Journal of Critical Reviews ISSN- 2394-5125 Vol 6, Issue 4, 2019 Review Article CORPORATE SOCIAL RESPONSIBILITY (CSR) AND SOCIAL CONFLICT POTENCIES IN MINING AREAS COMMUNITY: EMPIRICAL EVIDENCES FROM INDONESIA MOH. DULKIAH1*, LILIS SULASTRI2, IRWANDI3, AVID LEONARDO SARI4 1234UIN Sunan Gunung Djati Bandung, Indonesia *Email: [email protected] Received: 21.07.2019 Revised: 19.08.2019 Accepted: 23.08.2019 ABSTRACT Mining companies are business units that are required to carry out Corporate Social Responsibility (CSR). The implementation of CSR is one mechanism to improve the company's brand image in the community and also reduce the potential for conflict between the company and the people who live around the operational area. This study aims to look at the relationship between the implementation of CSR with the potential for social conflict, both vertically and horizontally in communities around mining areas. The study was conducted using qualitative methods, in several mining areas in Indonesia. The existence of corporations in the midst of society also has a broad impact on complex aspects both economically, socially, politically, culturally and environmentally. This can trigger conflicts in the community. The results found that the implementation of CSR programs conducted by the company can reduce the potential for conflict in the community, both vertically and horizontally. Keywords: CSR, community, mining areas, social conflict, Indonesia. © 2019 The Authors. Published by Advance Scientific Research. This is an open-access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/) DOI: http://dx.doi.org/10.22159/jcr.06.04.10 INTRODUCTION from the corporation because of its importance for the socio- Mining activity is one of the many production activities carried out economic development of a society. Because investment in in Indonesia. Mining business activities have two different sides, CSR can be correlated to the company's image, economic namely prosperity, energy and mineral fulfillment for the prosperity, competitive advantage, customer loyalty and community, but also have environmental and social impacts minimize the occurrence of corporate and community social (Prayogo, 2010; Situmeang & Siwi, 2017; Irwandi & Chotim, conflicts (Rahim et al., 2011; Firdaus, 2014). 2017). As awareness in order to account for the production Initially, CSR was in the form of corporate awareness without activities carried out by the corporation, long ago the practice of any formulation of policies regulated in the legal form. Several Corporate Social Responsibility (CSR) has been born (Ambadar, large corporations in the world from the beginning have 2008). routinely paid attention to the welfare of employees, as well as Every business organization operates in the community providing assistance to people who live around their (Akinyomi, 2012). The corporation is a social institution and part operational areas. Then, various studies and measurements, as of the community. Therefore, giving and returning relationships well as awards for awards were sparked to appreciate the are observed between the company and the community. As part of responsibility carried out by corporations on the environment the community, companies must do several things to improve the and society. The study and study of CSR practices began to be community as corporate social responsibility (CSR). initiated by looking at it from various perspectives (Sukada et Corporate social responsibility (CSR) is one of the most dynamic, al., 2007). complex and challenging problems in modern business In Indonesia, there are indeed regulations that require all management (Rahman, 2013). Modern business managers are business activities related to natural resources to be listed in constantly faced with the appropriate contribution dilemma for article 74 of Law Number 40 of 2007 concerning limited developing the environment in which they live to operate, and liability companies. However, this regulation is also meeting the requirements of a small but strong group of considered to still have shortcomings, for example, does not shareholders (Singh, 2006). Good corporate social responsibility include the amount of value that must be paid by the company in practical terms must be considered from the perspective of how as a responsibility for the exploitation of natural resources to local/regional managers of these multi-national companies the community (Ambadar 2008). These deficiencies have led operate in the region (Nickles et al., 2005). to conflicts between companies and communities living CSR refers to business decision making related to ethical values, around mining areas (Situmeang & Siwi, 2017). compliance with legal requirements, and respect for people, Social change with the entry of a corporation certainly creates communities, and the environment. In this light, there is a various social phenomena, one of which can be in the form of tendency for CSR to be seen by consumers as an obligation taken conflict. Interaction between mining corporations and the by entrepreneurs in running their business, making policies, surrounding community can be in the form of constructive making decisions, or following action steps (Ali & Ikhlas, 2012). interactions (associative) or interactions that actually bring CSR has different meanings for different stakeholders but each other down (dissociative). In fact, it is not uncommon for generally refers to saving people, communities and environmental interactions between corporations and the surrounding ways that go beyond what is legally demanded from a company community to turn into conflict, both latent and open (Prayogo (Salehi & Azary, 2009). 2011). There are high expectations of corporate social responsibility Several studies on corporate conflict with the community, for Journal of critical reviews 52 CORPORATE SOCIAL RESPONSIBILITY (CSR) AND SOCIAL CONFLICT POTENCIES IN MINING AREAS COMMUNITY: EMPIRICAL EVIDENCES FROM INDONESIA example, studies conducted by Prayogo (2010), Hoelscher & of industrialization has not only exploited natural resources Rustad (2019); Barnea & Rubin (2010), Fajri (2012) and others. but also degraded the environment. In this case, the local However, previous research forgot about the relationship community is the host as the 'owner' of the potential and between CSR and the company's brand image in the community assets of natural resource wealth but is the exploited party. and the relationship of CSR with the potential for social conflict in Even based on field research by researchers in the East communities around the company's operational area. Kalimantan region, one of the provinces in Indonesia which This study aims to look at the relationship between the has the highest number of mining industries, researchers implementation of CSR with the potential for social conflict, both found a conflict of interest between corporations and local vertically and horizontally in communities around mining areas in communities on the work aspect. Local communities are Indonesia. urging that the corporation can accept workers from the local community. But on the other hand, the corporation has quite METHOD strict recruitment standards for workers, especially in terms This study uses qualitative methods (Taylor et al., 2015; Patton, of education and competency. While prospective workers 1990; Creswel, 2009). The subjects in this study were the people from the local community have a low level of education and receiving CSR programs from mining companies in Indonesia. limited expertise. This problem is getting stronger because Data collection is carried out by researchers to obtain data and each is determined to emphasize its interests. The CSR team as information that is relevant and useful regarding this research. a representation of the company often becomes the Data collection is done through observation and in-depth foundation for resolving this conflict because it is considered interview techniques. to have a closeness with the local community. Data analysis was carried out through three stages namely data Conflicts of interest occur between corporations and local reduction, data presentation, and verification (Miles & Huberman, communities, especially in the economic aspects. Both the 1984). The purpose of this data reduction is to sharpen, classify, corporation and the local community each strive to win the direct, and discard unnecessary data. The second is the interests, especially the economic interests of the local presentation of data in the form of compiling all information and community towards the corporation (Achwan et al., 2005). data obtained into a series of words that are easy to read into a Thus, it causes an unbalanced relationship where exploitation report. Presentation of data in the form of narratives, diagrams, of natural resources such as natural resources, land, and and matrices. Verification is the last step which is a conclusion environmental impacts occur where local communities are from the results that have been processed at the reduction stage. located. In this case, the local community as an offensive party, the community tends to be often identified with the exploited, RESULTS AND DISCUSSIONS also identified with poverty, especially in terms of equitable CSR and Social Conflict in Indonesia (Corporate Interests vs. Local distribution of the economy and the right to justice. While Communities) corporations, on the contrary, the position of the corporation In Indonesia,