Corporate social responsibility in Iran in a comparative frameworkYadollah Dadgar Iran

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BRIEF CONTENT Introduction Principles, approaches, theories CSR trend in Iran Concluding remarks

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INTRODUCTION

BRIEF SUMMARY3 MAIN ELEMENTS:( based on CSR

theories ,historical experiences and observable data):

First: Iran as a significant case study in middle east

Second: Comparison as CSR is concerned Third: main results of the paper

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First Element: Iran as a significant case study in middle east 1-a great potentiality both positively and…,historically …(civilization and people not

government. It is unfair and drastic to judge….. 2-its location geopolitically…. 3-both natural and human resources,

peaceful mentality, special smartness in final decision…recent election…e

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Second Element: Comparison as CSR is concerned: 1-before and after 1980..Establishing CSR 2-reform period 1997-2004…moderation

and some progress in CSR 3-hard lining period 2005-

2013..collapsingCSR and any other substantive entities

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Third Element: considering the first two: Results: the role of some factors on CSR 1-well developed private sector or…. 2-ideological-extremist or

moderate governance 3-peaceful(not revolutionary or

violence oriented) movements ..green movement…Arabic Spring… are synergizing CSR…

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CSR as a self regulating, human oriented

mechanism is primarily based on ethical and

international standards.

////It is in itself an instrument of common language

and a way of communication, though it is informal,

it is significantly helpful and affective.

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CSR could potentially be construed as the fourth integrating part of modern societies: business sector, government sector, civil sector and CSR one.

As the role of companies is significant in daily activities of ordinary citizens, CSR could have crucial role thereof.

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CSR as a synthesis of ethics, law and international norms could have paramount role in synergizing altruistic affairs.

////Due to complexities in globalization era, assistance of informal and people oriented activities including CSR are influential, specially in resolving some human and ecological hardships.

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If business ethics is related to morality of organizational actions, CSR focuses on the consequences of organizational actions. So both are incorporated into a strategic process

Efficient CSR is going to compromise both profit maximization and ethical considerations.

////Paul. S. Otellini, president of Intel stipulates that: a key determinant of Intel‘s success is its ability to advance leadership in corporate responsibility.

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////Some successful managers believe that CSR is no longer optional for business leaders, but a mandatory duty which is remarkably helpful

Recent world economic forum stressed on corporate citizenship as a key factor which will play a crucial role in shaping the agenda for business leaders for third decade of 21 century.

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///Considerable numbers of studies, demonstrate that there is a

significant relationship between financial improvement of

businesses at one hand, and their share of CSR at the other.

Even opponents of CSR believe that business is a social

institution, although they differentiate on the exact meaning of

social responsibility itself.

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Looking carefully to the main constituents of CSR will reveal its link to the

profitability of business itself.

For, the key elements in CSR could be illuminated as:

Environmental protection

Disclosure of information to stakeholder

Equality of treatment for minorities

Profit sharing

Ethics in advertizing

Philanthropy

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Companies, specially giant ones, deliver essential

services to over 4 billion customers and play key role in

economic and social development of above 200

countries throughout the world.

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////For instance France Telecom Orange, FTO

delivers daily services to over 250 million

customers of 45 countries in Europe, Africa and

the Middle East. Therefore its mangers believe

that CSR is a key component of FTO conquest

2015 strategic project.

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CSR is closely related to theories of sustainable development and therefore it includes ecological aspects, economic justice, welfare of future generations and so on.

So many studies suggest that although CSR may impose some cost on companies in short run, it enhances their profitable capacity in mid and long run.

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As ethical duties overcome the limitations of legal duties, they could be complements of CSR aspects.

In CSR framework, ethical principles as informal rules of games are energetic partners for legal principles.

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Ethical considerations stem from a diversified sources including religious convictions, moral traditions, human principles human rights commitment and so on.

Although 1920 has been mentioned as the early period of CSR development, its modern evolution, however, was alongside with development of stakeholder theory in 1960s. Decade in question, is coinciding with a great social change in America.

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General schematic format of comprehensive CSR format could be as follows:

CSR

Economic responsib

ility

Ethical Res

Altruistic Res

Legal Res

Complementary

Responsibility

Economic responsibility could have some constituents as follows:

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Poverty eradication

Generating upward mobility

Promoting innovation

Creating new jobs

Fair rate of returns

Satisfying customers

Economic responsibilit

y

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Respecting peoples

moral rights

Being moral

Doing right,

just and fair

Preventing harms

caused by others

Ethical responsibil

ity

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///One of the strengths of success CSR is that it

relies on dialogue with stakeholders

Some empirical studies indicate that social

quality is inseparable from long term economic

sustainability.

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Typical aspects regarding CSR

some results of optimum CSR plans are:

Improving in equal opportunity, child protection,

accessibility to internet ,

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Facilitating access to education and medical

services

Finding innovative solutions for a green world

////Firm commitment to human rights

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Combating the geographic digital divide

Increasing access to information and

communication technologies

optimizing waste management and so on

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IRAN

Introducing a general platform

to analyze Iranian case

performance of CSR before

1980

CSR situation in 1980-2013

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FACTORS AFFECTING GENERAL CSR PLATFORM FOR IRAN

Existence of well defined private sector and

independent companies

The role and the nature of the government

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TYPICAL FRAMEWORK

Commitments Priorities

Recognize and support employees

Place people at the heart of the company support

employees in equal opportunity etc

Ensure transparency quality and safety

for customers

Solutions for greener world etc

Responsible use of products with regard to

prosecuting children privacy and data security Bring economic designed

products reducing customer environmental footprint decreasing CO2

and so on

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PUBLIC PRIVATE RELATIONSHIP IN IRAN

////Although Iran has ever suffered from less

developed private sector, this has been terribly

and extremely crucial after 1908s and specially

2005-2013

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////Public sector especially in 2005-2013 took over major

parts of economy and crowded out private sector

altogether.

////Right know roughly 85% of 100 top Iranian

companies are owned by government or semi-

government. The role of semi-gov…double

miserable….double tragedy

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100 TOP IRANIAN COMPANY

Sales Ranking COMPANY NAME Industry

N/A National Iranian Oil Company* Energy and petrochemicals

1 Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO)*

Mining

2 Iran Khodro Co.* Automakers and parts

3 National Petrochemical Co.* Energy and petrochemicals

4 Saipa Corp.* Automakers and parts

5 Bank Melli Iran* Banking and financial services

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6 SAPCO Automakers and parts

7 Mobarakeh Steel Company

Steel

8 Saderat Bank Iran* Banking and financial services

9 Parsian Bank* Banking and financial services

10 Bank Mellat* Banking and financial services

11 MCI Telecommunications

12 Sepah Bank* Banking and financial services

13 Tejarat Bank

Banking and financial services

14 Bandar Imam Petrochemical Co.

Energy and petrochemicals

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15 Iran Insurance Co. Insurance

16 National Iranian Copper Industries Co. (NICICO) Mining

17 Bank Maskan* Banking and financial services

18 Esfahan Steel Company Steel

19 Islamic Republic of Iran Shipping Lines Co.* Transportation

20 Keshavarzi Bank* Banking and financial services

21 Sazeh Gostar Co. Automakers and parts

22 MAPNA* Utilities and infrastructure

23 Bou Ali Sina Petrochemical Industries

Energy and petrochemicals

24 Khouzestan Steel Co. Steel

25 Mega Motor Co. Automakers and parts

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36 Iran Dairy Industries Co. (PEGAH)* Beverage and food

37 Iran Khodro Investment Development* Automakers and parts

38 Pasargad Bank

Banking and financial services

39 Ahwaz Pipe Mills (APM) Construction and building materials

40 Mine and Industry Bank* Banking and financial services

41 Asia Insurance Co. Insurance

42 Behpakhsh Co. Retail

43 Marun petrochemical complex

Energy and petrochemicals

44 Melli Iran Exchange Co. Banking and financial services

45 AmirKabir Petrochemical Co.

Energy and petrochemicals

46 Pars Khodro* Automakers and parts

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47 Omid Foreign Exchange Company Itd. Banking and financial services

48 Bahman Group* Automakers and parts

49 Arak Petrochemical Co. Energy and petrochemicals

50 Ghadir Investment Company* Banking and financial services

51 Fars and Khuzestan Cement Co.* Construction and building materials

52 Iran Melli-Sanati Steel Group (aka National Iranian Steel Company) Steel

53 Shahid Tondgooyan Petrochemical Co. Energy and petrochemicals

54 Petrochemical Commercial Company International Ltd. (PCCI) Energy and petrochemicals

55 Darou Pakhsh* Pharmaceuticals

56 Iran Electronics Industries (SAIRAN)* Computers and electronics

57 Sadid Industrial Group* Industrial equipment and machinery

58 Zagros Petrochemical Co.

Energy and petrochemicals

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59 Khark Petrochemical Co. Energy and petrochemicals

60 Alborz Investment Co.* Retail

61 Behshahr Industrial Co.* Beverage and food

62 Mines and Metals Development Investment Co.(P.J.S)* Mining

63 Pars Petrochemical Co. Energy and petrochemicals

64 Darupakhsh Distribution Co. Pharmaceuticals

65 Khorasan Steel Complex Steel

66 Pars Darou Co.* Pharmaceuticals

67 Tooga-Mapna Turbine Engineering and Production Utilities and infrastructure

68 Pakhshe Razi Co. Pharmaceuticals

69 Iran Auto Parts Mfg. and Distribution Co. (ISACO)* Automakers and parts

70 Iran Transfo Co.* Utilities and infrastructure

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71 Sina Bank

Banking and financial services

72 Iran Tractor Mfg. Co.* Automakers and parts

73 Saipa Diesel* Automakers and parts

74 Dana Insurance Insurance

75 Karafarin Bank

Banking and financial services

76 Pakhshe Hejrat Co. Pharmaceuticals

77 Petrochemical Industries Investment Company* Energy and petrochemicals

78 Gole-e-Gohar Iron Ore Co. Mining

79 Iran Aluminium Co. (IRALCO) Steel

80 Pasargad Oil Co. Energy and petrochemicals

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In addition about 130 holdings are working in Iran which

constitute a remarkable CSR potentiality. The problem

is ,however, government dominance on those holdings as

well.

Historically and as the data indicate, in Iranian case the

more government intervention in economy the less CSR

progress.

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Comparing CSR indices before and after 1980,

reveals a meaningful relationship in this connection.

////One can observe a brilliant performance of CSR at

least for several companies in 1967-2000,theier

establishment of which …before 1980

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• SOME TYPICAL SUCCESSFUL CASES IN CSR TREND BEFORE 1980

Industry Name of company Train and transportation instruments

Aminozarb (1834-1899)

Cloth and food products Abdollah Moghadam (1899-1983)Buttery liquid gas Mahmud Khalili (1905-74)Textile Mahmud Lajavardi (1910-1980)

Press and publishing industry Abdorahim Jafari (1919-2010)Oven, samovar, carton ,stove Mustafa Aalinasab (1919-2005)Automobile industry Ahmad Khayami (1924)

Mohamud Khayami (1931)

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Television industry Mohammad Taghi BarKhordar (1924- 2011)

constructions and tractor industries

Abdolhamid Fazli (1934..)

Oil, rubber and plastic industries

Abbas Moosavi (1938)

Leather industry Rahim Zadeh (1938)

Pipeline and steal Ahmad Taheri Talab (1940)

Micro Industrial instrument

Mohammad Mahdi Mazloomian (1943)

Tea packing and noodle industry

Bahram Haj Karimloo (1944)

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As CSR package is concerned these 12 famous

Iranian companies (established before 1980), had

been in top in operating social responsibility.

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For instance: Aalinasab companies were providing

the required protein for a considerable families in

slum areas of Tehran seasonally .

///It was devoting at least 35% of its profit to

assist school building construction in 3 provinces

including Azerbaijan.

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///Khayami company helped the children of poor

workers to complete their elementary school period.

Combating with cancer, launching free medical

services for poor and providing free lunch for low

income workers are among other activities of

company in question.

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Those 12 famous companies, were doing their

responsibilities in all five folds format (below):

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Inter organizational responsibility

Work place responsibility

Industry responsibility

Environmental responsibility

Socio-economic

responsibility

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////Optimum governments welcome to CSR ,

for CSR reinforces their policies and strategies.

In Iranian case specially under 2005-2013 this is

reverse.

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To be much more efficient, CSR requires a democratic

and an optimum government.

For, democratic governments construe CSR as assistant

partner for themselves, whereas despotic governments

considers CSR as their rival and competitors (The case

would be seen obviously in Iranian case 2005-2013).

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Iranian culture before Islam was influenced under

Zoroastrianism which requires each firm

devotes 10% of her saving for charities and

helping poor people.

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After dominance of Islam, the CSR situation was depending

on type of ruling regime. Under moderate and democratic

administration CSR was much more efficient .We face with

the worst situation under totalitarian one.

Under the reform administration 1997-2004 both private

and state owned companies had better performance in CSR

cases.

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Under 2005-2013 mismanagement in Iran ,every substantive objects

including CSR collapsed altogether.

One hypothesis of this paper is that ideological government is the

enemy of CSR . Thus ,Arabic spring ,Green movement in Iran ,etc are

promising changes. Accordingly , CSR ranking in North Korea, Syria

and Iran under period in question are in the bottom of the list.

The majority of productive and profitable firms have ever being taking

by the government or semi-governments specially revolutionary guard.

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Due to CSR cases, activities of Simense ,Dena and

other similar companies in Iran, were admired by

people before revolution. The very companies were

denounced by people after changing ownership from

private sector to rentier semi government among

pressure groups.

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Not surprisingly in Iran particularly and in other

countries generally, trust and reputation are at the

center of CSR .

This is obvious when we take a look at reputation

rank of 28 famous international companies.

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THE MOST REPUTABLE COMPANIES1. Acer

2. Air France KLM

3. Amazon

4. Bayer

5. Canon

6. Daimler

7. Dell

8. Kodak

9. Fed EX

10. Fuji film

11. Ford

12. GM

13. Google

14. Hertz

15. Hitachi

16. Honda

17. In tel

18. LG

19. Micro soft

20. Nisan

21. Toyota

22. Pana Sonic

23. Phillips

24. Rolex

25. Sharp

26. Simense

27. Sony

28. Zara

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The ranking in question has been released according to

findings of 47000 customer questionnaires throughout the

world.

As Henry Ford correctly stipulates (in 1969): the terms of

contract between companies and societies are changing.

Now we are being asked to serve a wider range of

human values.

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Green movement in Iran in 2009 after debatable

presidential election proved that Iranian people are very

sensitive to human rights. Thus they evaluate the

performance of companies in this regard seriously.

Some time they prohibited Nokia products for some

times.

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Iranian people are also pessimistic about the Russian

and Chinese products, this also might be related to

human right hardship over there.

Of course due to international sanctions purchasing

products of Russian and Chinese companies is the

last resort for Iranian citizens.

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Doing business environment is also an influential

factor on CSR performance. Iran in period in

question is roughly in the bottom of the list of all

countries in region (around 150 among 180

economies).

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Not surprisingly one can observe a meaningful

relationship between CSR ranking, doing business

situation and the behavior of government.

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TOP CSR RANKING CSR Rankings country CSR Rankings country

14 Austria 1 Netherland15 Spain 2 Sweden 16 Portugal 3 Switzerland 17 Australia 4 Denmark 18 Canada 5 Norway 19 Ireland 6 Germany 20 Check republic 7 Finland 21 Japan 8 Slovenia 22 Cyprus 9 France 23 Greece 10 Iceland 24 Poland 11 Italy 25 Israel 12 Belgium 26 Luxemburg 13 Singapore

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In Iran in so called “reform period” 1997-2004

(ruled by a democratic administration), both CSR

and doing business were much more better than

totalitarian period (2005-2013).

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Some typical cases in CSR in reform period: 1-

Mehrafarin company was building some schools

for poor Afghani emigrants in Iran 2- Tadbigran

launched painting workshop for poor children 3-

Pishgaman helped to decrease unemployment rate

among Iranian women.

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4- Rahavard company built a library for children

and their mums 5- Tooga launched musical classes

for low income teenagers (50 persons each

semester). 6- women entrepreneur association

launched remarkable numbers of social networks

voluntarily.

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7- Chargon Co organized computer classes for poor

students 8- Mehad Co helped qualified students

among poor families to continue university classes 9-

Stedtler Co learned 300 students how to produce

stationery materials

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Aalinasab companies supported financial cost of

reformist candidates 11- Sarmad company was

financing pocket moneys of 60 poor students each

semester 12- Yavaran Co were fixing the electricity

devices for poor voluntarily.

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Poyesh Co was serving free dental services for poor

people 14- Asayesh, Mapna, Raad, Zooragh,

Damavand Mineral water and so many other

companies were working hard to improve their share

in social responsibility. All these activities declined

massively during the 2005-2013 administration

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CONCLUDING REMARKS

Human rights, equal treatment with all, poverty

alleviation and environmental protection are crucial

and signaling factors in CSR performances (specially

in Iran).

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Doing business environment, democratic

government, and well defined private sectors are

backing factors for improving CSR .

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According to results of research of one of my

colleagues 92% of managers of main Iranian

companies maintain that role of government in

enhancing CSR is very crucial.

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This is consistent with Drucker’s famous findings in

this respect. He who is among father funders of CSR

stresses on the role of government in both

reinforcing and worsening this phenomenon.

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Iranian trade law in 1967 does have some special articles

regarding CSR ( one can maintain on Articles 137 and 138

particularly).

According to those articles and actual performance of

main companies, before 1980 Iranian progress in CSR is

defendable but after 1980 it depends on nature and

behavior of public administration.

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More than 2500 years before Christ Iranian civilization

was influenced by Zoroastrianism.

Main slogans and mottos of Zoroastrianism are: Good

thoughts, good words and good deeds. This three fold

path is the center of the faith

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One can summarize Iranian case regarding CSR as

follows:

1- Potentially speaking social responsibility has ever

been in the heart of Iranian civilization specially among

the business sectors.

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2- Before dominance of Islam and in Zoroastrian era the

behavior of business sector were reinforcing the CSR

framework.

3- The role of government and independence of private

sector has ever been influential in CSR progress.

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4- After dominance of Islamic government the situation has been related to the type of government as such. In case of moderate and democratic (as in 1997-2004), the CSR ranking was remarkable, under ideological one (2005-2013), however, we do face with the worst results in this regard.

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5- Taking over main companies by ideological

government and semi-government (like

revolutionary guard) is the main factor affecting

inefficiencies of CSR in Iranian case.

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6- The dominance of moderate and democratic

administration hopefully will change the result.

7- I do believe that green movement in Iran, and Arabic

spring in other middle east regions could have promising

role in enhancing efficacy of CSR in the region.

Thank you