured important elements of MNC social
performance that contributed to the firm’s stakeholders. These measured the firm’s
social performance, as evidenced by implementation of beneficial programs to the firm’s
employees. Questions 46 through 55 measured the important elements and their
contributions to socioeconomic development in Palestine. Responses were based on
scores ranging from 1 to 5. The value of MNC social performance was calculated by
averaging these scores for each respondent. Unanswered questions and questions marked
N/A were not included in the arithmetic mean calculation for this variable.
MNC Overall Performance
The overall performance of the MNC desired result was that society at large is
lifted in a lasting and meaningful way and that the company is financially successful.
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The “overall performance,” then, is a cycle of successful policies in which all
stakeholders are invested.
Validity and Reliability
The survey questionnaire was built on an extensive review of the literature
pertinent to the business environment in Palestine. Additionally, a comprehensive
investigation of corporate social responsibility (CSR) concepts, policies, international
initiatives, guidelines, and standards directed this research study. Research on the
business environment in Palestine was modeled on research done by multiple,
recognizable, international organizations of repute. The dissertation committee members
provided helpful resources, experience, and recommendations and have been
instrumental in guiding this research study. Previous research questions designed by
committee chairperson Dr. Greg Lorton and committee member Dr. Kevin Loebbaka
served as a guide in structuring the research questions in this study.
Suggestions and recommendations on the survey validity were sought from a third
party, Massar International, which has extensive knowledge about the business
environment in Palestine.
Data Analysis
The data collected through the questionnaire were coded into a Microsoft Excel
spreadsheet, which included data collected for MNC issue turbulence, MNC strategy
aggressiveness, MNC capability responsiveness, MNC corporate social responsibility
(CSR) posture, and financial and social performance of each MNC. Data were
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statistically analyzed using the SPSS program to test the hypotheses of the research study.
A probability value was generated based on the statistical analysis of the hypotheses of
the research study. A threshold value of 5% was used for the sample size to assess
statistical significance of the null hypothesis.
Assumptions
The methodology of the research model, measurements, and data analysis
included the following assumptions:
1. The research method and procedures are suitable for this study.
2. Respondents to the questionnaire understand and are able to answer the
questions with honesty and transparency.
3. Respondents are familiar with the business environment and familiar with their
organization’s CSR involvement.
Limitations
One of the limitations to this research study was that a limited number of
multinational companies operated in the West Bank and Gaza territory. The private
sector establishments constituted 90.7% of total businesses. These were largely family-
based, small-sized, and low-capacity businesses. Consequently, CSR was new to
Palestine, but MNCs doing business there are importing CSR policies that are well-
established in developed countries.
Local domestic companies and MNCs operating in Palestine were sought for this
research study. Although there were not enough MNCs operating in Palestine, the study
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might require multiple respondents from the same organization to fine-tune the research
strategy and get a significant sample size to test the hypotheses in the research study.
Table 9 presents the research questions paired with the research hypotheses, and
Table 10 presents a summary of research hypotheses statistical tests.
Table 9
Research Questions and Research Hypotheses
Research Question Research Hypothesis
Q1. H1.
What is the relationship between the MNC There is a reliable relationship between MNC
strategy aggressiveness gap and the MNC’s strategy aggressiveness gap and MNC financial
financial performance? performance.
Q2. H2.
strategy aggressiveness gap and the MNC’s strategy aggressiveness gap and MNC social
social performance? performance.
Q3. H3.
capability responsiveness gap and the MNC’s capability responsiveness gap and MNC
financial performance? financial performance.
Q4. H4.
capability responsiveness gap and the MNC’s capability responsiveness gap and MNC social
social performance? performance.
(table continues)
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Table 9 (continued)
Research Question Research Hypothesis
Q5. H5.
What is the relationship between the MNC’s There is a reliable relationship between MNC’s
strategy aggressiveness and the MNC’s social strategy aggressiveness and the MNC’s social
responsibility (CSR) posture? responsibility (CSR) posture.
Q6. H6.
What is the relationship between the MNC’s There is a reliable relationship between MNC
capability responsiveness and the MNC’s capability responsiveness and MNC social
social responsibility (CSR) posture? responsibility (CSR) posture.
Q7. H7.
CSR posture and the MNC’s financial CSR posture and MNC financial performance.
performance?
Q8. H8.
CSR posture and the MNC’s social CSR posture and MNC social performance.
performance?
Q9. H9.
financial performance and the MNC’s social financial performance and MNC social
performance? performance.
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Table 10
Summary of Statistical Tests
Research Hypothesis Null Hypothesis Statistical Test
There is a reliable relationship There is no relationship Correlation

H1 between MNC strategy between MNC strategy (Spearman's rho)
aggressiveness gap and MNC aggressiveness gap and MNC
financial performance. financial performance.

H2 between MNC strategy between MNC strategy (Spearman's rho)
aggressiveness gap and MNC social aggressiveness gap and MNC
performance social performance

H3 between MNC capability between MNC capability (Spearman's rho)
responsiveness gap and MNC responsiveness gap and MNC
financial performance financial performance.

H4 between MNC capability between MNC capability (Spearman's rho)
responsiveness gap and MNC social responsiveness gap and MNC
performance. social performance.
There is a reliable relationship There is no relationship

Correlation
between MNC strategy between MNC strategy
H5 (Spearman's rho)
aggressiveness and MNC social aggressiveness and MNC
responsibility (CSR) posture. social responsibility (CSR)
posture.

Correlation
between MNC capability between MNC capability
H6 (Spearman's rho)
responsiveness and MNC social responsiveness and MNC
responsibility (CSR) posture. social responsibility (CSR)
posture.

Correlation
between MNC CSR posture and between MNC CSR posture
H7 (Spearman's rho)
MNC financial performance. and MNC financial
performance.
(table continues)
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Table 10 (continued)
Research Hypothesis Null Hypothesis Statistical Test

H8
between MNC CSR posture and between MNC CSR posture (Spearman's rho)
MNC social performance. and MNC social performance.

Correlation
H9 between MNC financial between MNC financial
(Spearman's rho)
performance and MNC social performance and MNC social
performance. performance.
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Chapter 4
RESEARCH FINDINGS
This chapter presents the results of the data analysis of the nine original
hypotheses, results of additional findings, and an overall summary of the survey
information collected. The research study was designed to investigate the role of
multinationals (MNCs) and domestic local companies and their impact on sustainable
socioeconomic development in Palestine. The study looked at integrating CSR into
firms’ core business as part of MNCs’ strategic CSR posture to optimize the firms’
financial and social profitability based on Strategic Success Paradigm (SSP) framework
developed by Ansoff and McDonnell (1990).
The reactive to proactive nature of the firm’s CSR management systems
strategies was evaluated through the measured variables of MNC environmental
turbulence, MNC strategy aggressiveness, and MNC capability responsiveness, and MNC
CSR posture, financial and social performance of companies operating or contemplating
to engage in foreign direct investment (FDI) in Palestine. Two gap variables, the MNC
aggressiveness gap and MNC responsiveness gap, were calculated from the data for each
company. These variables represented the difference between aggressiveness or
responsiveness and MNC environmental turbulence, respectively. A reactive to proactive
Likert scale ranging from 1 to 5 was used to measure and evaluate all the variables in this
study, excepting the two gap variables, which were calculated as an absolute value on a
scale of 0 to 4. Table 11 presents the descriptive statistics of the study’s research
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variables. The relationships among these variables were evaluated in SPSS, utilizing
Spearman’s rho statistical analysis to compare the variables. All study results were tested
at a 5% significance level for a 2-tailed distribution.
Table 11
Descriptive Statistics of the Research Variables
Variable Scale Mean Range SD
MNC Environmental
Turbulence 1–5 3.17 2.13–4.50 .714
MNC Strategy
Aggressiveness 1–5 3.23 2.20–4.00 .598
MNC Capability
Responsiveness 1–5 3.66 2.77–4.38 .559
MNC CSR Posture 1–5 3.26 2.60–4.60 .567
MNC Aggressiveness Gap 0–4 .55 .03–1.47 .489
MNC Responsiveness Gap 0–4 .61 .02–1.79 .549
Social Performance 1–5 3.41 2.45–4.17 .526
Financial Performance percent 8.12 -.10–+27.0 12.38
Note. N = 11.
Hypothesis 1 (Not Supported)
Hypothesis 1 predicted a reliable relationship between the MNC strategy
aggressiveness gap and MNC financial performance. Hypothesis 1 was not supported
([r] = .137, p = .689), indicating there wasn’t a reliable relationship between the MNC
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aggressiveness gap and MNC financial performance. This hypothesis was based on
Ansoff’s Strategic Success Paradigm (SSP), which predicted that financial performance
would increase as the absolute gap between MNC aggressiveness and MNC
environmental turbulence decreased.
Hypothesis 2 predicted a reliable relationship between the MNC strategy
aggressiveness gap and MNC social performance. Hypothesis 2 was not supported ([r] =
.191, p = .574), indicating there wasn’t a reliable relationship between the MNC
responsiveness gap and social performance. Hypothesis 2 was supposed to confirm that
as the gap between MNC aggressiveness and MNC environmental turbulence decreased,
social performance of MNC increased, but this was not the case.
Hypothesis 3 predicted a reliable relationship between the MNC capability
responsiveness gap and MNC financial performance. Hypothesis 3 was not supported
([r] = .534, p = 0.09), indicating there wasn’t a reliable relationship between the MNC
responsiveness gap and MNC financial performance. Hypothesis 3 did not confirm that
as the gap between MNC capability responsiveness and MNC environmental turbulence
decreased, financial performance of MNC increased.
144
Hypothesis 4 predicted a reliable relationship between the MNC capability
responsiveness gap and MNC social performance. Hypothesis 4 wasn’t supported ([r] =
.424, p = .194), indicating there wasn’t a reliable relationship between the MNC
responsiveness gap and social performance. Hypothesis 4 didn’t confirm that as the gap
between MNC capability responsiveness and MNC environmental turbulence decreased,
social performance of MNC increased.
Hypothesis 5 predicted that a reliable relationship existed between MNC strategy
aggressiveness and MNC CSR posture. Hypothesis 5 wasn’t supported ([r] = .385, p =
.243), indicating there wasn’t a reliable relationship between the firms’ MNC strategy
aggressiveness and the MNC CSR posture. Hypothesis 5 did not confirm that as MNC
strategy aggressiveness increased and became more proactive, the firm’s MNC CSR
posture became more proactive.
Hypothesis 6 (Supported)
Hypothesis 6 predicted a reliable relationship existed between MNC capability
responsiveness and MNC CSR posture. Hypothesis 6 was supported ([r] = .642, p =
.003), indicating there was a reliable relationship between the firms’ MNC capability
responsiveness and the MNC CSR posture. Firms that scored high on MNC capability
responsiveness tended to score high on MNC CSR posture. This hypothesis confirmed
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that as MNC capability responsiveness increased and became more proactive, the firm’s
MNC CSR posture became more proactive.
Hypothesis 7 predicted that a reliable relationship existed between MNC CSR
posture and MNC financial performance. Hypothesis 7 was supported ([r] = .735, p =
.01), indicating there was a reliable relationship between the firms’ MNC CSR posture
and financial performance. Firms that scored high on MNC CSR posture tended to score
high and increase their financial profitability, and as the firm’s MNC CSR posture
became more proactive, the firm’s MNC financial performance increased.
Hypothesis 8 predicted that a reliable relationship existed between MNC CSR
posture and MNC social performance. Hypothesis 8 was supported ([r] = .642, p = .033),
indicating there was a reliable relationship between the firms’ MNC CSR posture and
social performance. Firms that scored high on MNC CSR posture tended to score high
and increase their social profitability, and as the firm’s MNC CSR posture became more
proactive, the firm’s MNC social performance increased.
Hypothesis 9 predicted that a reliable relationship existed between MNC social
performance and MNC financial performance. Hypothesis 9 was supported ([r] = .665, p
= .026), indicating there was a reliable relationship between the firms’ MNC financial
146
performance and MNC social performance. Firms that scored high through proactive
implementation of CSR posture and engagement with pro-social activities to meet
societal needs tended to score high on financial performance. As the firm’s MNC social
performance became more proactive, the firm’s MNC financial performance increased.
Summary of Results
The statistical analyses of the hypotheses and additional findings for this research
were conducted with Spearman’s rho (r) correlation. Spearman’s rho (r) is a non-
parametric measure of correlation. It assesses how well a monotonic function could
describe the relationship between two variables, without the assumption of frequency
distribution of the variables (Laerd Statistics, 2011).
All results were tested at a significance of < 0.05. MNC strategy aggressiveness
gap to financial and social performance Hypotheses 1 and 2, respectively, were not
supported. Also, MNC capability responsiveness gap to financial and social performance
Hypotheses 3 and 4, respectively, were not supported. Hypotheses 5, relating MNC
strategy aggressiveness to MNC CSR posture, was not supported. Hypotheses 6, relating
MNC capability responsiveness to MNC CSR posture, was supported. Hypothesis 7 and
8, relating MNC CSR posture to financial and social performance, were supported.
Hypothesis 9, relating financial to social performance, was supported. The statistical
outcomes of this study are presented in Table 12.
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Table 12
Summary of Statistical Results
Hypotheses Statistical (rho) Value p Value Supported

Test
H1 Relationship between MNC Spearman’s .137 .689 Not

Strategy Aggressiveness rho Supported
Gap and MNC financial
performance

Strategy Aggressiveness rho Supported
Gap and MNC social
performance

Capability Responsiveness rho Supported
performance

Gap and MNC social
performance

strategy aggressiveness and rho Supported
MNC corporate social
responsibility (CSR) posture
H6 Relationship between MNC Spearman’s .642 .033 Supported

capability responsiveness rho
and MNC corporate social

CSR posture and MNC rho
financial performance
(table continues)
148

Test

social performance

financial performance and rho
MNC social performance
Note. N = 11.
149
Chapter 5
SUMMARY CONCLUSIONS AND
RECOMMENDATIONS
Chapter 5 summarizes this research study investigation of the role of
multinational companies (MNCs) in sustainable socioeconomic development when
strategic CSR is integrated into the overall business strategy of the company. The study
examined the relationships among MNCs’ environmental turbulence, MNC strategy
(CSR) posture, and the financial and social profitability of MNCs operating in Palestine.
This chapter analyzes the global and research models developed to investigate corporate
social responsibility as an integral part of the overall MNC business strategy. It reviews
the research questions, hypotheses, and the resulting statistical outcomes of the research
study. Chapter 5 also elaborates on the study’s additional findings and recommends areas
for further research.
Background of the Problem
Multinational companies (MNCs) are considered crucial members of society, and
corporate social responsibility (CSR) has become an essential part of successful
companies’ strategies. In essence, MNCs have become increasingly conscious of their
ethical and economic responsibility to provide products and services that add value to
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society, to deploy entrepreneurialism, to create jobs, and to assist developing countries in
the promotion of their economic growth.
Based on the opinions of good corporate behavior, a growing number of
businesses have argued that both profit and social good could be combined through
innovations aimed at improving the lives of the world’s poorest citizens. Stakeholders
expected businesses to understand and address relevant social and community issues
within CSR framework to prompt sustainable economic development. The turbulent
political environment in Palestine, coupled with severe socioeconomic conditions,
presented multinational companies with external societal challenges. One of the things
that businesses did well was to create jobs, which, consequently, could have significant
potential for promoting stability, reducing despair, and lowering tensions if initiated in a
newly viable Palestinian State. This research investigated the role of multinational
companies (MNCs) in sustainable socioeconomic development when they integrated
strategic CSR into the overall business strategy to optimize the financial and social
profitability of their operations.
Statement of the Problem
Foreign direct investment (FDI) in conflict-prone countries had increased in
emerging markets. Ansoff and McDonnell (1990) argued that the survival of a firm in a
competitive business environment required companies to evaluate the environmental
turbulence by defining the trends, threats, and opportunities facing the organization.
Palestine had been plagued with political, economic, environmental, and social
instability, thus exerting more externalities on firms’ strategic behaviors. With this
151
challenging business environment in Palestine, the research looked at integrating CSR
into firms’ core business as part of MNCs’ strategic CSR posture to optimize the firms’
financial and social profitability. A new paradigm shift of MNCs’ strategic behavior to
integrate societal change with their core business would create a new form of engagement
to promote economic development, create employment, ameliorate poverty, and promote
stability in Palestine.
Purpose of the Study
responsibility (CSR) posture, and the financial and social performance of MNCs
operating in Palestine. This study hypothesized that organizational performance is
improved when MNC strategy aggressiveness and MNC capability responsiveness are
aligned with MNC issue turbulence level.
Expected Contributions
contributed to the field of strategic management by empirically testing and validating
prone zone such as Palestine. The study provided researchers and professionals with
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performance.
Global Model
The Global Model outlined in Figure 8 presented the environment with a complex
set of relationships among multinational companies (MNCs) and their various
stakeholders that influenced their strategic behavior. The global model established a
strategy landscape from which to analyze the research objectives of this study. Corporate
social responsibility (CSR) embedment was shown as an integral part of the core business
strategy. Ansoff and McDonnell (1990) provided a strategic management approach to
optimize the organizational performance and postulated that for a firm to optimize its
competitiveness and profitability, the firm had to match its strategy and capability with
the environment. The environment was a determining factor for the firm’s strategy and
its capability profile. The engagement of stakeholders in the firm’s decision-making
process would help define the preferred objectives of MNCs operating in Palestine
through a legitimacy strategy based on a bargaining process. Part of the business firm
environment was the “rules of the game,” defined as a set of constraints under which the
business could conduct, but must limit, its activities.
The strategic posture of the MNC organizational management was based on the
strategic success paradigm (SSP). This formed the basis of Ansoff’s model of strategic
management at the corporate MNC level. According to Ansoff and McDonnell, the
firm’s adaptation to its external environment hinged on how strategic information was
perceived and understood by management. The corporate social responsibility (CSR)
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aggressiveness and corporate social responsibility (CSR) responsiveness would lead to an
overall corporate philosophy that had the capacity to respond to changes in the
environment and to financial and societal results of economic development in Palestine.
The use of CSR instruments as part of this research would facilitate the integration of
sustainability concerns as part of the company operations and create economic, as well a
social-organizational performance.
Figure 12, below, shows the role of MNC in sustainable socioeconomic
development in Palestine.
Figure 12. The role of MNC in sustainable socioeconomic development: The case of
Palestine.
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Strategic Success Paradigm (SSP)
The strategic success paradigm stated that the optimal performance of an
organization was where strategy aggressiveness and organizational capability
responsiveness matched the level of environmental turbulence in which the firms
operated. Ansoff and McDonnell (1990) outlined significant variables that were related
to successful strategic behavior and were environment driven. The first driver was
“environmental turbulence,” an effective response to the environment and a key to a
long-term strategic success. The second category of contingent driver was success
factors that must be done to produce success strategies in the future environment.
Realizing that there are different types of environments, different strategy-capability
couplings are required for successful operation of the firm.
Ansoff and McDonnell (1990) developed the concept of environmental turbulence
to describe the different environments according to five distinct turbulence levels. They
identified a concomitant level of success for every level of turbulence. The
environmental turbulence is defined by four characteristics. The four characteristics are
the following: (a) complexity, where the business environment becomes more complex
and the pace of change increases, resulting in an increase of turbulence level; (b)
familiarity of events; (c) rapidity of change, and (d) visibility of the future.
Table 13, below, reflects these levels of environmental turbulence.
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Table 13
Levels of Environmental Turbulence
Level 1 2 3 4 5
Turbulence
Characteristics Repetitive Expanding Changing Discontinuous Surprising
Complexity National + Regional + Global
Familiarity of Familiar Extrapolable Discontinuous Discontinuous

Events Novel
Rapidity of Slower Comparable Faster to

Change than to Response Response
Response
Visibility of Recurring Forecastable Predictable Partially Unpredictable
Future predictable
MNC Environmental Turbulence
MNCs are faced with diverse stakeholder environments across their international
operations. Multiple constituencies with various objectives affect the firm’s strategic
behaviour in addressing the final preferred objectives and rules of the game. Ansoff and
McDonnell (1990) outlined three ingredients to help analyse a firm’s legitimacy strategy:
(a) there was a need to analyse stakeholders’ objectives, (b) the legitimacy strategy
analyses and constraints, and (c) the analysis of power field environment. To manage the
firm’s boundaries, various researches had addressed gaps in the business environment
through forming alliances and interpersonal ties for successful operations.
156
Figure 13 presents a prototypical MNC with multi-stakeholders and provides the
extent of their influence on the corporation’s governance. Stakeholders’ involvement
could reduce risk by providing feedback such as early warning signs of product safety
issues, human rights violations, or environmental concerns. Understanding the impact of
stakeholders’ issues and concerns helps MNCs articulate their values, mission, strategy,
and commitments and indicates how they implement regulatory approvals processes,
participation in measurement and reporting, crises management, and their proactive
involvement in their network of relationships (ESCAP, 2009).
157
Host Country Gov. Customers and Stockholders Israeli policies of
(Palestine) users pose a Socially responsible closure regime and
Policies & continuing investment (SRI) restriction of
Regulations challenge to and engagement movement of people
(Investment laws) & business strategy activism and goods in West
PRDP Bank & Gaza
Multilateral Local civil

Special society
Interest
institutions (World organizations
Groups and
Bank, IMF, etc.) to social and special
support lending interest groups
partnerships Activism
MNC
Corporate
Int’l civil society Other companies
Organizations, leading CSR
NGOs aimed at benchmarks for
affecting MNCs sustainability in the
behavior market place
National & Int’l Suppliers Employee Local Unions and labor

Industry associations, Collaborate with Company HRM and & Int’l Labor
Chambers of suppliers for product work practices and Organization (ILO)
Commerce, WBCSD, design and services commitment to relations
code of conduct sustainability sustainability New regulations
Figure 13. MNC company governance and stakeholders.
158
Ansoff and McDonnell (1990) described two factors for the business’s strategic
approach: strategy aggressiveness and capability responsiveness. Strategy aggressiveness
was characterized by the firm’s application of tools, techniques, and know-how to enable
it to position itself in the environment. Ansoff described a firm’s strategy aggressiveness
according to two characteristics: first, the degree of discontinuity of the firm’s successive
strategic moves, such as between successive products that the firm introduces to the
market; and second, the timeliness of introduction of the firm’s new products.
Timeliness in this case ranged from reactive to anticipatory and to innovative and
proactive.
Organizational responsiveness was characterized as the firm’s ability to respond,
and it included the manager’s capabilities and those of the organizational system as a
whole. Ansoff and McDonnell (1990) characterized organizational responsiveness
according to the manner in which a firm handles change. They characterized the firm’s
responsiveness as the degree to which its organization is either introverted or extroverted
and identified three organizational components for the firm’s capability responsiveness:
1. Managers: mentality, power, competency, and capacity
2. Climate: culture, risk propensity, time perspective, and change triggers
3. Competence: problems-solving skills, information technology, organizational
structure, rewards, and total headcount
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Table 14, Matching Aggressiveness and Responsiveness to Turbulence, describes
the appropriate strategy aggressiveness and responsiveness levels that are necessary for
success through each turbulence level. Ansoff and McDonnell (1990) on one extreme
outlined the stable, placid environment where nothing changes, which is also known as
the “repetitive environment”; on the other extreme, they outlined the creative
environment, also known as the “surpriseful and unpredictable environment,” which is
characterized by major technological breakthroughs and sociopolitical upheavals.
Table 14
Matching Turbulence-Aggressiveness-Responsiveness
Environmental Repetitive Expanding Changing Discontinuous Surpriseful

Turbulence Repetitive Slow Fast Discontinuous Discontinuous
incremental predictable Unpredictable
Strategy Stable Reactive Anticipatory Entrepreneurial Creative

Aggressiveness Stable Incremental Incremental Discontinuous Discontinuous
based on based on based on New based on novel based on
precedents experience extrapolation observable creativity
opportunities
Capability Stability Efficiency Market Environmental Environment

Responsiveness seeking driven driven driven creating
Rejects Adapts to Seeks Seeks related Seeks novel
change change familiar change change
change
Closed Open
System System
LEVEL 1 2 3 4 5
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Strategy and Strategic CSR
From a business perspective, CSR has different meanings depending on the
MNC’s strategic behavior in terms of forming its responses to its environment. In this
research, it is defined as a means to respond to sustainability challenges. Ansoff and
McDonnell (1990) postulated that an MNC’s strategic behavior could take the course of
either a responsive-reactive or a strategic-proactive way to respond to the environment
based on its turbulence level. In the responsive-reactive approach, companies perceive
sustainability issues as risks that should be mitigated to maintain the firm’s reputation for
appropriate behavior and be worthy of its license to operate. On the other hand, when
companies proactively integrate a strategic issue management system into their
operations, management would perceive it as an opportunity rather than a risk to their
reputation or operations.
The strategic and systematic integration of CSR into the company’s strategy
allows companies to respond to societal needs while satisfying company and stakeholder
financial goals. From the perspective of stakeholders, proactive CSR can be viewed as a
specific form of socioeconomic relationship wherein social and financial goals are
negotiated in an ongoing way between the company and its stakeholders. According to
Porter and Kramer (2006a, 2006b), companies should design their affirmative corporate
social agenda to extend beyond harm avoidance to embrace programs for social progress.
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CSR Change Management Framework
Ansoff and McDonnell (1990) defined a change management sequence of three
major components to deal with discontinuous change. They defined discontinuous
change as a novel change, where the past does not prepare the organizations for the
future, requiring major revisions in the culture, power structure, reward/incentive
systems, organizational structures, and relationships with the external environment. The
three major components are the following: (a) a change strategy to introduce new
products and services; (b) changes in the systemic competence of the firm’s systems,
structure, skills, and knowledge; and (c) a behavioral change including norms,
perceptions, values, models, and distribution of power (Ansoff & McDonnell, 1990).
Ansoff and McDonnell (1990) recommended a managed resistance change
strategy that looks like an accordion, where each panel is a separate project/module that
builds the final process. Each module consists of two parts, one comprising capability
and the other strategy projects. On one hand, there lies the capability that focuses on the
reduction of resistance to skill development and simultaneously lays down strategy that
focuses on direction, plans, and strategic positioning. The uniqueness of the process is
that each module can be modified based on inputs from previous modules and new
information from the external environment. Ansoff and McDonnell listed three areas that
need to be addressed before and during the application of change management: (a)
strategy choice, (b) building the launching platform, and (c) launching the transformation.
Another framework for embedding CSR into business strategies and practices has
also been recommended by the United Nations Economic and Social Commission for
Asia and the Pacific (ESCAP) (2009). The framework consists of three major categories:
162
(a) designing, (b) execution, and (c) mainstreaming. Figure 14 outlines three areas that
require specific CSR design, including (a) preparing for CSR embarkation to raise CSR
awareness inside the company, (b) assembling a CSR team, and (c) stakeholder
engagement in the CSR process. The second category is the execution of the CSR
strategic plan that outlines the implementation of the CSR integrated strategy, followed
by monitoring and evaluation of the CSR plan. The last category outlines internalizing
CSR into organizational systems, as well as corporate culture and values.
In the case of sustainable development in Palestine, the drivers for CSR
embedment are political stability, socioeconomic priorities, and governance. This is
where an MNC with stakeholder engagement can take leadership in the definition of the
societal needs pertinent to its location in Palestine through a social agenda that is part of
the core business strategy. With a substantially responsive CSR program, a company
chooses to be a good corporate citizen and serve social concerns for stockholders, and it
might help mitigate existing or anticipated adverse effects from its business activities
along with its value chain.
163
Figure 14. The three areas that require specific CSR design.
Research Model
The success of the CSR strategy depends on the internal CSR capabilities of the
firm, which are functional, such as research and development, marketing, production, or
general management capability. As the environmental turbulence level changes
164
quantitatively and qualitatively, so does the firm’s strategy—capability couplings have to
change to fit the turbulence level for optimal organizational performance.
The research model reflects MNC strategy “aggressiveness” and MNC capability
“responsiveness,” both of which influence the strategic CSR posture of the MNC. The
research model describes two gaps, the MNC strategy aggressiveness gap and the MNC
capability responsiveness gap. These are defined respectively as the difference between
the perceived level of environmental turbulence and the reactive-to-proactive nature of
MNC CSR posture to MNC activities. This study hypothesized that as the absolute value
of MNC strategy aggressiveness gap decreases, performance of the MNC increases.
Similarly, as the absolute value of MNC capability responsiveness gap decreases,
performance of the MNC increases. The MNC CSR strategic posture is, then, theorized
to have a significant relationship to the social and financial performance of MNC.
This research aimed to answer some fundamental questions regarding the needs of
the Palestine region in terms of business development in the 21st century. It also aimed to
provide a very current picture of why the area is ripe for CSR policy and why and how
multinational companies that move into the market there can enact change that will be
both good business and good corporate social behavior.
The social, political, and business environment in Palestine is characterized by
instability and severely challenged socioeconomic development that influences every
facet of MNC strategic behavior, from stakeholder relations to human resources to
environmental impacts. The region has seen the frequent, unpredictable, and surprising
occurrence of uprisings and blockades that make the business environment complex,
constantly changing, and volatile. The level of environmental turbulence in the West
165
Bank/Gaza region is reflected in the complexity of the business environment. Change is
often reactive rather than proactive due to the constancy of chaos. Successful, that is,
proactive rather than reactive, corporate responsibility strategy requires its integration
into MNC’s core business strategy. The Research Model is presented in Figure 15,
below.
Figure 15. The research model.
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Research Variables
The variables studied in this research included MNC environmental turbulence,
MNC strategy aggressiveness, MNC capability responsiveness, MNC CSR posture, MNC
strategy aggressiveness gap, MNC capability responsiveness gap, financial and social
performance. The summary of research study variables are summarized below.
MNC Environmental Turbulence
The level of “environmental turbulence” describes the types of opportunities,
threats, and trends in the environment that an MNC faces in its international operations.
political and business environment, which creates multifaceted threats, surprising trends,
and bountiful opportunities. MNCs must vigilantly watch and measure these conditions
for relevance to their processes and policies. On the other hand, the continuation of
violence, border crossings, and security procedures all hamper the free movement of
goods and people. Consequently, MNCs require review of their economic viability, as
well as their political risk, such that they protect their FDI.
There are also important issues that must be resolved by the Palestinian Authority
(PA), such that MNCs continue to attract FDI and to promote a confident investment
climate. In addition, there are key national priorities that the PA outlines in its PRDP
plan that promote a viable climate for investors. These are comprised of contingencies,
such as (a) bringing the rule of law to the Palestinian territories, (b) combating violence,
(c) managing the Palestinian internal administrative affairs, (d) implementing institutional
reforms, and (e) developing a supportable infrastructure and economy.
167
The characteristics of MNC environmental turbulence presented in Table 15 is
drawn from Lorton (2006) and Loebbaka’s (2008) environmental management systems
dissertations and Ansoff and McDonnell’s (1990) Strategic Success Paradigm. The five
levels of MNC issue turbulence correspond to the spectrum of strategic behaviors that are
applicable to this research study.
Table 15
Level 1 2 3 4 5
Turbulence Repetitive Expanding Changing Discontinuous Surprising

Characteristics
Complexity of Not at all Slightly Moderately Usually very Always

Issues complex complex complex complex highly
complex
Pace of Rare Time to Must respond Must catch up Always

Change respond quickly to change changing
Predictability Changes are Easily Usually Predictable, Unpredictable

of Change rare predictable predictable but some
surprises
This study examined the advantages of integrating strategic CSR into a firm’s
core business strategy. Successful corporate responsibility involves policy development
between an MNC and its stakeholders. The CSR management system aggressiveness
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concept represents the mindset that MNC managers conceive to enact an overall CSR
perspective more strategically into their business operations. To not do so, for instance,
failure to satisfy consumer demands or provide acceptable pricing for safe products,
affects consumer confidence. To counter this requires organizational capability
responsiveness that meets the changing demands of various stakeholders, as well as
consumers. According to Clarkson (1995), an organization’s capability of satisfying
stakeholders’ demands is a key factor that determines the organization’s competitive
advantage.
Process Dimension of CSR “Built-in”

and “Bolt-on”
According to the RARE project’s Rhetoric and Realities: Analyzing Corporate
Social Responsibility in Europe, CSR sustainable management systems take two different
forms: the “built-in approach” and the “bolt-on” approach. The “built-in approach” deals
with building responsible behavior into the process. In addition, it includes efforts to
make corporate processes more sustainable, thereby improving the social properties of
the products and services tailored to host countries. Specifically, it strives to promote
sustainable consumption, sustainable extraction of raw material, and greening of
production and distribution processes, fair trade practices, and consumer information.
Additionally, it works to enforce compliance with ISO 26000 guidelines for corporate
social responsibility with respect to human rights and with the ILO’s labor standards,
especially as regards renunciation of child labor. It also supports efforts to increase
women’s participation on different management levels. Through a CSR management
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system, “change management” becomes an integral part of a firm’s strategic posture and
can create a bottom line impact.
The second form, the “bolt-on” approach, deals with company engagement with
pro-social initiatives beyond its core business operations and strategically can be linked
to the scope of business as the very raison d’être of the company. It is comprised of
strategic philanthropic activities, partnerships, and, most importantly, policies to manage
negative externalities in cooperation with external stakeholders.
The two processes can be considered as a continuum with management systems
“building in” responsibilities beyond compliance with regard to both goals and measures
followed by codes of conduct and reporting activities, while contributing at the same time
to sustainable development. The CSR management system aggressiveness requires that
the firm’s top management craft a CSR plan to transform the firm’s behavior. The
elements that contribute to CSR sustainable management system aggressiveness are
derived from the elements of strategic aggressiveness in Ansoff’s Strategic Success
Paradigm. Table 16 summarizes the five levels of CSR management system
aggressiveness that correspond to the five levels of MNC issue turbulence.
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Table 16
CSR MNC Management System Aggressiveness Verses MNC Issue Turbulence
Turbulence Level
1 2 3 4 5
Turbulence Static/ Repetitive Slowly changing Rapidly changing Discontinuous Surpriseful

Characteristics
CSR Company Fiduciary duty Corporate Corporate communications Strategic issue management Strategic CSR
Approach management reputation Business ethics leadership
Profit Philanthropy Strategic philanthropic
Maximization Public affairs Corporate identity activities
Public relations
CSR Stakeholder Stakeholder Stakeholder Stakeholder dialogue and Interactive strategic Partnerships and
Approach information with debate informal contacts stakeholder dialogue alliances
no interaction
Use of Technologies Use only current Adapt to new Implement Implement Seek novel
existing technologies and periodic/incremental continuous/incremental technologies
technologies quality control technologies creative technologies
management
systems
(table continues)
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Turbulence Level
1 2 3 4 5
Change Management Reject change and Welcome change Adapt to change for new Change for potential risk and Integrate creative
seek stability for existing CSR instruments opportunity change
instruments
Maintain Strategic CSR as

Maintain profit Strategic issue management
CSR Strategy Maintain CSR financial a form of
maximization with limited and strategic philanthropic
Integration Mindset strategy isolation responsibility to engagement with
philanthropic activities activities
shareholders stakeholders
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CSR Capability Responsiveness
CSR management system responsiveness represents the ability of the CSR
management system to respond to stakeholders’ demands regarding societal needs while
optimizing the MNC’s economic performance. Ansoff and McDonnell (1990) defined
the general management capability of an organization as consisting of two key factors,
the capabilities of the general managers and the capabilities of the management
organization. According to Ansoff and McDonnell, levels of strategic aggressiveness and
capability responsiveness appropriate to the level of environmental turbulence are
required for business success.
Basically, the CSR management system represents the capabilities of the top
management to craft the CSR initiatives. This includes the formation of a socially
diverse CSR team that represents different departments. Such a team makes clear the
organizational mindset and goal-setting, which can then implement state-of-the-art
technologies and maintain continuous knowledge of globally, accepted CSR instruments.
D’Amato, Henderson, and Florence (2009) cited that leadership competencies include
courage, business acumen, and a vision of the company’s legacy. They added that a
leader should be remembered as a person who designed, not just a company, but a society
that is educated and economically sustainable.
Ansoff and McDonnell (1990) stressed that business strategy should be aligned
with organizational strategy. Based on this concept, sustainability and CSR should be
aligned and integrated with organizational business strategy. The design structures and
systems should address sustainability and CSR societal needs, implement CSR change
management, overcome organizational resistance to change, empower team engagement
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with stakeholders, and support performance to build a new culture to support the CSR
implementation process.
The hypothesis presented in this research was that MNC performance is
optimized when MNC strategy aggressiveness and MNC capability responsiveness are
aligned with MNC issue turbulence. In the research model, the difference between MNC
issue turbulence and MNC strategy aggressiveness was named MNC strategy
aggressiveness gap. Similarly, the difference between MNC issue turbulence and MNC
capability responsiveness was named MNC capability responsiveness gap. The research
model also indicated the CSR strategic posture reflecting the influence of MNC issue
turbulence, CSR management system aggressiveness, and CSR management system
responsiveness for MNC CSR continuum.
Table 17 outlines the five levels of CSR management system responsiveness that
correspond to the five levels of MNC issue turbulence.
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Table 17
CSR MNC Management System Responsiveness Verses MNC Issue Turbulence
Turbulence Level
1 2 3 4 5
Turbulence
Static/Repetitive Slowly Changing Rapidly Changing Discontinuous Surpriseful
Characteristics
No commitment to
Focuses on risk Creates awareness Creates new form of
Top Management address CSR issues Implements CSR
mitigation and harm and understanding of engagement with
Involvement in CSR Political change management
avoidance CSR issues stakeholders
Public relations
Political
Charismatic and
Leadership Skills
transformational
Forms cross-
Explores CSR added Plans for new CSR Acts as CSR agents
Primary roles and functional CSR
CSR Team roles and roles and to implement change
responsibilities teams within
responsibilities responsibilities management
departments
(table continues)
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Turbulence Level
1 2 3 4 5
CSR Policies, CSR policies,

Programs, Policies, programs standards, and
International and standards are not programs are
Standards, and part of organization formalized to
Guidelines stakeholders
Staff Knowledge of Expert Knowledge of

Effective knowledge
CSR Policies, Knowledge of Some knowledge of Moderate knowledge new CSR policies,
of CSR policies,
Programs, existing internal CSR policies, of CSR policies, programs and
programs, and/or
International policies programs and/or programs, and/or international
standards
standards and/or standards/guidelines standards/guidelines standards and/or
and guidelines
Guidelines Guidelines
Seek novel and

Reject Accept familiar risks Seek familiar risks Seek unfamiliar risks
CSR Risk Propensity creative risks and
and opportunities And opportunities and opportunities
opportunities
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CSR Management System Strategic
Posture
Ansoff and McDonnell (1990) referred to the combination of the firm’s strategic
aggressiveness, its capability responsiveness, and its change management as the
“strategic posture” of the firm. The strategic posture of the firm is derived through
diagnosing the future levels of environmental turbulence and the desired strategic
approach. They stated that the outcome of the gap analysis and the closure of these gaps
were the bases for implementing change management and further establishing the
strategic aggressiveness and general management responsiveness required for optimum
performance. According to Ansoff and McDonnell, the general management capability
responsiveness includes the general management and the supporting organization. The
closure of the gaps in general management capability responsiveness that supports
strategy aggressiveness requires significant change in organizational behavior in order to
overcome resistance (Ansoff & McDonnell, 1990).
Table 18 depicts the attributes of general management capability.
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Table 18
The Attributes of General Management Capability
Attribute Managers Organization
Climate Mentality Culture

Will to Respond Power Position Power Structure
Competence Talents Structure

Ability to Respond Skills Systems
Shared Knowledge
Capacity Personal Organizational

Volume to Response
Based on research of Palestine, the drivers of CSR include the following: (a)
socioeconomic priorities, (b) governance gaps, (c) market access, (d) political stability
and reform, (e) investment incentives, (f) supply chain factors, (g) stakeholder activism,
and (h) international standardization. The firm’s CSR strategic posture should
specifically target the impact of the MNCs’ activities in the workplace; that is, labor
standards, human resources, organizational development, and the marketing that defines
the MNC to its customers, including product manufacturing and quality, distribution
access, and selling practices should be transparent to employees, as should concerns
about the sustainability of company technologies. The CSR should address the
socioeconomic development challenges facing Palestine. This would include generating
employment to alleviate poverty; capacity building; health-care provision; infrastructure
development; peace-building; helping to rebuild weak government institutions; political
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reforms; and human rights, as well as challenging governance gaps regarding social
The Research Questions and Hypotheses
The research questions focused primarily on management issues that relate to
improved MNC financial and social performance. The following list of research
questions was constructed based on the above information:
aggressiveness gap and the MNC’s financial performance?
aggressiveness gap and MNC financial performance.
aggressiveness gap and the MNC’s social performance?
aggressiveness gap and MNC social performance.
responsiveness gap and the MNC’s financial performance?
responsiveness gap and MNC financial performance.
responsiveness gap and the MNC’s social performance?
responsiveness gap and MNC social performance.
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Research Question 5. What is the relationship between the MNC’s strategy
aggressiveness and the MNC’s social responsibility (CSR) posture?
aggressiveness and MNC social responsibility (CSR) posture.
Research Question 6. What is the relationship between the MNC’s capability
responsiveness and the MNC’s social responsibility (CSR) posture?
responsiveness and MNC social responsibility (CSR) posture.
and the MNC’s financial performance?
MNC financial performance.
and the MNC’s social performance?
MNC social performance.
Research Question 9. What is the relationship between the MNC’s financial
performance and the MNC’s social performance?
Hypothesis 9. There is a reliable relationship between MNC financial
performance and MNC social performance.
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Research Strategy
The methodology for this research study was based on the Strategic Success
Paradigm (SSP) presented by Ansoff and McDonnell (1990). This methodology was
operationalized in this study through the relationship between MNC environmental
turbulence, MNC aggressiveness, and MNC capability responsiveness. Specifically, the
study hypothesized that organizational performance is improved when MNC strategy
aggressiveness, MNC capability responsiveness, and MNC CSR strategic posture are
aligned with MNC issue turbulence. The environmental turbulence was the driving
variable that determined whether the firm’s strategic behavior would succeed in an
environment. As part of the MNC’s strategy, CSR was considered an integral part of the
overall core business strategy to optimize economic and social performance for
companies operating in Palestine.
This study evaluated four independent variables: (a) MNC issue turbulence, (b)
MNC strategy aggressiveness, (c) MNC capability responsiveness, and (d) MNC CSR
strategic posture. The MNC strategy aggressiveness gap and the MNC capability
responsiveness gap were the two intervening variables. The two dependent variables
were the MNC’s financial performance and the MNC’s social performance. The industry
type, business, business sector, and business activity were control variables. The data for
each variable were evaluated based on interval scales. The research consisted of
statistical hypothesis testing using a descriptive correlation approach. Data were
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statistical significance of the null hypothesis. Table 19 outlines the variables of this
research study with conceptual and operational definitions.
Table 19
Variables of the Research Study With Conceptual and Operational Definitions
Variables Conceptual Definition Operational Definition
MNC Environmental MNC Environmental

Turbulence is characterized by Turbulence is measured
the (a) complexity, (b) rapidity through an arithmetic mean
of change, and (c) calculation from each
predictability of the business respondent for Questions 1
environment in Palestine. It through 8, using a 5-point
MNC Environmental will measure the company’s Likert scale.
Turbulence response relative to changes in
(Independent) the business environment and
predictability of economic,
political, and security closure
policies and complexity of
regulations and financial
policies that affect a firm’s
activities and business
environment.
It will measure the MNC’s The MNC Strategy

behavior toward the Aggressiveness is measured
integration of CSR as an through calculating the
integral part of its core arithmetic mean from each
business operations, the respondent for Questions
company’s approach to change 9–13, using a 5-point Likert
MNC Strategy Aggressiveness on issues pertaining to CSR, scale.
(Independent) the top management’s mindset
and CSR goals, whether CSR
is conceived of organization as
a new form of engagement
with stakeholders, and how
receptive the company is to
new technologies for the
production of quality products.
(table continues)
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It is characterized by the The MNC Capability

ability of management and its responsiveness is measured by
organizational system to calculating the arithmetic
respond to CSR issues in the mean for the following
business environment. It is questions: 14-26, using 5-
measured through a series of point Likert scales.
questions that examine top
MNC Capability
management’s involvement in
Responsiveness
CSR issues, organizational
(Independent)
leadership that supports CSR
initiatives, policies and
programs developed for
stakeholders, management’s
knowledge of international
standards, initiatives, and
various factors that MNCs
consider when contemplating
investment in Palestine.
The conceptual definition of The operational definition of

MNC posture articulates the MNC posture is measured by
two approaches, the “built-in,” calculating the arithmetic
which deals with building mean for Questions: 27–36,
responsible behavior in the using a 5-point Likert scale.
organization; and the “bolt-
on,” which deals with
MNC CSR Posture company engagement using
(Independent) pro-social initiatives that
extend beyond the core
business operations. It will be
measured through a series of
questions pertinent to the
firm’s strategic
aggressiveness, its capability
responsiveness, and its change
management stance.
(table continues)
183

the MNC aggressiveness gap the MNC aggressiveness gap
MNC Strategy is a measure of how much an is calculated as the absolute
Aggressiveness Gap organization’s MNC difference between the scores
(Intervening) aggressiveness differs from its of MNC aggressiveness and
issue turbulence. MNC issue turbulence from
each respondent. The MNC
aggressiveness gap can range
in value from 0 to 4.
the MNC responsiveness gap the MNC responsiveness gap
MNC Capability is a measure of how much an is calculated as the absolute
Responsiveness Gap organization’s MNC difference between the scores
(Intervening) responsiveness differs from its of MNC responsiveness and
MNC issue turbulence. MNC issue turbulence of each
respondent. The MNC
responsiveness gap can range
in value from 0 to 4.
MNC financial performance is The financial performance is
a measure of the firm’s calculated as the arithmetic
finance when the CSR mean from each respondent
MNC Financial Performance management system is part of for Question 37. It measures
(Dependant) the core business strategy. the average firm’s return on
equity (ROE) over the last 3
years’ percentage of MNC
operations (ratio of income to
shareholder’s equity).
A measure of important The operational definition of
elements of MNC social the social performance is
performance that contributes calculated as the arithmetic
MNC Social Performance to the firm’s stakeholders as mean from each respondent
(Dependant) evidenced by implementation for Questions 38-55.
of beneficial programs to the
firm’s employees and external
stakeholders.
It is a measure to categorize Industry Type is identified in
Industry Type , Business
business classification, sector, Question 56, 57, and 58,
Sector, and Business Activity
and activities of the MNC’s respectively.
(Control)
operations.
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Data Sources
The target population for this research included multinational corporations
(MNCs) and domestic Small and Medium Enterprises (SMEs) that had operations in or
were contemplating undertaking FDI investment in Palestine. The intended survey
respondents must have had the knowledge and expertise regarding the political and the
socioeconomic challenges in the Middle East, mainly of a conflict-prone region such as
Palestine. Two multiple sets of samples were downloaded into a Microsoft Excel
spreadsheet from two Web site sources: the Palestinian Trade Center (Pal Trade) and
Palestine Stock Exchange (PSE), respectively. Pal Trade is a national trade development
organization that has 339 memberships for Palestinian leading businesses (see Appendix
A) of various industry sectors in the West Bank and Gaza. There were 43 companies
listed on the Palestine Stock Exchange in various industries, and they were actively
traded on the PSE market (see Appendix B). These companies were mainly located in
the West Bank and Gaza. Company names, contact persons, industry sectors, e-mail
addresses, and telephone and fax numbers were tabulated. Companies that responded to
the survey instrument were industries in the following: (a) manufacturing, (b)
communication and advertising, (c) IT and networking, (d) real estate, (e) construction,
(f) financial services and banking, (g) telecommunication, (h) retail, and (i) business
consulting firms.
Instrument and Procedure
The questionnaire was set up online using SurveyMonkey.com, and a link to the
survey was e-mailed to listed companies on Pal Trade and PSE to participate in the
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survey. An introductory page that briefly described the purpose of the study, with
information required by the Institutional Review Board (IRB) and instructions for
completing the survey, was attached to survey. Massar International, a private business
consulting firm and a subsidiary of the main firm that promoted sustainable development
in Palestine, was consulted to communicate with companies in Palestine to either
participate through online SurveyMonley.com and/or provide companies with printed
questionnaires in PDF format downloaded from the Survey Monkey Web site on both
sides of 8½ x 11-inch white paper. Respondents preferred a direct e-mail to their
companies with an attached questionnaire that was downloaded from SurevyMonkey.com
in a PDF format.
Validity and Reliability
The survey questionnaire was built on an extensive review of the literature
pertinent to the business environment in Palestine. Additionally, a comprehensive
investigation of corporate social responsibility (CSR) concepts, policies, international
initiatives, guidelines, and standards directed this research study. Research on the
business environment in Palestine was modeled on research done by multiple,
recognizable, international organizations of repute. The dissertation committee members
provided helpful resources and recommendations and have been instrumental in guiding
this research study. Previous research questions designed by committee chairperson Dr.
Greg Lorton and committee member Dr. Kevin Loebbaka served as a guide in structuring
the research questions in this study.
186
Suggestions and recommendations on the survey validity were sought from a third
party, Massar International, which has extensive knowledge about the business
environment in Palestine. The variables analyzed in this research were calculated from
the respondents’ answers to multiple questions. Reliability measurements were
undertaken for the independent and dependent variables within the study using
Cronbach’s alpha. The reliability and descriptive statistics for these variables are
presented in Table 20.
Table 20
Variable Reliability and Descriptive Statistics
Variable Alpha Scale Mean Range SD
MNC Environmental
Turbulence .818 1–5 3.17 2.13–4.50 .714
MNC Strategy
Aggressiveness .489 1–5 3.23 2.20–4.00 .598
MNC Capability
Responsiveness .821 1–5 3.66 2.77–4.38 .559
MNC CSR Posture .641 1–5 3.26 2.60–4.60 .567
MNC Aggressiveness
Gap -- 0–4 .55 .03–1.47 .489
MNC Responsiveness
Gap -- 0–4 .61 .02–1.79 .549
Social Performance .554 1–5 3.41 2.45–4.17 .526
Financial Performance
(as ROE) -- percent 8.12 -10–+27 12.38
Note. N = 11.
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Data Analysis
The survey questionnaire was sent to 316 companies that operated at the time of
the survey taken in Palestine. There were 15 companies that responded to the survey.
One company missed a major part of the questionnaire pertaining to financial and social
performance and was removed from the sample. Another company in the technology
sector was eliminated from the sample because it did not insert its financial performance.
In addition, two more companies declined to participate in the survey. The research
study was analyzed based on 11 returned surveys. The response rate was approximately
5%.
The data collected through the questionnaire were coded into a Microsoft Excel
spreadsheet that included data collected for MNC issue turbulence, MNC strategy
(CSR) posture, and financial and social performance of each MNC. Data were
statistical significance of the null hypotheses.
Assumptions
The methodology of the research model, measurements, and data analysis
included the following assumptions:
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1. The research method and procedures were suitable for this study.
2. Respondents to the questionnaire understood and were able to answer the
questions with honesty and transparency.
3. Respondents were familiar with the business environment and familiar with
their organization’s CSR involvement.
Limitations
One of the limitations of this research study was that a limited number of
multinational companies operated in the West Bank and Gaza territory. The private
sector establishments constituted 90.7% of total businesses. These were largely family-
based, small-sized, and low-capacity businesses. Consequently, CSR was new to
Palestine, but MNCs doing business there were importing CSR policies that were well-
established in developed countries. Domestic local companies and MNCs operating in
Palestine were sought for this research study. Although there were not enough MNCs
operating in Palestine, the studies required multiple respondents from the same
organization and their subsidiaries to fine tune the research to test the hypotheses in the
research study. The number of companies that responded was limited, and a small
sample of 11 companies was used to analyze and test the hypotheses in the research
study.
Another limitation for this research study was the possibility of the population
being conditioned to a high level of turbulence that might have produced bias from the
respondents. The environment in Palestine has been shaped by conflict, violence, and
continued unrest for many decades. The long-term social and cultural norms of
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acceptance of a high turbulence level might have shifted the business environment to
acceptance of a moderate high turbulence level.
Research Findings
MNC environmental turbulence, MNC strategy aggressiveness, MNC capability
responsiveness, MNC CSR posture, and MNC social and financial performances were
directly computed from responses to survey questions. The MNC aggressiveness gap and
MNC responsiveness gap were calculated as the difference between MNC environmental
turbulence and MNC aggressiveness and MNC responsiveness, respectively.
A summary of the results from Hypotheses 1, 2, 3, 4, 5, 6, 7, 8, and 9 are
presented in Table 21. Hypotheses 1, 2, 3, 4, and 5 were not supported at significance
levels of less than 0.05. Hypotheses 6, 7, 8, and 9 were supported at a significance level
of less than 0.05.
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Table 21
Summary of Statistical Results

Test

Strategy Aggressiveness Gap rho Supported
and MNC financial
performance

Strategy Aggressiveness Gap rho Supported
and MNC social performance

performance

Gap and MNC social
performance

strategy aggressiveness and rho Supported

capability responsiveness and rho

financial performance

CSR posture and MNC social rho
performance

financial performance and rho
MNC social performance
Note. N = 11.
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Discussion of Findings
The sample sizes, means, standard deviations, and reliability outcome pertaining to
the variables were presented in Table 20. Spearman’s rho revealed no statistical
correlation for Hypotheses 1, 2, 3, 4, and 5 for a significance level less than .05.
Spearman’s rho revealed a statistically reliable relationship for Hypotheses 6, 7, 8, and 9
and was supported at a significance level of less than 0.05.
Hypothesis 6, the relationship between MNC capability responsiveness and MNC
corporate social responsibility (CSR) posture, was supported (p < 0.033), indicating that
those firms that scored high on capability responsiveness tended to score high on CSR
posture. As the firm’s managerial and organizational system had the ability to respond to
CSR issues in the business environment, the firm’s CSR posture became proactive and
had the ability to build competence and implement CSR change management.
Hypotheses 7 and 8 were statistically supported, respectively (p <.010 and p <
0.033), which indicated that relationships existed between an MNC CSR posture and its
financial and social performance. Firms that scored high on MNC CSR posture tended to
score high and increase their financial and social profitability. As the firm’s CSR posture
became proactive—to build a responsible behavior, implement CSR change management,
and engage with stakeholders to respond to societal needs—the firm’s financial and
social profitability increased.
Hypothesis 9 showed a statistically significant relationship (p < 0 .026) between
financial and social performance. Firms that proactively implemented CSR posture and
engaged with pro-social activities to respond to societal needs and scored high on social
performance tended to score high on financial performance. This outcome indicated that
192
as firms implemented successful CSR policies in which all stakeholders were invested,
the company would be financially successful.
The research findings also showed a significant relationship with development of
viable national economy (r [11] = .781, p = .005), a significant relationship with
enhancing government institutions (r [11] = .741, p = .009), and a significant relationship
with supportive investment climate (r [11] = .740, p = .009). It was found that MNC
strategy aggressiveness had a significant relationship with CSR core business strategy
incorporation (r [11] = .831, p = .002), a significant positive relationship with companies’
approach to interaction with stakeholders (r [11] = .760, p = .007), a significant positive
relationship with MNC managerial skills (r [11] =.960, p = .00), and a significant positive
relationship with MNC leadership skills (r [11] =.819, p = .002.). These significant
relationships indicated that companies that scored high on these variables tended to score
high for a supportive business environment and a proactive CSR posture for firms
operating in Palestine. For instance, there would be the need for a proactive posture to
integrate strategic CSR in a firm’s core business strategy, the need for interaction with
stakeholders to define societal needs, and the need for managerial and leadership skills to
implement a new change management and institutionalize CSR embedment in the firm’s
business operations for optimal financial and social performance.
political and business environment, which created multifaceted threats, surprising trends,
and bountiful opportunities. The level of environmental turbulence in the West
Bank/Gaza region was reflected in the complexity of its business environment.
According to the World Bank (2009a), the political and the socioeconomic environments
193
in Palestine had seen frequent, unpredictable, and surprising upheavals. Firms operating
in Palestine should develop and install an environmental surveillance and capability
analysis management system to detect discontinuities in the market place and proactively
respond to societal challenges . The drivers for CSR pertaining to socioeconomic
priorities and political stability ought to be implemented to achieve sustainable
development in Palestine. MNC engagement with stakeholders could take the leadership
in defining the societal needs pertinent to the location in Palestine through a social
agenda as part of the core business strategy.
The strategic and systematic integration of CSR into the company’s strategy would
allow companies in Palestine to respond to societal needs while satisfying company and
stakeholder financial and societal goals. According to Ansoff (1984), the optimal
performance of an organization would require MNC strategy aggressiveness and
organizational capability responsiveness to match the level of environmental turbulence
in which the firm operated. Realizing that there were different types of environments,
different strategy-capability couplings were required for successful operation in Palestine.
Additional Findings
The additional findings of this study examined the relationships between MNC
environmental turbulence and various factors that affect the business environment in
Palestine for successful operations. The external political, socioeconomic, and legal
environment was extensively researched and concluded that a supportive investment
environment for companies seeking foreign direct investment (FDI) in Palestine needed a
transparent, stable, and predictable investment climate for successful operations.
194
MNC environmental turbulence showed a significant relationship with political
stability (r [11] = .937, p = .000). Goll and Rasheed (2002) concluded that a positive
relationship was dependent upon the business environment in which the firm was
operating. Loree and Guisinger (1995) indicated that equity FDI was positively linked to
political stability. The research showed a positive strong relationship between political
stability and development of a viable national economy in Palestine (r [11] = .872, p =
.00).
According to the World Bank Operations Evaluation Department (WBOED)
(1998), one aspect of successful post-conflict rebuilding was the necessity of
interdependent and mutually reinforcing political, economic, and military pillars to
consolidate the peace. A strong economic recovery could not be built on a fragile peace,
and a strong peace could not be built on a fragile economy. The research showed a
significant relationship with developing a viable infrastructure (r [11] = .792, p = .004).
Empirical research indicated that physical infrastructure influenced MNC decisions in
that it formed the basis of calculations regarding the expected costs of moving raw
materials and finished goods to and from a MNC home base (Loree & Guisinger, 1995;
Root & Ahmad, 1978). The research showed a significant relationship with development
of viable national economy (r [11] = .781, p = .005), a significant relationship with
enhancing government institutions (r [11] = .741, p = .009), and a significant relationship
with supportive investment climate (r [11] = .740, p = .009). Successful multinational
companies operating in this challenging market should diagnose their environmental
turbulence with inside-out and outside-in approaches to optimize their long-term
economic and social profitability.
195
The MNC strategy aggressiveness examined other relationships that are positively
correlated. It was found that MNC strategy aggressiveness had a significant relationship
with CSR core business strategy incorporation (r [11] = .831, p = .002), a positive
correlation with CSR goal and mindset of the organization (r [11] = .633, p = .037),
positive correlation with MNC capability responsiveness (r [11] = .654, p = .029), and a
positive relationship with transparency in commercial transactions (r [11] = .640, p =
.034).
Prahalad and Hart (2002) argued that transaction governance capacity (TGC) was
a fundamental dimension of a transparent market for capital, land, labor, commodities,
and knowledge, which further would set the stage for a supportive investment climate.
The study showed a positive relationships with sustainable job creation (r [11] = .650, p =
.03) and political risk insurance (r [11] = .627, p = .039). Political risk was a top concern
for corporate foreign investors when venturing into emerging markets (MIGA, 2009).
Specifically, for developing countries, political risk was a major factor in the investment
decision-making of foreign investors (Okoroafa, 1986). The research showed a
significant relationship with free inflow and outflow of foreign currency (r [11] = .753, p
= .007). El-Said and El-Hennawi (1982) found that favorable conditions for profit
repatriation and capital had a positive impact on management decisions to invest in
developing countries.
The MNC capability responsiveness variable showed a positive correlation with
promoting an investment climate in Palestine (r [11] = .798, p = .004); a significant
positive relationship with companies’ approach of interaction with stakeholders (r [11] =
.760, p = .007); a significant positive relationship with MNC managerial skills (r [11]
196
=.960, p = .00); a significant positive relationship with MNC leadership skills (r [11]
=.819, p = .002); a positive correlation with access to resources as an important factor in
the decision-making of MNC FDI investment in Palestine (r [11] = .670, p = .024); a
significant positive relationship with collaboration between MNCs as an important factor
of cooperation with stakeholders (r [11] = .729, p = .011); a significant positive
relationship with creating transparency in commercial transactions (r [11] = .927, p =
.00); a positive relationship with employee health plan programs contribution (r [11] =
.667, p = .036); a positive relationship with sustainable job creation as a contribution to
socioeconomic development in Palestine (r [11] = .724, p = .012); a positive relationship
with companies’ support initiatives to attract FDIs to Palestine (r [11] = .686, p = .02
<.05); a significant positive relationship with companies’ support of local education,
health, and enterprise development programs (r [11] = .749, p = .008); a positive
significant relationship with tax incentives and exemptions as an important factor to
consider when investing in Palestine (r [11] = .828, p = .002); a positive relationship with
companies’ innovation to manufacture products and services tailored to local markets in
Palestine (r [11] = .669, p = .024); and a positive relationship with free inflow and
outflow of foreign currencies as an important factor to consider for MNC operations in
Palestine.
The MNC CSR posture variable showed a strong positive relationship with MNC
cooperation with non-governmental organizations’ (NGOs) stakeholders (r [11] = .843, p
= .001), MNC cooperation with civic and local government in Palestine as an important
factor in the decision-making (r [11] = .743, p = .009), a positive relationship with
cooperation with not-for-profit (NFT) organizations (r [11] = .681, p = .021), a positive
197
relationship with creating sustainable jobs in Palestine (r [11] = .649, p = .031), a positive
relationship with employee health plans (r [11] = .690, p = .019), a positive relationship
with MNC capability responsiveness gap (r [11] = .674, p = .023), a positive relationship
with MNC’s CSR involvement (r [11] = .702, p = .016), and a positive relationship with
promoting managerial skills (r [11] = .654, p = .029).
The additional positive correlations of the MNC return on equity (ROE) pertained
to the importance of the MNC collaborations and interaction with stakeholders (r [11] =
.618, p = .043), collaboration between MNCs (r [11] = .703, p = .016), cooperation with
NGOs (r [11] = .712, p = .014), and a strong positive relationship with employee health
plan programs (r [11] = .798, p = .003).
The additional findings with social performance showed positive relationships
with MNC capability responsiveness (r [11] = .606, p = .048), importance of investment
in human resources (r [11] = .699, p = .017), support of internal and cross border
business (r [11] = .626, p = .039), and support initiatives to attract FDIs to Palestine (r
[11] = .618, p = .043), and a negative relationship with complexity of regulations and
financial frameworks in Palestine (r [11] = - .740, p = .009). Mendibil et al. (2007)
described how in practice innovation and social responsibility appeared to come together
through strong engagement with employees and external stakeholders. The report added
that CSR needed to be part of core business strategy if it was to be a competitive
differentiator. MNC strategic posture planning requires integration of international
instruments in framing the CSR plan for successful operations.
198
Conclusions
responsibility (CSR) posture, and the financial and social performance of MNCs
operating in Palestine. This study hypothesized that organizational performance was
improved when MNC strategy aggressiveness and MNC capability responsiveness were
aligned with MNC issue turbulence level. The sample sizes, means, standard deviations,
and reliability outcome pertaining to the variables were presented in Table 20.
Spearman’s rho revealed no statistical correlation for Hypotheses 1, 2, 3, 4, and 5 for a
significance level less than .05. Spearman’s rho revealed a statistically reliable
relationship for Hypotheses 6, 7, 8, and 9 and was supported at a significance level of less
than 0.05.
According to Ansoff and McDonnell (1990), levels of strategic aggressiveness
and capability responsiveness appropriate to the level of environmental turbulence were
required for business success. Basically, embedment of CSR management system in the
companies’ operations would require the capabilities of firms’ top management to craft
CSR initiatives and respond to socioeconomic challenges facing Palestine. This would
(a) generate employment to alleviate poverty, (b) support capacity building, (c) support
health-care provisions, (d) promote infrastructure development, (e) help peace-building,
(f) help to rebuild weak government institutions, (g) institutionalize political reforms, and
(h) preserve human rights, as well as (i) challenge governance gaps regarding social
199
According to Ansoff and McDonnell (1990), the strategic posture of the firm was
derived through diagnosing the future levels of environmental turbulence and the desired
strategic aggressiveness and capability responsiveness of the firm based on the gap
analysis approach. The closure of these gaps was the basis for implementing change
management and further establishing the strategic aggressiveness and general
management responsiveness required for optimum financial and social performance. The
MNC CSR posture showed significant relationships with NGOs, civic and local
government, and company interaction with stakeholders and NFP organizations. Mainly,
MNC CSR posture showed a positive relationship with sustainable job creation for firms
operating in Palestine.
According to Porter and Kramer (2011), the most important thing a corporation
could do was to contribute to a prosperous economy because with that contribution, the
corporation could change the state of affairs with regard to social welfare. Based on the
findings of this research study, incorporating strategic CSR into a firm’s core business
would improve the organization’s financial and social performance.
In addition to these findings, multinational companies’ engagement and
collaboration with stakeholders, government, civic agencies, NGOs, and NFP organizations
showed positive and significant relationships with MNC CSR posture that could lead to
sustainable development. This was consistent with Kidder’s (2006) statement that a
carefully crafted coalition of international businesses, NGOs, and prominent businesses
could be organized to improve economic conditions in Palestine.
200
Recommendations for Business Managers
The research study examined integration of CSR strategies in multinational and
local companies in Palestine with the objective of maximizing both profits and social
performance that would lead to socioeconomic development. Firm leaders and managers
could improve their competitive advantage by embedding CSR strategies as part of their
core business strategy. The conclusions of this study pointed out that MNC CSR posture
could add value and obtain competitive advantage and be profitable through socially
responsible activities. Acting strategically, CSR management systems should be
integrated with core corporate strategies.
According to Porter and Kramer (2002), companies’ actions should be seen as
adding value to their products in the eyes of the public and should also improve their
local business environment. It is critical for managers to outline a CSR change
management system where strategy aggressiveness and capability responsiveness match
the level of turbulence in Palestine. MNC’s management should diagnose the
environment based on inside-out and outside-in approaches and proactively respond to
societal challenges through dialogue with stakeholders operating in Palestine. This is
where an MNC with stakeholder engagement can take leadership in the definition of the
societal needs pertinent to its location in Palestine through a social agenda that is part of
the core business strategy.
201
Contributions to the Academic Field
of Strategic Management
contributed to the field of strategic management by empirically testing and validating
prone zone such as Palestine. The study provided researchers and professionals with
performance. This research study empirically validated the application of Ansoff’s
Strategic Success Paradigm (SSP) in the area of strategic CSR as part of core business
strategies. It also complemented the works Dr. Greg Lorton’s environmental system
integration (2006) and Dr. J. K. Loebbaka’s (2008) safety management system
integration.
Contributions to the Practice

of Management
This study was designed to examine the background of the MNC issue turbulence
in Palestine. It clarified the CSR strategic approach as an integral part of the overall core
business strategy for optimum financial and social profitability. The study summarized
the strategic success paradigm (SSP) as a framework to integrate CSR as a core strategy
in companies’ operations, the importance of legitimacy strategy, and the rules of the
game to optimize the preferred objectives and profit-seeking activities. The following
CSR management systems were identified in the research study for FDI’s in Palestine:
202
1. Analysis of the MNC issue turbulence surveillance system that would be
required to diagnose the social, economic, political, and legal environment through
inside-out and outside-in approaches to identify the gaps and mitigate turbulence in the
business environment through the implementation of CSR proactive-integrated posture.
This issue management system would help organizations rapidly detect and respond to
changes in the socio-political environment as they emerge.
2. Implementation of strategic posture management that would be derived
through diagnosing the future levels of environmental turbulence and the desired strategic
approach. The outcome of the gap analysis and the closure of these gaps would form the
basis for implementing change management and further establishing the strategic
aggressiveness and general management responsiveness required for optimum
performance.
3. Incorporation of strategic CSR into a firm’s core business that would improve
the organization’s financial and social performance. The research study showed a
positive relationship between financial and social performance (FP-SP). The social
performance pro-social activities do not appear to increase the company’s financial risk.
On the contrary, social performance integrated particular stakeholders preferred
objectives in a legitimacy strategy that would lead to socioeconomic development in
Palestine.
4. Implementation of MNC CSR management system aggressiveness that would
require the firm’s top management to craft a CSR plan to transform the firm’s behavior
through CSR change management.
203
5. Implementation of MNC CSR management system responsiveness that would
represent the ability of the CSR management system to respond to stakeholders’ demands
regarding societal needs while optimizing the MNC’s economic performance.
6. Following the CSR strategic posture management and integrating CSR
management systems into their core business strategies that would allow firms’ managers
to be able to achieve financial and social profitability.
Recommendations for Further Research
The research study could be refined and expanded for further research. The
following are additional items to be considered for further research:
1. Additional respondents to the research study would allow for a larger sample.
Basically, the larger the sample, the more likely a computed correlation coefficient would
be found to be statistically significant for the strategy aggressiveness and capability
responsiveness gaps, respectively. Hypothesis 3, the relationship between MNC
capability responsiveness gap and MNC financial performance, was not supported (r [11]
= .534, p = .09). The test could have been significant if the sample was larger than N =
11.
2. Additional questions could have been designed and added that pertained to the
strategy aggressiveness independent variable in the research study. The reliability for
Cronbach’s alpha coefficient = .489 is considered low, and more questions could increase
the reliability coefficient to support internal consistency of the construct.
3. Additional questions might be asked about financial performance since some
companies might not understand the definition of the term return of equity (ROE).
204
4. The results of this research did not support the application of the Ansoff
strategic success model in the case of Palestine. However, previous research by Abu
Rahma (1999), Chabane (1987), Salameh (1987), and Thabet (1993) did support the
model in different situations in Arabic countries. Further research is recommended to
identify the factors that either support or contradict the elements of the Ansoff model in
this region of the world.
205
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221
APPENDICES
APPENDIX A
PALESTINIAN TRADE CENTER –
PALTRADE
PALESTINE TRADE CENTER – PALTRADE - http://www.paltrade.org/en/membership/list-members.php
Company Name Contact Person Sector City Telephone Fax E-mail Web site
A.C.C Co. Najeeb Ja`bari Stone and Marble Hebron 22222229 22229618 [email protected]
A. R. Hijawi Sons Husam Hijjawi Paper Industry Nablus 92311867 92311870 [email protected] www.arhijjawi.com
Company
Abdo Khasawneh Majid Abdo Tourism Jerusalem 22349816 22344360 [email protected]

Tourism & Travel
Abed Alfatah Mushtaha Maher Mushtaha Wood and Gaza 82802355 82802355
Sons Furniture
Abu Alsbaa‘ Animals Hatem Abu Alsbaa‘ Food Industry Jenin 42414862 42414860 [email protected]
Seeds Company
Abu Farha for Olive Majdi Elias Handicrafts Bethlehem 22774002 22774324 [email protected]
Wood Products
Abu Ramadan Inv. Mohammad Abu General Trade Gaza 82822616 82821381 [email protected] www.marna.com
Group Co Ramadan
Abu Zolof Company for Nour Alddin Jaradat Stone and Marble Bethlehem 22560085 22560085 [email protected]
Stone & Marble
Adawa for Designing & Imad Abu Taha Consulting and Ramallah 22980552 22961493 [email protected]
Printing trade services
Adwaa Al basheer for Wissam Ghorab General Trade Gaza 82821322 82864647 [email protected] www.adwaa1.com
Trade
Ajjawi for Commerce Bashar Ajjawi General Trade Jenin 42453235 42453234 [email protected] www.ajjawe.com
AL Amana Alkhayreia Ghaleb Abu Shaban Information Gaza 82846111 82846112 [email protected] www.al-amana.ps
Company Technology
Al Arz for Ice Cream Zahi Anabtawi Food Industry Nablus 92377677 92379808 [email protected] www.alarz.ps
Industry
Al Darwish Investment Abd Alkarim darwish Consulting and Gaza 82830360 82828191 [email protected] www.a-
Company trade services darwish.org
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224
Al Haddad Brothers Sameeh Haddad Plastics Gaza 82822278 82822304 [email protected] www.hbco.cc
Company
AL Hithnawi for Bashir Alhithnawi Food Industry Jenin 42414741 42416741 [email protected] www.hathnawi.com
Trading Company
Al Marad Al Assry Khaled Labad General Trade Gaza 82844913 82821413 [email protected]
Electrical Supplies
AL Mubtasem Sweets Mubtasem Omrieh Food Industry Jenin 42453524 42453524 [email protected]
Al Ostath Company for Tayseer Al ostath Textile and Gaza 82854665 82854440 [email protected]
Trade and Industry Garment
Al Salam Pottery Fares Al-Natsheh Handicrafts Hebron 22229127 22221530 [email protected]
Factory
AL Saqqa Electrical Tareq Alsaqqa General Trade Gaza 82838803 82841582 [email protected] www.al-saqqa.com
Equipment Co.
Al Shurook Jewellery Muhannad Amraish Jewelry Hebron 22227531 22257582 [email protected]
Company
AL Tariq for System & Tarek Eslim Information Gaza 82860280 82847736 [email protected] www.altariq.ps
Projects Technology
Al-Taweel Company Mahmoud Samhan Wood and Ramallah 22404722 22404722
for Trading and Furniture
Furniture
AL–Deira Company Rashid Abdelhamid Consulting and Gaza 82838100 82838400 [email protected]
Trade Services
Al-Hadad for Ibrahim haddad Metal Industry Jenin 424140101 424140101 [email protected]
Agriculture Equipment
Al-Hamarsheh Mohammad Hamarsheh General Trade Jenin 42463464 42461124 [email protected]
Company for House
Equipment
Al-hoda Textile Factory Tareq Saqf Elheit Textile and Nablus 92345420 92345420 [email protected]
Garment
Al-marah for Trade & Nidal Jabarin Metal Industry Jenin 42414306 42414307
Industries
Al-rajah Detergents Zuhair Dweikat Chemical Nablus 92311893 92311085 [email protected] www.alrajeh.ps
Factory Industry
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225
Al-Akram Co. for Raed Abu Asab General Trade Hebron 2230097 2230097 [email protected]
Importing and
Exporting and General
Trade
Al-Anwar Marble Co. Mohammad Manasrah Stone and Hebron 22222715 22222716 [email protected]
Ltd. Marble
Al-Aqsa Factory for Yousef Alkhatib Food Industry Jenin 42504087 42450136
Food Products
Al-Ayam Press Mahdi Almasri Consulting and Ramallah 22987341 22987342 [email protected] www.al-ayyam.com
Publishing & Printing Trade Services
Al-Fares Al-Masy Co. Nasser Alzghayyar Leather and Hebron 2223091 2214790 [email protected]
for Import Shoes
Al-Gentle for Shoes Azmi Alzghayyar Leather and Hebron 2233817 2233817 [email protected]
and General Trade Shoes
Company
Al-Hamoda Co. for Mousa Salameh Food Industry Jerusalem 022421131- 22421133 [email protected] www.hamodagroup.com
Food & Dairy Products 6
Al-Hijaz for Chocolate Hussain Hijaz Food Industry Tulkarim 92673077 92673516 [email protected] www.alhijaz.ps
Ltd.
Al-Jada Electrical Jamal Qawasmeh General Trade Hebron 2259931 2259931 [email protected]
Engineering
Corporation
Al-Jarmaq for Ghassan Al-Kurdi Information Ramallah 22401007 22404334 [email protected] www.aljarmaq.com
Computer Electronics Technology
& Services
Al-Jneidi for Trade & Noman Al-Junaidi Metal Industry Hebron 22220087 22258680 [email protected] www.junidi.com
Industrial Engineering
Al-Juman for Trading Muhannad Shuman Wood and Ramallah 2972177 2976851 [email protected]
and Furniture Furniture
Manufacturing
Al-Kaileh Furniture Jamal Kaileh Wood and Ramallah 2951810 2957083 [email protected]
Co. Furniture
Al-Khalla Stone and Khalil Thawabteh Stone and Bethlehem 599264605 22769701
Marble Co. Marble
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226
Al-Majd Industrial Osama Alkhuzndar General Trade Gaza 82552355 82552353 [email protected]
and Trade Company
Al-Manar Trading Raed Zghayyar General Trade Hebron 2219301 2229544 [email protected] www.almanar.ps
Company
AL-Mohandison Utax Maher Al-Shalabi Consulting and Ramallah 22984970 22984977 [email protected]
Trade Services
Al-Morouj Co. for Adnan Abu Awad Food Industry Ramallah 22980470 22963070
Manufacturing
Al-Naba Aljadeeda Hafith Alkhodor Stone and Hebron 22218001 22218002
for Stone & Marble Marble
Al-Naseem Bros. Co. Nidal Qawasmi Metal Industry Hebron 22220423 22219211 [email protected]
Al-Nasher Saad Abd Al-Hadi Consulting and Ramallah 22408423 22407387 [email protected] www.enasher.com
Advertising Co. Trade Services
Al-Reef for Salim Abu Ghazaleh Food Industry Jerusalem 22963840 22963850 [email protected] www.pal-arc.org
Investment and
Agricultural
Marketing
Al-Saifi Co. for Muhammad Bashar General Trade Nablus 92370868 92371219 [email protected]
Import and Export Al-Saifi
Al-Shammas Maher AlFathoury Metal Industry Hebron 2227928 2290901 [email protected]
Aluminum Co.
Al-Shunnar for Food Muhammad Nidal Al- Food Industry Nablus 92348601 92347070
Industries Shunnar
AL-Tawfiq Marble Co. Noman Shabaneh Stone and Hebron 22222697 22227051 [email protected] www.tmsco.ps
Marble
Al-Yaseen Marble Co. Odeh Jaradat Stone and Hebron 22563047 22563047
Marble
ALahlieh Carton Mohammad Alhirbawi Paper Industry Hebron 22227543 22225659 [email protected] www.al-ahlia.ps
Alaqsa Company for Subhi Thawabteh Stone and Bethlehem 22765011 22745173
Marble Marble
Albadawi Company Rabah Zaatari Leather and Hebron 22220749 22293593
for Leather and Shoes
Shoes
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227
Aldeera Electric Bashar Shammout General Trade Ramallah 22975384 22975387 [email protected] www.shammoutcenter.com
Investment Co
Aldwaik Fashion Fadel Al-Dwaik Textile and Hebron 2296117 2296117 [email protected]
Company Garment
ALhodalis Textile Abd Allah Hodali Textile and Bethlehem 22741386 22745308 [email protected]
Printing Factory Garment
Alhusam United Bashar Alzaghal Leather and Hebron 22252212 22252212 [email protected]
Company Shoes
Lhusani for Marble Mahmoud Sabateen Stone and Bethlehem 22770784 22770784 [email protected] www.al-husni.com
Marble
ALithad Socks Co. Nabil Abu Rumman Textile and Bethlehem 22747843 22770874
Garment
ALjabary for Marble Mohammad ALjabari Stone and Bethlehem 22743340 22743340 [email protected] www.aljabarymarble.com
& Stone Marble
ALjaber for General Ahmad Thawabteh Stone and Bethlehem 22769066 22769756
Trade Marble
Aljamal for Printing & Salam Amin Consulting and Ramallah 22955987 22955986
Invest Trade Services
Aljarashi Trading Khader Aljarashi Stone and Bethlehem 22744141 22741186
Industrial Marble
Contracting Co. Ltd.
ALjarashi Trading Saqar Aljarashi Chemical Bethlehem 22744738 22745367 [email protected]
Industries Co. Ltd. Industry
ALjundi Marble Co. Sayel ALjundi Stone and Bethlehem 22770553 22770554
Marble
Aljuneidi dairy food Hashim Aljuneidi Food Industry Hebron 22229011 22220558 [email protected] www.aljuneidi.com
stuff co
Allam Ahmed Allam Hamada General Trade Gaza 82859808 82859809 allam-
Hamada company [email protected]
Alshawaheen Marble Rebhi al Shawaheen Stone and Hebron 22270093 22270093
Co. Marble
Alshifa Industrial Ibrahim Boziya Food Industry Ramallah 22404020 22404020 [email protected] www.m-alshifa.com
Trading Company
Altakamolia Ala‘a Eddin Obaid Consulting and Gaza 82889132 82889133 [email protected] www.altakamolia.com
Management and Trade Services
Planning Co.
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228
Alternative Business Sami Khoury Consulting and Ramallah 22971528 22973751 [email protected] www.abs.ps
Solutions Trade Services
Aluminum Alamal Saher Bdeir Metal Industry Qalqilia 92946922 92946911 [email protected] www.alamal.ps
Company
ALwalid Company for Walid Diryeh Stone and Bethlehem 22769128 22769622 [email protected] www.waleedstone.com
Marble & Stone Marble
Alworood Shoes and Muhammad Abu Rajab Leather and Hebron 2235277 2234802 [email protected]
General Trade Co. Shoes
Alyateem for Olive Mansoor alyateem Handicrafts Bethlehem 22773129 22775015 [email protected]
Wood Products
Alzaghal investment Mohammad Alzaghal Leather and Hebron 22231148 22231149 [email protected]
Group Shoes
Amani Tours Tourism Ramallah 22965785 22987013 [email protected]
Amsi Brothers Ziyad AL Amsi Wood and Gaza 82455050 82457858 [email protected] www.amassy.com
Company Furniture
Annahda book shop Mahmoud Lubbad Paper Industry Gaza 82862237 82865265 [email protected]
Annunciation Olive Nichola bshara Handicrafts Bethlehem 22773120 22773549 [email protected]
Wood Factory
Aqarat Consulting and Nablus 92332333 92332335
Trade Services
Arab Company for Michael Jarad Stone and Bethlehem 22741004 22767969
Stone & Marble Marble
Arab Eastern Co. Nidal Al Shakaa Paper Industry Nablus 92311071 92311070 [email protected] www.aecodiapers.com
Arab Technology Hisham Zaid Information Ramallah 22410000 22411111 [email protected] www.ats-pal.com
Systems (ATS) Technology
Arabic Center for Walid Aljedi Consulting and Gaza 82845153 82848844 [email protected]
Businessmen Trade Services
Atalla Trading Issa Attalla Handicrafts Bethlehem 22772710 22773047 attalla@bethlehem- www.bethlehem-
Company souvenirs.com souvenirs.com
Auto Zone Company Zaki Abu Yousef General Trade Ramallah 22400565 22400566 [email protected] www.peugeot.ps
Azzouni for Trading Iyad Azzouni General Trade Nablus 92377240 92375192 [email protected]
Services Co.
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229
Company Name Contact Person Sector City Telephon Fax E-mail Web site
e
B Cell Fadi Baransi Information Ramallah 22981108 22964167 [email protected] www.bci.ps
Technology
Babel Soft Company Mhana Manasra Information Ramallah 22408769 22408769 [email protected] www.babilsoft.com
Technology
Badri & Hania Co. Fouad Hania General Trade Gaza 82864435 82869078 [email protected] www.bah.ps
Bani Naim Marble Izat Al-Khodor Stone and Hebron 22218820 22218822 [email protected] www.baninaim-
Co. Marble marble.com
Bank of Palestine Banks Gaza 82826818 82828973 [email protected] www.bankofpalestine.com
Ltd.
Basher Siksik Co. Plastics Gaza 82833374 82864208 [email protected] www.bashirsiksik.com
BCI Saeed Baransi Information Ramallah 22981108 22964167 [email protected] www.bci.ps
Technology
Beauty Paints Jamal Alghawanmeh Chemical Ramallah 22349905 22349908 [email protected]
Company Industry
Beit Almakdes Samer Shokeh General Trade Gaza 82824775 82821709 [email protected] www.rannet.com
Health Services
BEAM
Belal Co. for General Fayeq H . Belal Textile and Gaza 82803485 82803487 [email protected]
Trading Garment
Bessisso &Alami Co. Mohammad Bessisso Wood and Gaza 82808121 82808121 [email protected] www.farahgaza.com
Ltd. Furniture
Best Buy Imad Qanadilo General Trade Ramallah 22425838 22424998
Bethlehem Hotel Elias Alarja Tourism Bethlehem 22770702 22770706 [email protected]
Bir Zeit Firas Nasser Al Deen Pharmaceuticals Ramallah 22987572 22967205 [email protected] www.bps.ps
Pharmaceutical and Chemicals
Company
Blest Art Co. Samah Qumsieh Handicrafts Bethlehem 22772120 22772120 [email protected] www.holycrafts.com
Brothers Travel & Maher Alatrash Tourism Bethlehem 22775188 22775189 [email protected] www.brostours.com
Tours
Bunto Blue Company Zeyad Alzaghal Leather and Hebron 22280005 22280007
for Shoes Industry Shoes
Burbar Jerusalem for Firas Burbar Stone and Ramallah 2811588 2811064 [email protected] www.burbarstone.com
Stone and Marble Marble
(table continues)
230
Company & Factory Naim Jaber Food Industry Jenin 42501875 42431822 [email protected] www.alnaser.ps
Nasser Crinders
Computer Land Marwan Kuhel Information Gaza 82855662 82852229 [email protected] www.computerland.ps
Center Technology
Crown Tourism & Ibrahim Alatrash Tourism Bethlehem 22740911 22740910 [email protected]
travel Co. Ltd.
Dar Elkhebra Trade Mohammad Jamil Naja Consulting and Gaza 82885635 82842496 [email protected] www.dar-elkhebra.com
and Development Trade Services
Darwish Abu Muaileq Nabil Abu - Muaileq General Trade Gaza 82865972 82821236 [email protected] www.mtcgaza.com
Company Insurance
Agency
Daàna Industrial Muhammad Daàna Leather and Hebron 2286085 2286085
and Trade Co. Shoes
Debas Agriculture Mohammad Debas Food Industry Tulkarim 92672079 92686662
and Animal Food Co.
Delta International Abdalhakim Hassuna Consulting and Gaza 82834886 82834886 [email protected] www.deltagaza.com
Logistics Custom Trade Services
Clearance Import &
Export
Eagle Flex Abrasive Roben Julani Metal Industry Hebron 22225759 22225597 [email protected] www.eagle-flex.com
Company
Eka Trading Yousef Elyas General Trade Bethlehem 22747108 22764432 [email protected] www.eka-trading.com
Company
Electro nihad for Nihad abd alazziz Metal Industry Jenin 42468565 42468566 [email protected]
packing machines
Elhayek Trade and Ali Hayek General Trade Gaza 82838664 82838674
Industrial Company
Elhytham Trading Hani Alyazji Consulting and Gaza 82833568 82848556 [email protected] www.alhaytham.com
Co. Trade Services
Ellam Tam- The Kamel Al-Husseini Consulting and Ramallah 22409105 22409106 [email protected] www.ellamtam.com
Communication Trade Services
Company
Ernest and Young Saèd Abdallah Consulting and Ramallah 22421011 22422324 [email protected] www.ps.ey.com
Trade Services
(table continues)
231
Essa Mhnna Trading Issa Mhanna Wood and Gaza 82801227 82801226 [email protected]
Co. Ltd. Furniture
Etkaidek Buildings Nidal Etkaidek General Trade Hebron 22292505 22292606 [email protected] www.etco.ps
Technology
Everest Hotel Walid ALarja Tourism Bethlehem 22742604 29934946 [email protected]
Eye Specialty Center Anwar Maswadi Consulting and Hebron 2228919 2228919 anwarmaswadi@yahoo.
Co. Trade Services com
Fadda Technology & Awni AL-Tawil Information Gaza 82869777 82866226 [email protected] www.faddagtech.com
Information Systems Technology
Fatima for Olive Jiries Faqooseh Handicrafts Bethlehem 22742695 22743407 [email protected] www.fatimco.com
Wood Works
Feed Co. – Saif Aldeen aldeek Food Industry Ramallah 22955534 22955534
Operation Co.
Fleifel Trading Zaid Othman Textile and Tulkarim 92675927 92678049 [email protected]
Textile Industry Garment
Company
Foam Co. Ltd. Gamal Elkhoudary Chemical Gaza 82457151 82457152 [email protected]
Industry
Four Seasons Co. Hani Naji Atallah Tourism Bethlehem 22774401 22774402 [email protected]
Future Tech Mohammad Alami Information Gaza 82847355 82835655 [email protected] www.futuretech-pal.com
company Technology
Galaxy Information Majed Bakeer Information Ramallah 22958444 22958807 [email protected] www.galaxy.ps
Systems Technology
Gamma Jamileh Alsayed Pharmaceuticals Ramallah 22900911 22900064 [email protected]
Pharmaceuticals Co. and Chemicals
Geneva Company Hassan Asfour Stone and Ramallah 22966882 22966880 [email protected] www.geneva-marble.com
Marble
George for Olive Georg Kheir Handicrafts Bethlehem 22775675 22775675 [email protected]
Wood Products
Glad Baby Company Jawdi Abu Rajab Leather and Hebron 2230254 2230257 [email protected]
Shoes
Globalcom Kameel Qattan Information Ramallah 22975108 22975109 [email protected] www.globalcom.ps
Telecommunications Technology
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Golden Wheat Mills Bassam Walweel Food Industry Ramallah 22818013 22818014 [email protected] www.gwmc.ps
Hadara Technologies Mahmoud Yaseen Information Ramallah 22403434 22403430 [email protected] [email protected]
Technology
Hagob Jewelry Issa Rashmawi Jewelry Bethlehem 22743785 22743374 [email protected]
Factory
Halaika Marble and Ishaq Alja`fari Stone and Bethlehem 2745757 2747805 [email protected]
Stone Industries Marble
Hani Al-Ajjawi Hani Omarieh Food Industry Jenin 42453168 42453914 [email protected] www.ajjawi.ps
Company - General
Trading
Harvest Export Ibrahim Barakat Agriculture Ramallah 22972760 22972776 [email protected] www.harvestexport.com
Company
Hebron Star Co. Mowaffaq Salhab Leather and Hebron 2230206 2230206
Shoes
Helen Chemical Ayman Al Taweel Chemical Nablus 92311177 92311179 [email protected] www.helen1970.com
Factory Industry
High Line for Jamal M. Elbaghdadi Consulting and Gaza 82861799 82861799 [email protected]
Engineering Trade Services
Consultant
Hirbawi Investment Majid Hirbawi General Trade Hebron 22226789 22229770 [email protected] www.hitco.ps
and International
trade company
Hmouda Company Akef Hmouda Textile and Tulkarim 92674994 92684994 [email protected]
Garment
Holy Land Ceramics Fayez Abu Omar Handicrafts Hebron 22229767 22220041 [email protected]
Holy Land for Joudeh Jamal Agriculture Ramallah 22971901 22971902 [email protected] www.holyland.ps
Marketing and
Agricultural
Investment
Holy Land Mosaic Sami Thaljieh Stone and Bethlehem 22742817 22770062 [email protected] www.holy-
Stone Marble mosaicstone.com
Holy Land Society Bassam Abu Farha Handicrafts Bethlehem 22773087 22773088 [email protected]
Home Engineering Ahed F. Bseiso Consulting and Gaza 82834676 82860990 [email protected]
unlimited Trade Services
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Horizon for Amin Khateeb Information Ramallah 22988128 22988128 [email protected] www.axizo.com
Computer Technology
Technology
Hulul Business Mustafa Hasan Information Ramallah 22410000 22411111 [email protected] www.hulul.com
Solutions Technology
Ibrahim Karajah Ahmad Karajah General Trade Hebron 22299555 22299830
General Trade
Company
International Khaled Anabtawi General Trade Nablus 92383623 92372957 [email protected] www.intl-anabtawi.ps
Overseas Co.
International Trading Fahed Ghaith Consulting and Hebron 22291403 22253133 [email protected] www.palstone.com
Services Center Trade Services
Isra‘ Software and Husam Dweikat Information Nablus 92373001 92373002 [email protected] www.iscosoft.com
Computer Company Technology
Issam Daàna Co. Issam Daàna Leather and Hebron 2286229 2286229
Shoes
IT Partners Abdelhadi Abu Shahla Information Gaza 82839911 82839901 [email protected] www.itp.ps
Technology
Iyad Amr for Bags Iyad Amr General Trade Hebron 599253399 2296922 [email protected]
and Accessories
Jaddeh Industrial Mohammad Aljabari Stone and Hebron 22218691 22218692
Company Marble
Corporation
Jaffa Net Computer Yihya Alsalaqan Information Ramallah 22961060 22966613 [email protected] www.i-jaffa.net
Systems Technology
Jamal Sons Telecom Mohamed Haboush Information Gaza 82867199 82833507 [email protected]
Computer Systems Technology
Ltd.
Jerusal Information Mahmoud Yaseen Information Ramallah 22403434 22403430
systems Technology
Jerusalem Mohammad Masrouji Pharmaceuticals Ramallah 22406550 22403246 [email protected] www.jepharm.ps
Pharmaceuticals and Chemicals
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Jerusalem Stone and Muhammad Taqatqa Stone and Bethlehem 22763804 22763805
Marble Company Marble
K. A. R. for Macaroni Osama Alhirbawi Food Industry Hebron 22233459 22233860 [email protected] www.hitco.ps
Food Stuff Co.
K.Hawash and Abdel Raòf Hawash Wood and Nablus 92311980 92311703 [email protected] www.hawash.ps
Brothers for Plywood Furniture
and Trading Co.
Khadair Bros. Co. Suhail A. Khdair General Trade Gaza 82478252 82821574 [email protected]
Ltd.
Khairy Alja`bari Asem Alja`bari Leather and Hebron 22258650 22258651
Sons Industrial Abd Shoes
Trading company
Khamis trading Shukri Dallal General Trade Bethlehem 22744702 22751678 [email protected] www.khamistc.com
company
Link Information Weam Abu Yousef Information Gaza 82825520 82825530 [email protected] www.linkit.ps
Technology Technology
Lozan Trade Mohammad Khader Consulting and Ramallah 22900568 22900805 [email protected]
Consultants Trade Services
Management Walid Al najjab Consulting and Ramallah 22954001 22986410 [email protected] www.mcs-palestine.com
Consulting services Trade Services
Manasrah Zuhair Almanasrah Agriculture Jericho 2320791 2320791 [email protected]
Development and
Investment
Company
Maramara khader Nassar Stone and Bethlehem 22745552 222745553 [email protected] www.marmarastones.com
Investment Marble
Company
Mashareq Company Abd Alkareem Consulting and Gaza 82827668 82820733 [email protected] www.mashareq.ps
Habboush Trade Services
Maslamani Trading Jamal Maslamani Food Industry Nablus 92348899 92348244 [email protected] www.maslamani.ps
Corp.
Massar Consulting Manal Zraiq Consulting and Ramallah 22409595 22409110 [email protected] www.massar.com
Services Trade Services
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Middle East Marwan Alasttal Pharmaceuticals Gaza 82455012 82455051 [email protected] www.megapharm.ps
Pharmaceutical & and Chemicals
Cosmetics
Laboratories Co.
Milano Shoes Omar Habboub Leather and Gaza 82800454 82818772 [email protected]
Industries Co. Shoes
Models Textile Jamil Jarayseh Textile and Bethlehem 22772048 22772096
company Garment
Modern Company for Rafiq Abumunshar Construction Hebron 22225682 22224842 [email protected]
Construction
Supplies
Modern Industrial Mohammad Alnajar Wood and Gaza 82138728 82138729 [email protected] www.mig-pal.com
Group Furniture
Modern Technology Rasem Moshtaha Information Gaza 82824099 82820929 [email protected] www.mtcgaza.com
Corporation Technology
Mohammad Mustafa Mohammad Bader Stone and Nablus 92535301 92535301 [email protected]
Esbeih & Sons Co. Sbaih Marble
Mohammed Abu Dan Mohammed Abu Dan Textile and Gaza 82473510 82473520 [email protected]
Company Garment
MTC Majed Alsousi Wood and Gaza 82453970 82453970
Furniture
Mushtaha Furniture Mohammad Mushtaha Wood and Gaza 82828312 82823782 [email protected]
& Trading Co. Furniture
Musleh for General Salah Musleh General Trade Nablus 92316221 92316223 [email protected]
Trading
Nabel Shoes Nidal Jaabari Leather and Hebron 22256592 22256521 [email protected]
Industry and Trading Shoes
Company
Nablus Company for Mujtaba Tbeileh Chemical Nablus 92501006 92501004 [email protected] www.nablussoap.ps
Cleaning Agents Industry
Nablus Diamond Muhannad Ghazal Metal Industry Nablus 92311329 92311328 [email protected] www.ndt.ps
Tools Co.
Naboly Shoes Fadel Alnatsheh Leather and Hebron 22259946 22227936 [email protected]
Company Shoes
Nairokh Company Nafiz Nairoukh Metal Industry Hebron 22233322 22233425 [email protected] www.nierokh.com
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Nassar Stone Nassar Nassar Stone and Bethlehem 22747707 22747708 [email protected] www.nassarstone.com
Investment and Marble
General Contracting
Company
National Agriculture Khalil Kharraz Food Industry Ramallah 229584101 22958415 [email protected] www.zaytps.com
Company
National Aluminum Anan Anabtawi Metal Industry Nablus 92347222 92347616 [email protected] www.napco.com.ps
Profiles Company
National Beverages Imad Alhindi Food Industry Tulkarim 92683483 92683458 [email protected] www.nbc-pal.ps
Company
National Insurance Aziz Abd Aljawad Consulting and Ramallah 22983800 22407460 [email protected] www.nic-pal.com
Company Trade Services
National Leather Co. Adel Za`tari Leather and Hebron 2226275 2223397
Shoes
National Textile Majdi Abu Rumman Textile and Bethlehem 22742622 22770891 [email protected] www.ntc-pal.com
Company Garment
Nativity for Rimon Abu Farha Handicrafts Bethlehem 22775576 22775621 [email protected] www.nativity.ps
Manufacturing and
Trading Olive Wood
Near East Industries Ziyad Anabtawi Food Industry Nablus 92348035 92348436 [email protected] www.anabtawigroup.com
& Trade
Nestle Trading Co. Anton Hazboun General Trade Bethlehem 22777666 22770004 [email protected]
Ltd.
New Farm Daoud Istanbuli Food Industry Ramallah 22819557 22819557 [email protected]
Processing &
Marketing
New Power Company Othman Zughayar Leather and Hebron 22250939 22250939
Shoes
Noor for Trading & Alaa AlBayed Consulting and Hebron 2290784 2292784 [email protected]
Clearing Services Trade Services
NTS - Nextlevel Majed Ayyad Information Ramallah 22959816 22959817 [email protected] www.nts.ps
Technology System Technology
O.B.G Arja Bros. Khaled alarja Textile and Bethlehem 22765345 22765346 [email protected] www.arja-textile.com
Textile Garment
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Odeh Commercial Majid Odeh handicrafts Bethlehem 22773642 22773022 [email protected]

Stores
Omar Shakhshir and Azzam Shakhshir General Trade Nablus 92313320 92326028 [email protected]
Sons Co.
Organic Oil Producers Wisam ziyadeh Food Industry Salfeet 92516951 92516951
Association
Osaily Trading Naser Osaily Construction Hebron 22229851 22220873 [email protected] www.osaily.com
Contracting Company
Pal Karm Cosmetics Ali Barham Cosmetics Nablus 92311490 92311725 [email protected]
Ltd.
Pal Lease Abed Qattawi Consulting and Ramallah 22973333 22972020 [email protected]
Trade Services
Pal Media Company Kamal Abu Khadija Consulting and Ramallah 22406477 2406479 [email protected] www.vandv.ps
Trade Services
PAL NET Ghassan Anbtawi Information Ramallah 22403434 22403430 [email protected]
Technology
Pal Safe Majdi Al Atari Consulting and Ramallah 22974444 22972020 [email protected] www.wassel.ps
Trade Services
PAL TEL Abd Almalek Aljaber Information Nablus 92390657 92389983 [email protected]
Technology
Pal- Expo Samer Taher Consulting and Ramallah 22973333 22972020
Trade Services
Palestine Cellular Ammar Al Aker Information Ramallah 22402440 22968636 [email protected]
Communications Ltd. Technology
Palestine Co. for Fadel ALjaru Construction Gaza 82801196 82801175 [email protected] www.palestineco.com
Building Materials
Automatic Factory
Palestine Sameer Hulileh Ramallah 2403336 2403363 [email protected] www.padico.com
Development and
Investment Limited
Co. – PADICO
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Palestine Electronics Ghassan Anabtawi Information Nablus 92397681 92397683 [email protected] www.paltelgroup.ps
and Electrical Technology
Company - PEEC
Palestine Food A‘aed Abu Ramadan Food Industry Gaza 82801235 82801234 [email protected] www.ped.ps
Industries Co.
Palestine Industrial Wadei Al Masri Consulting Gaza 82801003 82801003 [email protected] www.piedco.ps
Estate Development and Trade
Co. Services
Palestine Industrial Hani Dajani Construction Ramallah 22971901 22971902 [email protected] www.piedco.ps
Estate Development
Company
Palestine Islamic Aziz Hammad Banks Gaza 82827360 2980558 [email protected] www.islamicbank.ps
Bank
Palestine Online Nafeth Alkoni Information Ramallah 22403434 22403430 [email protected]
Technology
Palestine plastic Jamal Daraghmeh Plastics Nablus 92398716 92398715 [email protected] www.ppic-pal.com
industries Co
Palestine poultry Co Abd Alhakeem Food Industry Tulkarim 92683177 92683180 [email protected] www.aziza-ppc.com
Foqahaa
Palestine Real Estate Nidal Abu Lawi Construction Ramallah 22986505 22986506 [email protected]
Investment
Palestine Securities Khaled Jiaan Stock Nablus 92311765 92311748 [email protected] www.p-s-e.com
Exchange Ltd.
Palestine Yellow Mohammad Sbeih Consulting Ramallah 22964446 22964445 [email protected] www.yellowpages.com.ps
Pages and Trade
Services
Palestinian Banking Ameen Haddad Banks Ramallah 22969800 22969801 [email protected] www.palbanking.com
Corporation
Palestinian beit Sulaiman Alduaifi Consulting Nablus 92345066 92345067 [email protected]
Alkhibra for and Trade
Research & Services
Investment
Palestinian Internet Rajaie Emeel Esèed Information Gaza 82843197 82843377 [email protected]
Services – pis Technology
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Pama Forza Mahmoud Obaido Leather and Hebron 22227676 22220332 [email protected]
Investment Shoes
Company
Paper Industries Co. Marwan Alhirbawi Paper Industry Hebron 22224237 22224068 [email protected] www.pic.ps
Ltd.
PC – World Co. Ltd. Ahmed Abualoun Information Gaza 82824229 82825968 [email protected] www.pcworld-co.com
Technology
PCNC 2000 for Net- Iyad Qumsieh Information Bethlehem 22402931 22402931 [email protected] www.pcnc2000.com
Working Technology
Pharmacare PLC Pharmaceuticals Ramallah 22900680 22900189 pharmacare@pharmacare- www.phatmacare-ltd.com
and Chemicals ltd.com
Professionals Mohammed Akram Information Gaza 82861772 82861772 [email protected] www.pit.ps
Information Skaik Technology
Technology
Quality for Marble Mohammad Ali Nassar Stone and Bethlehem 22740947 22740985
Company Marble
Rami Sport Company Rami Alsughaiar Leather and Hebron 22220550 22216360 [email protected] www.golf-horse.com
for Shoes Industry Shoes
Ramtan Studios Qasem ALi Consulting and Ramallah 22989460 22989462 [email protected] www.ramattan.com
Trade Services
Redwan Salah Radwan Mortaga General Trade Gaza 82810610 82810611 [email protected]
Mortaga Co.
Roma Company for Jamal Almadbooh Leather and Hebron 22233616 22235220 [email protected]
Shoes Industry Shoes
Roxi for Shoes and Raed Dahnous Leather and Hebron 2296776 [email protected]
Trading Co. Shoes
Royal Company for Radwan Zaghal Leather and Hebron 22235296 22235295
Shoes Shoes
Royal Industrial Mazen Zughayar Plastics Hebron 22225288 22220127 [email protected] www.royal.ps
Trading Company
Royal Tourism & Nisreen Al-shyookhi Tourism Ramallah 22966351 22966635
Travel
Saad ELwadia & Khaled S. Alwadeya General Trade Gaza 82808526 82808527 [email protected] www.saadelwadia.com
Stones Co.
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Saba & Partners Co. Adnan Awad Consulting and Gaza 82823746 82823746 [email protected] www.sabagaza.com
Trade Services
Sabi International Samer Alsabi General Trade Qalqilia 92949484 92949485 [email protected] www.sabi.ps
Ltd.
Safa Office furniture Hisham Allwaini Wood and Gaza 82457010 82457799 [email protected]
Furniture
Safad Engineering Ibrahim Barham Information Ramallah 22957229 22980142 [email protected] www.safed.com
and Electronics Ltd. Technology
Sahem Trading and Sameer Zraiq Consulting and Ramallah 22965710 22965713 [email protected] www.sahem-inv.com
Investment Co. Trade Services
Salah Trading Khaled Salah Food Industry Hebron 22229960 22224970 [email protected]
Company
Salama Alaemar Co. Sa‘di Salama Construction Gaza 82061317 82067494 [email protected] www.salama-co.com
Saleem Co. Ltd. Ahmed Saleem Wood and Gaza 82855441 82855442 [email protected] www.gmx.net
Furniture
Salman Elhelou & Nasser S. Elhelou General Trade Gaza 82825177 82840275 [email protected]
Sons Ltd.
Shawa Furniture Nader AL - Shawa Wood and Gaza 82806755 82809822 [email protected]
Company Furniture
Shawwa Contracting Faisal G. Shawwa General Trade Gaza 82821788 82866624 [email protected] www.ascc.ps
Co.
Shweiki Sikurit Salah Shweiki General Trade Jerusalem 25350425 25350412
Sidata Information & Basim AL - Wazeer Information Gaza 82825131 82824665 [email protected] www.sidata.net
Communication Technology
System
Siniora Food Majdi Alshreef Food Industry Jerusalem 22796804 22799088 [email protected] www.siniorafood.com
Industries Co.
Sinokrot Food Mohsen Sinokrot Food Industry Ramallah 22955701 22965521 [email protected] www.sinokrot.com
Company
Sky Advertising Tareq Abbas Consulting and Ramallah 22986878 22986879 [email protected] www.sky-adv.com
Trade Services
Smart Co. Amjad Asfour Information Gaza 82888069 82821658 [email protected] www.smart.ps
Technology
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Solutions for Iyad Joudeh Consulting and Ramallah 22970710 22970711 [email protected] www.solutionsdev.ps
Development Trade Services
Consulting Company
Sotex for Tareq Alsouos Textile and Bethlehem 22741760 22766132
Undegarments Garment
Textile
Suheil & Alsaheb Hisham Alsaheb Stone and Bethlehem 22744933 22944932 [email protected] www.ssmarble.com
Trade Industrial Marble
Sun Fashion Majdi Zughaiar Textile and Ramallah 22342777 22342777 [email protected] www.sun-z.com
Garment
Sun Pharm Thaer Abu Shmais Chemical Nablus 92311181 92311184 sunpharm@sunpharm- www.sunpharm-pal.com
Chemicals Ltd. Industry pal.com
Super Nimer Ind. & Ahmad Nimer Metal Industry Hebron 22291219 22297198 [email protected] www.super-nimer.com
Invest Co.
Super Tech Trading Mohammed Ghazi General Trade Hebron 22257704 22229638 [email protected]
Company Hirbawi
Susi Furniture Co. Mujahed Al - Susi Wood and Gaza 82457301 82454560 [email protected] www.sousy.com
Ltd. Furniture
Swan Cosmetic Ihssan Abd Alnabi Cosmetics Gaza 82458657 82454281 [email protected] www.sawncosmetic.com
Laboratories
Talem Associates Basheer Al-Rayyes Consulting and Ramallah 22977776 22973751 [email protected] www.talem.ps
Company Trade Services
Tami Training Imad Abu Dayyah Consulting and Gaza 82841877 82841867 [email protected]
Accounting & Trade Services
Management
Institute
Tamimi Ceramics Nader AL-tamimi Handicrafts Hebron 22220358 22229253 [email protected] www.tamimics.com
Tatweer Business Haitham Abu Sha`ban Consulting and Gaza 82882600 82882700 [email protected] www.tatweer.ps
Services Co. Trade Services
Techno Pal Co. Nimer Jayyousi General Trade Tulkarim 92672111 92691123 [email protected] www.technopal.com.ps
Tera Company for Faraj Alsughaiar Leather and Hebron 22227553 22296959 [email protected] www.tera.ps
Shoes Industry Shoes
Terano for Shoes Abd Aljawad Zaatari Leather and Hebron 22231836 22232837
Industry Shoes
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The Arab Clearing Fadi Qattan Consulting and Bethlehem 22741872 22742431 [email protected] www.aca.ps
Agency Trade Services
The Arab Palestinian Ali Aqqad Ramallah 2961461/2/3 2981541 [email protected] www.apic.com.jo
Investment Co. -
APIC
The Arab Shopping Zuhair Osaily General Trade Ramallah 22408582 22408582 [email protected] www.arabmarketsco.com
Centers Co.
The Holy Family Sami Abu Aitah Tourism Bethlehem 22740656 22744888
Company
The International Abdel Fattah Consulting and Gaza 82860569 82848587 [email protected] www.dslco.ps
Trade Service Co. Alshurafa Trade Services
ITSC
The Modern Nezar Kuhail Metal Industry Gaza 82830018 82822903 [email protected] www.mic-toys.com
Industrial Co. for
Producing Baby Toys
Ltd.
The National Paper Nabeel Haj . Abed Paper Industry Ramallah 22956342 22956343 [email protected] www.national-paper.com
Product and
Marketing Company
The Palestinian Odeh S. Zaghmouri Consulting and Ramallah 22974444 22972020 [email protected] www.wassel.ps
Distribution & Trade Services
Logistics Services Co.
The Palestinian Mamoun A. Abushahla General Trade Gaza 82822726 82823967 [email protected] www.pbtc.com
British Trading &
Contracting Co.
Tosseti Shoes Co. Farhat Siaj Leather and Hebron 22220433 22220826 [email protected]
Ltd. Shoes
Trust international Haleem Al-Halabi Consulting and Gaza 82823446 82823447 [email protected] www.trust-pal.com
insurance Co. PLC Trade Services
Union of Agriculture Khaled Al-Hidmi Food Industry Jerusalem 22954289 22965545 [email protected]
Work Committees
Unipal General Saleh Tabakhna General Trade Ramallah 22981060 22981065 [email protected] www.unipalgt.com
Trading Co.
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United Feed Co Hamdi Fattooh Food Industry Nablus 92590367 92590116

Usama J. Kuhail & Usama J. Kuhail General Trade Gaza 82839959 82842035 [email protected] www.ujkuhail.com
Brothers General
Contracting
Company
Vegetable Oil Mahdi Almasri Food Industry Nablus 92324161 92325036 [email protected] www.asad.ps
Manufacturing
Company
Venezia Trading Abd Alsalam Ameen General Trade Ramallah 22956670 22963576 [email protected]
Company
Vision and Visuals Kamal Abu Khadija information Ramallah 22426477 22426033 [email protected] www.vandv.ps
Active Media Technology
Wasef Mute` Wasef Mute` Wood and Ramallah 2986462 2986462 [email protected]
Furniture Factory Furniture
Yaboos Stone Mahmoud Razzouq Stone and Jerusalem 22345787 22340873 [email protected] www.yaboosstone.com
Company Marble
Yazegi Group for Soft Mahmoud Alyazegi Food Industry Gaza 82806732 22806731 [email protected] www.yazegigroup.com
Drinks Ltd.
Yooya Land Information Ramallah 22403434 22403430 [email protected] www.yooyaland.com
Company Technology
Zain Public Relations Mohammad Jaber Consulting and Ramallah 2955120 2955121 [email protected] www.zain.com.ps
& Business Services Trade Services
Zalmoot Trading Co Ahamd AlZalmout General Trade Nablus 92311765 92311748 [email protected] www.zalmout.com
Zant Co. for Medical Marwan Zant Pharmaceuticals Gaza 82870028 82870029
Supplies and Labs and Chemicals
Ziyad Mourtaga and Fuad Murtaja General Trade Gaza 82866562 82867593 [email protected] www.z-mortaga.ps
Bros. Company
(table ends)
244
APPENDIX B
PALESTINIAN COMPANIES ON
STOCK MARKET
Palestinian Companies on the Stock Market
Company Name Industry Symbol General Manager E-Mail Fax Phone Location
Mr. Samer Aziz [email protected] 2240746 0229838 West Bank

AL-WATANIAH TOWERS Service ABRAJ Shihadeh 0 00
2296524 02296524
West Bank
THE ARAB HOTELS Service AHC Mr. Anan Takrori [email protected] 2 0/1
Mr. Atyieh arabislamicbank@aibn 2240706
West Bank
ARAB ISLAMIC BANK BnkFinServSec AIB Shananier k.com 5 22407060
Dr. Mohammed M. 2298663
West Bank
AHLIEA INSURANCE GROUP Insurance AIG Sabawi [email protected] 6 22986634
Mr.Ahmad Al-haj 022978
West Bank
ALRAFAH MICROFINANCE BANK BnkFinServSec AMB Hasan [email protected] 880 22978710
Mr. Wael Al- 092311 09231130
West Bank
ARAB PAINT PRODUCTS Industry APC Qadoumi [email protected] 302 1/3
Dr. Mohammad M. [email protected] 022799 0227990
West Bank
ARAB INVESTORS Investment ARAB Alami m 020 21
Mr. Lotfi Fayez aqareia.arab@hotmail. 092384 09238403
West Bank
ARAB REAL ESTATE ESTABLISHMENT Service ARE Sarawan com 034 0/2
Mr. Abdel Hakim 092683 09268317
West Bank
PALESTINE POULTRY Industry AZIZA Al-Fuqaha [email protected] 180 7/8
Mr. Hashem Hani [email protected] 2296470 0229650
West Bank
BANK OF PALESTINE BnkFinServSec BOP Shawa om 3 10
Mr. Talal 2296720 02298757
West Bank
BIRZEIT PHARMACEUTICALS Industry BPC Nasereddin [email protected] 5 2/4
022975
West Bank
GLOBALCOM TELECOMMUNICATIONS Service GCOM Mr. Ibrahim Qattan [email protected] 109 22975108
Mr. Bassam 2281801 0228180
West Bank
GOLDEN WHEAT MILLS Industry GMC Walweel [email protected] 4 13
Mr. Jamal 9239092 0923909
West Bank
GLOBAL UNITED INSURANCE Insurance GUI Barahmeh [email protected] 0 19
Mr. Mohammed 022956 0229861
West Bank
GRAND PARK HOTEL & RESORTS Service HOTEL Mousa [email protected] 950 94
Susp
AL-I'TIMAN FOR INVESTMENT & Mr. Hussein N. alitiman_company@ya 092332 0923373 West Bank end-
DEVELOPMENT Investment IID Abu-Zant hoo.com 420 34 ed
Mahmoud Ahmad 2295474 02295633
West Bank
PALESTINE ISLAMIC BANK BnkFinServSec ISBK Al-Rama' [email protected] 5 0/1
022799
West Bank
JERUSALEM CIGARETTES Industry JCC Dr. M. Alami [email protected] 770 22799777
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246
022403 0224065
West Bank
JERUSALEM PHARMACEUTICALS Industry JPH Dr. Iyad Masrouji [email protected] 246 50
JERUSALEM REAL ESTATE Mr. Walid N. Al- 2296521 02296521
West Bank
INVESTMENT Investment JREI Ahmad [email protected] 7 5/6
Mr. Jamal 9239871 09239871
West Bank
PALESTINE PLASTIC INDUSTRIES Industry LADAEN Daragmeh [email protected] 5 6/7
Mr. Ayoub Wael 022958 0229580
West Bank
AL MASHRIQ INSURANCE Insurance MIC Zurub [email protected] 089 90
Mr. Hazem Al- 092311 09231129
West Bank
THE NATIONAL CARTON INDUSTRY Industry NCI Aghbar [email protected] 294 0/1
Mr. Ahmad 2240746 0229838
West Bank
NATIONAL INSURANCE Insurance NIC Mushasha [email protected] 0 00
Dr. Yosif
Mohammad N. 092341 0923415 West Bank
NABLUS SURGICAL CENTER Service NSC Masri [email protected] 506 01
PALESTINE DEVELOPMENT & [email protected] 009626 0096264
WB/Jordan
INVESTMENT Investment PADICO Mr. Samir Hulileh m 4630451 647837
092350 0923762
West Bank
PALESTINE TELECOMMUNICATIONS Service PALTEL Mr. Ammar Aker [email protected] 451 25
Mr. Masouad M. Al- 2297997 0229799
West Bank
PALESTINE COMMERCIAL BANK BnkFinServSec PCB Aardah [email protected] 7 99
8288860
Gaza
PALESTINE ELECTRIC Service PEC Mr. Walid Salman [email protected] 7 82888600
Mr. Ibrahim Abu 2240788 0224078
West Bank
PALESTINE INVESTMENT BANK BnkFinServSec PIBC Dayeh [email protected] 7 80
022985 0229876
West Bank
PALESTINE INSURANCE Insurance PICO Mr. Naser Ghunaim [email protected] 894 03
PALESTINE INVESTMENT & 022954 0229540
West Bank
DEVELOPMENT Investment PID Mr. Azzam Dakkak [email protected] 027 28
Mr. Abdel Hakim 092384 09238618
West Bank
PALESTINE INDUSTRIAL INVESTMENT Investment PIIC Fuqha [email protected] 354 0/3
ARAB PALESTINIAN SHOPPING 022428
West Bank
CENTERS Service PLAZA Mr. Aram Hijazi [email protected] 582 22428581
0229865 02298650
PALESTINIAN REAL ESTATE Investment PRICO Mr. Nidal Abu Lawi [email protected] 06 5 West Bank
(table continues)
247
PALESTINE MORTGAGE & HOUSING 0229791 02297919 West Bank

CORPORATION BnkFinServSec PMHC Mr. Issa Kassis [email protected] 92 1
Mr. Azzam Al- 0229799 02297955
West Bank
AL QUDS BANK BnkFinServSec QUDS Shawwa [email protected] 55 5
Mr. Alfred Mahfouz [email protected] 2298574 0229564
West Bank
THE RAMALLAH SUMMER RESORTS Service RSR Kishek om 0 88
022425 0229785
West Bank
TRUST INTERNATIONAL INSURANCE Insurance TRUST Mr. Anwar Shanti [email protected] 734 50
UNION CONSTRUCTION AND Eng. Khaled Al- 022974 02297499
West Bank
INVESTMENT Investment UCI Sabawi [email protected] 978 2/3/4/5
092325 0923241
West Bank
THE VEGETABLE OIL INDUSTRIES Industry VOIC Mr. Mahdi Masri [email protected] 036 61
PALESTINIAN DISTRIBUTION & Mr. Odeh 2298369 0229744
West Bank
LOGISTICS SRVs Service WASSEL Zaghmory [email protected] 1 44
WATANI Dr. Bassam 022423 0224150
West Bank
WATANIYA PALESTINE MOBILE TELE Service YA Hannoun [email protected] 044 00
http://www.pex.ps/PSEWEBSITE/English/ListedCompanies.aspx?Tabindex=0
248
APPENDIX C
SURVEY QUESTIONS
250
251
252
253
254
255
256
257
258
259
APPENDIX D
PALESTINIAN LABOR FORCE
STATISTICS
Adapted from Labor Force Survey Report, by Palestinian Central Bureau of Statistics
(PCBS), April-June 2008, retrieved September 30, 2010, from http://www.google.com/
search?q=ilo+and+PSCB&sourceid=ie7&rls=com.microsoft:en-S&ie=utf8&oe=utf8&rlz
=1I7ADFA_en
261
APPENDIX E
CALCULATED VARIABLES
Calculated Variables
Survey Response Number 1 2 3 4 5 6 7 8 9 10 11
MNC Environmental Turbulence 2.13 2.25 3.75 3.25 4.5 3.5 3.63 2.5 2.75 3.13 3.5
MNC Strategy Aggressiveness 2.6 3 3.8 3.4 3.4 2.6 3.6 2.2 2.4 4 3.6
MNC Capability Responsiveness 3.92 3.17 4 4.38 4.15 3.58 3.31 2.87 2.77 4.23 3.92
MNC CSR Posture 3.3 3.44 2.8 3.7 3.3 3.1 2.7 2.6 2.87 4.6 3.5
MNC Strategy Aggressiveness Gap 1.47 0.75 0.05 0.15 1.1 0.9 0.03 0.3 0.35 0.87 0.1
MNC Capability Responsiveness Gap 1.79 0.92 0.25 1.13 0.35 0.08 0.32 0.35 0.02 1.1 0.42
MNC Financial Performance (ROE %) 10.4 10 -5 27 -1.3 21.73 8.5 -10 -5 10.13 22.9
MNC Social Performance 3.83 3.17 3.53 4.13 2.78 3.57 3.13 2.45 3.36 4.17 3.45
263

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THE ROLE OF MULTINATIONAL COMPANIES IN SUSTAINABLE

SOCIOECONOMIC DEVELOPMENT: THE CASE

Graduate Faculty of the

Alliant International University

of the Requirements for the Degree of

Doctor of Business Administration

San Diego, 2012

All rights reserved

INFORMATION TO ALL USERS

THE ROLE OF MULTINATIONAL COMPANIES IN SUSTAINABLE

SOCIOECONOMIC DEVELOPMENT: THE CASE

Yousef A. Ibrahim, D.B.A.

Alliant International University

Committee Chairperson: Gregory A. Lorton, D.B.A.

THE PROBLEM. This study investigated the role of multinational companies

(MNCs) and their impact on sustainable socioeconomic development in Palestine.

improve the organization’s financial and social performance.

METHOD. The target population for this research included multinational

operations in or were contemplating undertaking FDI investment in Palestine. An online

study investigated different aspects of the Strategic Success Paradigm developed by

MNC strategy aggressiveness, MNC capability responsiveness, and MNC corporate

social responsibility (CSR) posture. Two intervening variables, defined as gaps,

RESULTS. Nine hypotheses were tested using Spearman’s rho, a non-parametric

measure of statistical dependence between 2 variables for a significance level of 5% (p <

performance relative to strategy aggressiveness and capability responsiveness gaps,

supported (r [11] = .665, p = .026).

SOCIOECONOMIC DEVELOPMENT: THE CASE

Graduate Faculty of the

Alliant International University

of the Requirements for the Degree of

Doctor of Business Administration

San Diego, 2012

ALL RIGHTS RESERVED

SOCIOECONOMIC DEVELOPMENT: THE CASE

Graduate Faculty of the

Alliant International University

This dissertation is dedicated to my family:

my wife, Suzanne, my daughter, Noelle,

and my son, Omar.

I would like to thank my dissertation committee members, who provided me with

during the development of my research and survey questions.

patience, encouragement, and useful suggestions.

LIST OF TABLES ........................................................................................................ xiii

LIST OF FIGURES ........................................................................................................ xv

1. THE RESEARCH PROBLEM ........................................................................ 1

Definitions and Abbreviations .................................................................. 2

Theoretical Background of the Problem ................................................... 5

Practical Background of the Problem ....................................................... 8

Economic and Political Environment .................................................... 11

External Political Environment ...................................................... 11

Political System Structure .............................................................. 17

External Socio-Economic Environment ................................................. 17

Unemployment Rate and Labor Force ........................................... 18

Working Conditions in Palestine ................................................... 19

Human Resource Development ..................................................... 19

Poverty Rate ................................................................................... 20

The External Macro-Economic Environment ......................................... 20

Structure of the Palestinian Economy ..................................................... 23

Infrastructure in Palestine ....................................................................... 25

Palestinian Financial Sector .................................................................... 25