Internal Corporate Social Responsibility as a Microfoundation of Employee Well-Being and Job Performance

Abstract

Very drastic environmental changes require the development of an adaptive performance management framework that supports the strengths of the company’s structure. The position of internal CSR as a resource that can solve performance problems needs to be proved. The purpose of the study was to analyze the effect of internal corporate social responsibility on job performance through employee well-being. To this end, this causal study surveyed 282 non-managerial employees at four strategic industrial state-owned enterprises in Indonesia. The respondents were recruited using the proportional random sampling technique. The collected data were analyzed using SEM with SPSS 26. The results showed that changes in job performance can be predicted by the adequacy of work resources and personal resources. Both resources can be realized by the existence of corporate social responsibility intended for employees. Internal corporate social responsibility was found to encourage increased work engagement and decrease burnout, which ultimately improves job performance. Internal CSR is an important personal and work resource for employees. Internal CSR is the company’s main orientation in an effort to strengthen the company’s performance structure while ensuring the implementation of the company’s ethical responsibility in its environment. From the theoretical perspective, this study implied the need for exploring the concept of internal corporate social responsibility to expand our understanding of the relationship between corporate social responsibility and personal and work resources and employee performance. Meanwhile, the practical implications of this study highlight the importance of microlevel corporate social responsibility programs to meet personal and work resource needs so that companies benefit from high employee engagement and low burnout in order to improve adaptive performance and the structure of the company’s performance.

1. Introduction

During the COVID-19 pandemic, various companies are facing pressures, including SOEs, companies that manage the business sectors owned by the government for the welfare of the people. There are several SOEs that have a strategic position in terms of defense and high technology in the list of State-Owned Enterprises of Strategic Industries. Since 2019, the Ministry of SOEs has pursued a shareholder’s action with the vision of developing a national strategic defense industry that is advanced, strong, independent, competitive and leading in the Asian region. The holding structure of the strategic defense industry SOEs is led by PT LEN Industri (Persero). The four SOEs under the strategic defense industry holding are (1) PT Dirgantara Indonesia (Persero), (2) PT Pindad (Persero), (3) PT Dahana (Persero) and (4) PT PAL Indonesia (Persero). In 2019, the state-owned strategic defense industry experienced performance problems coupled with pressures during the COVID-19 pandemic such as a decrease in profits, delays in order delivery, losses due to high restructuring interest expenses.

The pressure affects the life of employees and in general reduces the performance of organizations. This situation leads to the lack of a strong foundation that supports the company’s performance structure. Organizational performance depends on employee performance [1]. Job performance is a multidimensional concept. Job performance consists of two components, namely, components specific to a particular job and non-specific performance components of the work [2]. Job performance consists of two fundamentally different aspects, namely, organizationally mandated performance, innovative work behavior and more spontaneity [3]. Performance is quite complex and can be only partially understood. Performance as a mixture of activities varies greatly from stage to stage and is necessary for a specific purpose [4,5,6]. Performance can also be seen as a complex behavior consisting of three different behavioral tasks, namely, idea-making, promoting ideas and realizing ideas [7,8]. Work behavior is based on innovative concepts consisting of generalization and implementation of new and useful ideas [9]. The fulfilment of employee behavior is designed for innovative work that consists of generating and implementing new and useful ideas. Some authors [10,11] see job performance from the context referring to [12] as extra behaviors that contribute to organizational goals. The performance can be defined as actions and behaviors relevant to the goals of organizations that are under employee control [13]. Innovation performance and contextual performance are dimensions of job performance [14].

Today’s performance challenges are unprecedented pressures that tear down individual performance structures. That is required to be able to respond and act proactively to change and show an extra role in environmental changes both at work and outside of work. Demands that employees be able to adapt to changes form a basic framework for developing performance concepts according to the dynamics of change. The focus in performance is about adaptive ability in new conditions or unexpected situations and being an orientation (Motowidlo, 1993) [12]. Adaptive performance was put forward by Pulakos et al. (2000), Park and Park (2019 and 2020). Niessen and Lang (2020), Luo et al. (2021) and Stasielowicz (2018) [15,16,17,18,19] emphasized that the adaptive ability of employees is needed to deal with the dynamic of environmental change. Although adaptive performance is very important and familiar, the concept seems to have a different focus with the possibility of overlap, and research comparing and clarifying various terms and concepts is still lacking. Therefore, focusing on factors that encourage performance from various sides, especially adaptive performance such as internal CSR, is very important. CSR has drawn the attention of academicians and practitioners. In the academic field, CSR can be scrutinized through a range of aspects and seen as one of the strategies to improve performance. Following the self-improvement and social exchange theories, employees may perceive the effect of corporate social responsibility [20]. For business practitioners, CSR can be seen as one of the business strategies [21]. Corporate social responsibility has become an important part of human resources management (HRM) practice [22,23]. The notion of corporate social responsibility denotes a company’s responsibility for the environment, community and stakeholders [14]. According to [24], the concept of CSR could be associated with business ethics, stakeholder management, sustainability, corporate citizenship behavior, shared values creation and business-conscious capitalism driven by social goals. Theorists and practitioners of CSR are indeed interested in the concept of CSR [25], but the concept and implementation of CSR are biased due to certain interests.

In the context of HR governance, attention to CSR integration is still limited. Although a previous study [13] focused on ethical issues in HRM, it did not discuss the practice of corporate social responsibility as suggested [26]. In this regard, the relationship between CSR and HRM is strategically isolated [27]. Among the noticeable gaps regarding HRM and CSR integration is the current shortage of understanding of CSR in terms of its function and orientation. Corporate social responsibility is commonly divided into two, internal CSR and external CSR [14]. The former emphasizes the company’s internal aspects such as employees’ careers, needs and education [28]. In this regard, internal CSR mainly aims to promote organizational change [29], whereas external CSR primarily aims at gaining organizational support.

One of the current problems regarding CSR can be seen in state-owned companies, where numerous CSR programs deviate from their contexts. External CSR currently gains far more priority despite demands to encourage changes in organizations that are mainly related to employee performance. It is necessary to make state-owned enterprises aware that they need more changes rather than support. Internal CSR practices at state-owned companies do not receive adequate attention like the external ones do [14]. It should be noted that the CSR program also needs to address employees as stakeholders of the company [30].

The concept of internal CSR as a microfoundation was proposed by some authors [31,32]. A company’s investment in internal CSR is much more substantial than external CSR but this investment is avoided because of the high cost and impact on the company’s finances [33]. In general, internal CSR mainly aims to achieve organizational changes [29]. The concept of corporate social responsibility at the microlevel is related to the direct behavior of employees [34]. However, the internal CSR function as a microfoundation is still debatable as there is no generally accepted definition [35], creating both challenges and opportunities. Therefore, it is highly challenging to generalize the result of CSR at the microlevel. The idea of individual-level CSR should be an opportunity to understand CSR thoroughly [36], and the process of driving job performance and understanding the role of internal CSR is a relatively unexplored research topic. The explanations that have been presented in the literature regarding employee relations with CSR are not comprehensive [30].

Optimizing the internal CSR function to build performance not only has a positive function on employees themselves; the strength of the company’s foundation increases, which further ensures the sustainability of the company and, on the other hand, toursut and realizes sustainability. Especially during the pandemic, Indonesia is facing a period of economic recovery. Therefore, the role of such companies as state-owned enterprises is very important. The present study attempts to fill the gap regarding the relationship between internal CSR and performance in a changed environment. The result of this study is expected to expand our understanding of internal CSR and its functions for employees and companies and internal CSR practices based on stakeholder theory perspectives. This study also demonstrates the position of internal CSR as the foundation for the company to produce an optimal performance based on individual job performance and clarifies the integration of internal CSR into HR governance based on the JD-R perspective for employee well-being. Management’s decisions to involve employees as CSR beneficiaries are used as a framework to demonstrate social responsibility towards stakeholders, communities and the environment. In general, the present study aims to analyze the effect of internal CSR on job performance through employee well-being.

Corporate social responsibility denotes a set of obligations the community expects a company to perform [37]. The modern concept of modern corporate social responsibility is based on the main principle of the triple bottom line, namely, the balanced relationship between profit, people and the planet [38]. In its development [39] proposes a version of stakeholders who are oriented toward the implementation of CSR programs. In terms of its orientations and goals, CSR could be practically divided into internal and external CSRs. The notion of external CSR is oriented more at the company’s external audiences, such as customers, suppliers and governments [29].

Internal CSR as an organization’s policy and practice is related to the psychological and physiological well-being of its employees [40]. The action is focused on building company-specific human resources and expanding the range of volunteer opportunities for employees to increase individual or intentional benefits for the company [41,42]. Internal CSR is the company’s responsibility towards employees, for example, concern for employee careers, needs and education [28]. Internal CSR is a condition of being accountable to the company both ethically and legally to carry out the task of caring for employees, considering environmental and community conditions to ensure the sustainability of the community and company stakeholders [14]. The conceptual framework of internal CSR is inseparable from the general framework of CSR as put forward in [37]. The difference lies in the focus/priority based on stakeholder theory considerations.

Internal CSR is also related to the level of welfare of employees and is one of personal resources. Therefore, internal CSR is related to the level of welfare of employees. One of the theoretical frameworks for employee well-being is the JD-R model [43,44]. From the JD-R’s perspective, employee well-being results from two relatively independent processes [45]: (1) health problems due to poor work design and drained mental energy (fatigue) and (2) work resources that drive positive organizational results. This model provides a framework for explaining the work well-being associated with high levels of tension and friction [46].

The fulfillment of the level of welfare of indicated by work enggagement is sourced from internal CSR. Work engagement (WE) is a form of implementation of tasks and responsibilities based on self-expression, cognition and emotions [47], a situation related to work that is effectively positive, satisfying, motivating, prosperous [48]. WE can be defined as spirit, dedication and absorption [49]. Burnout itself is a psychological syndrome due to stress, and high job demands with low resources [43,45]. Thus, engagement can be considered the antipode (opposite) of burnout [50]. However, the two have different characteristics. Burnout attachments in JD-R models such as [51] are getting a lot of attention.

The availability of resources for work provided based on responsibility and concern encourages the improvement of employee welfare. CSR positively affects the hedonic and eudaimonic well-being of employees [52]. Internal CSR is a work resource that encourages positive organizational outcomes [45]. Internal CSR puts employee well-being as a priority. Employee well-being itself is WE and burnout [45]. CSR more specifically determines the level of passion, dedication and absorption at work [53,54]. From the perspective of the social exchange theory, internal CSR encourages work engagement [55]. CSR enjoys a significant influence at the microlevel and on employee engagement [56]. The hypotheses proposed are as follows:

H1. 

Internal CSR has a positive influence on work engagement.

H2. 

Internal CSR has a positive influence on burnout.

Internal CSR raises awareness of the meaning of work and ethical behavior at work. Internal CSR fosters a moral obligation to do better through work. CSR is a form of corporate attention to employees. From the perspective of social exchange, that form of attention is returned with better work. The performance of employees improves when employees see intrinsic and extrinsic motives in CSR [57]. Intrinsic motivation includes the company’s responsibility to its employees. A change in job performance can be based on corporate social responsibility interventions [58,59,60]. According to the means–end chain theory, the conception of value in corporate social responsibility such as responsibility, attention and concern affect the behavior of employees [61]. The hypothesis proposed is as follows:

H3. 

Internal CSR has a positive influence on job performance.

The level of employee welfare is related to work and personal resources, the interaction between the well-being and performance of teams and individuals [62]. CSR functions increase work engagement at the same time [63]. There is a relationship of well-being with individual performance and the organization [64]. Well-being has a significant effect on job performance [65]. Employee well-being is a variable that mediates CSR and job performance [66,67]. The role of WE is an indicator of employee well-being as stated in the perspective of the JD-R theory as a mediation variable for CSR and employee behavior [68,69]. Internal CSR practices encourage work–life balance, improving social exchange relationships and employee engagement that ultimately leads to an increased behavior that brings benefits to organizations and supports the company. WE’s role in mediating CSR practitioners toward the positive behavior of employees [70,71]. The increasing welfare of employees sourced from internal CSR encourages more positive behavior change [72]. Specifically, WE is a variable that mediates CSR and the creative behavior of employees [73]. The hypothesis proposed is as follows:

H4. 

Work engagement mediates the influence of internal CSR on job performance.

Internal CSR is a form of concern, attention and corporate responsibility. Based on the means–end chain theory, the conception of value in CSR affects the behavior of employees [61]. Internal CSR encourages employees to identify with the company and work to express themselves to relieve burnout [74]. Perceptions about CSR affect employee burnout [74,75]. Increasing CSR decreases burnout as the opposite of work engagement [76]. The perception of CSR reduces the pressure on employees in their interactions with customers. Internal CSR strategies reduce employee burnout [77]. Decreased burnout will improve performance [78,79,80]. When employees bear heavy workloads or excessive mental stress, employees seek to reduce physical and mental interaction with work as a self-defence mechanism. This reduces the performance of employees. According to the burnout model from the perspective of JD-R, burnout influences job performance [81].

Optimizing the internal functions of CSR increases the compatibility between the psychological and social needs of employees and companies that reduces employee burnout, which ultimately boosts performance. The increase in employee performance was influenced by well-being supported by CSR [67]. CSR is important for employees to improve their quality of life and performance [72] (Figure 1). The hypothesis proposed is as follows:

H5. 

Burnout mediates the influence of internal CSR on job performance.

2. Materials and Methods

This causal study attempted to see changes in job performance based on changes in internal CSR mediated by work engagement and burnout by collecting cross-sectional data in February 2022. The units of analysis of this research were strategic defense industry SOEs. The submission of research to the HRD of each company was proposed before implementation. The research was carried out on employees directly or through friendship channels who were willing to be respondents and disclose through questionnaires information about the research variable. After the research proposal was received, the researcher began to compile the research plan by asking for data on the number of employees, determining the proportional number of each SOEs in the strategic defense industry cluster. The selection of samples was carried out by HRDs by taking data online. The questionnaires used in this study were self-reported in nature, with a five-point Likert scale (5: strongly agree, 1: strongly disagree). The distribution of the questionnaires for data collection was limited to only 2 weeks to avoid the occurrence of bias due to changes in empirical variables in the field.

The research population was non-managerial employees at four strategic industrial SOEs in Indonesia. Four hundred questionnaires were distributed proportionally online and offline to each company, and 382 responses were obtained. The data were collected within two weeks in February 2022. Most participants were male non-managerial employees (72.7%). Regarding educational background, most participants graduated from vocational high school or held Associate’s degrees (67%), while the rest of them held Bachelor’s and Master’s degrees (30.9% and 2.1%, respectively). The average age of the participants was between 25 and 40 years. Most participants had worked for more than 15 years (41.1%). Considering their job tenure, the employees in this study were considered to have adequate experience levels.

Internal CSR was measured using the items designed in [13], namely, (1) My company encourages subordinates who obtain additional education, (2) My company has flexible policies that allow employees to better balance work and personal life, (3) My company provides important job training to workers, (4) My company provides an excellent work environment for workers, (5) My company provides an excellent work environment for workers, (6) My company’s managerial staff complies with the law, (7) My company follows job recruitment and employment laws to prevent discrimination in the workplace.

Employee well-being was measured according to such indicators [43] as work engagement and burnout. We employed the Utrecht Work Engagement Scale [82] to measure the participants’ work engagement. Some of the items read “At work, I feel full of energy” (vigor), “My work inspires me” (dedication) and “time passes so quickly when I am at work” (absorption). Five-point responses were provided (1: never, 5: always). The burnout in this study was assessed using Demerouti and Bakker’s (2008) [45] Oldenburg Burnout Inventory (OLBI) covering two dimensions with eight items each: fatigue and release. One of the items measuring employee fatigue reads “I usually feel tired as I work hard”.

Job performance was measured following the concept of adaptive, innovative and contextual performance [14,15]. Adaptive performance can be defined as (1) anticipating environmental changes, (2) increased personal capacity in overcoming difficulties and bouncing back from the challenge. The former denotes innovative activities such as (1) suggesting new ways to achieve goals or literacy, (2) coming up with new and practical ideas for performance, (3) employees looking for technology, processes, techniques and/or ideas for new products. Meanwhile, the latter defines activities such as (1) taking the initiative to start a new task after completing the previous task and (2) the provision of receiving challenging tasks/jobs.

After the data were collected, the researcher verified the suitability of the number of incoming and outlier-free questionnaires in accordance with the adequacy of the data. The data review involved research staff and officers in the field who assisted during the study. The data were collected in two weeks, 382 responses were obtained out of the 400 distributed questionnaires. The collected data were analyzed using Covariant SEM.

3. Results

3.1. Descriptive Analysis

The descriptive analysis results are shown in

Table 1. Descriptive analysis.

Variable	Mean	Standard Deviation	Category
Internal CSR	3.32	0.64	Medium
Work engagement	3.87	0.67	High
Burnout	2.00	0.88	Low
Job performance	3.79	0.52	High

Source: researcher-processed data.

as follows.

Based on Table 1, we obtained the loading factor, shown in

Table 2. Loading factor and critical ration.

Variable	Code	Loading Factor	Critical Ratio
Internal CSR	CSR1	0.769	13.832
	CSR2	0.776	14.093
	CSR3	0.784	14.285
	CSR4	0.793	14.523
	CSR5	0.818	15.069
	CSR6	0.762	13.822
	CSR7	0.738	13.311
	CSR8	0.798	14.589
	CSR9	0.798	14.615
	CSR10	0.784	14.267
	CSR11	0.764	13.788
	CSR12	0.791	14.404
	CSR13	0.771	13.991
	CSR14	0.762	13.779
	CSR15	0.773	14.022
	CSR16	0.789	14.382
Work engagement	WE1	0.754	12.232
	WE2	0.766	13.575
	WE3	0.797	14.223
	WE4	0.768	13.623
	WE5	0.779	13.815
	WE6	0.792	14.079
	WE7	0.775	13.733
	WE8	0.775	13.741
	WE9	0.764	13.509
	WE10	0.786	13.931
	WE11	0.789	14.017
	WE12	0.779	13.822
	WE13	0.759	13.412
	WE14	0.797	14.187
	WE15	0.787	13.944
	WE16	0.736	12.961
Burnout	BO1	0.835	16.254
	BO2	0.816	16.769
	BO3	0.822	17.045
	BO4	0.856	18.191
	BO5	0.878	19.095
	BO6	0.874	18.842
	BO7	0.852	18.026
	BO8	0.809	16.769
Job performance	JP1	0.772	14.524
	JP2	0.777	14.643
	JP3	0.786	14.885
	JP4	0.781	14.738
	JP5	0.77	14.512
	JP6	0.757	14.17
	JP7	0.752	14.06
	JP8	0.797	15.108
	JP9	0.775	14.566
	JP10	0.788	14.926
	JP11	0.809	15.392
	JP12	0.778	14.697
	JP13	0.786	14.836
	JP14	0.795	15.049
	JP15	0.79	14.913
	JP16	0.763	14.329
	JP17	0.768	14.414
	JP18	0.744	13.887
	JP19	0.773	14.591
	JP20	0.76	14.262

Source: researcher-processed data.

, as follows.

As shown in Table 2, the observed variable for internal CSR variables was accepted. The loading factor value ranged from 0.738 to 0.818. The latent variable, i.e., work engagement (WE) exhibited loading factors ranging between 0.736 and 0.797. The loading factor for burnout ranged from 0.809 to 0.878, while the loading factor for job performance ranged from 0.744 to 0.809. Each variable was accepted and no issue of construct validity was noticed. The test results on consistency using composite reliability and AVE are displayed in the following table.

The results in

Table 3. AVE score and composite reliability.

Variable	AVE	Composite Reliability
Internal CSR	0.608	0.975
Work engagement	0.601	0.971
Burnout	0.711	0.950
Job performance	0.603	0.978

Source: Data processing.

show the convergent construct and explain the variance of the items of each latent variable quite well. The results of the evaluation of the validity of convergent constructs used averages (AVE) for internal CSR construct items (0.608), work engagement (0.601), burnout (0.711) and job performance (0.603). Based on the standard that an acceptable AVE is 0.50 or higher, the construct of each item was accepted. The results of the composite reliability test of each statement item were higher than 0.7. This indicates that each variable met composite reliability requirements, i.e., the variables have good discriminant reliability.

3.2. Discriminant Validity Test

Based on Table 2, it is known that the observed CSR1–CSR16 exhibited the highest correlation with internal CSR variables, i.e., 0.738–0.818. Meanwhile, WE1–WE16 exhibited the highest correlation with work engagement, i.e., 0.735–0.797. The observed variable BO1–BO8 had the highest correlation with burnout, 0.809–0.878, while the observed variable JP1–JP20 had the highest correlation with the job performance variable, 0.753–0.817, compared to other latent variables. The results of the discriminant validity test are in a high category. This means that each observed variable has a greater relationship with its respective latent variable compared to other latent variables.

3.3. The Goodness-of-Fit Test Results

The results of the goodness-of-fit test model to show the degree of conformity between the data and the empirical conditions in the field show that no improvement was needed. The test results are as follows (

Table 4. The goodness-of-fit model.

Criteria	Cutoff Value	Result	Conclusion
Absolute:
p-value (sig.)	>0.05	0.02	Poor
Chi-squared/df	≤3	1879	Poor
GFI (goodness of Fit)	≥0.90	0.831	Marginal fit
RMSEA (root-mean-square error of approximation)	≤0.08	0.019	Good fit
RMR (root-mean-square residual)	≤0.05	0.049	Good fit
Incremental:
AGFI (adjusted goodness-of-fit index)	≥0.90	0.818	Marginal fit
CFI (comparative fit index)	≥0.90	0.987	Good fit
Incremental fit index (IFI)	≥0.90	0.987	Good fit
Relative fit index (RFI)	≥0.95	0.870	Marginal fit
Parsimonious:
PNFI (parsimonious normed fit index)	>0.6	0.843	Good fit
PGFI (parsimonious goodness-of-fit index)	Close to 1	0.774	Marginal fit
AIC (Akaike information criterion)	<462.000	2129	Poor
CAIC (consistent Akaike information criterion)	<1536.725	2709	Poor

Source: researcher-processed data.

):

The criteria for the goodness of fit were considered sufficient. Each of the criteria of the goodness of fit was met on the absolute fit indices criteria such as RMSEA (root-mean-square error of approximation) with a value of 0.019 or RMR (root-mean-square residual) with a value of 0.005 (good fit). Two incremental criteria were in the fit category, namely, CFI (0.98) and IFI (0.98). Parsimonious criteria, namely, PNFI (parsimonious normed fit index) with a value of 0.843, were represented. Thus, it can be concluded that the goodness-of-fit confirmatory model test was acceptable. The results of the study are by the research model.

3.4. Significance Test

The results of the latent variable relationship test showed that the relationship between the latent variables was significant. The beta coefficient that shows the relationship between internal CSR and WE was 0.307. The beta coefficient of CSR and BO was −0.398. The beta coefficient of BO and JP was −0.37. The beta coefficient of the relationship between WE and JP was 0.341. The beta coefficient of CSR with JP was 0.211. Each correlation was significant, with the p-value < 0.05.

3.5. Hypotheses Test Result

The results of the hypotheses test is indicated in

Table 5. Hypotheses test result.

			Estimate	SE	CR	p	Simpulan
WE	←	CSR	0.305	0.062	4.851	***	supported
BO	←	CSR	−0.398	0.085	−6.339	***	supported
JP	←	CSR	0.211	0.058	3.811	***	supported
JP	←	WE	0.341	0.045	−6.286	***	supported
JP	←	BO	−0.37	0.061	5.953	***	supported

Source: researcher-processed data. *** means < 0.05.

as follows:

Based on Table 5, the direct Hypotheses H1–H3 proposed in the study were accepted. Next, we conducted a mediation test using the Sobel test. The test results showed that the calculated Z-value for the work engagement mediation variable was 4.126 or was in the Ha acceptance area. The role of burnout variables in mediating the influence of internal CSR on job performance was 4.408, that is, it was in the Ha acceptance area, with a critical limit on the right side of 1.96. This means that two variables, namely, work engagement and burnout, which are images of well-being, can mediate the influence of internal CSR on job performance.

4. Discussion

The results of the hypothesis test show that Hypotheses H1–H3 are supported. Hypothesis H4 about the role of work engagement and burnout variables as mediating variables is supported. The results showed that the availability of work resources and personal resources in the form of internal CSR increased work engagement and reduced employee burnout. The findings of this study support the view of job resources demand (JD-R) proposed in [45]. This means that CSR is internal as a work and personal resource for employees who are indispensable to support their performance, especialy adaptive performance.

In line with the construct regarding performance that is multidimensional, in the context of occurrence of high environmental change pressures, adaptive performance is a construct that can be used as a framework to optimize performance while still paying attention to innovative and task performance as a support in line with [15] which asserts that adaptive performance is an expansion of performance. However, expansion requires data sources as in the framework of the JD-R concept (job resources demand) [15]. Such resources are internal CSR. The results of the study are in line with [27,29] which shows the function of CSR for organizations.

Along with the adaptability challenges to performance, the conceptual framework required is a concept that is an extension of performance [15], adaptive performance, in line with [16,17,18] which shows adaptive performance functions in the face of environmental changes. Adaptive performance has distinctive characteristics when faced with situations that are very dynamic and full of change pressure so that it makes it different from the concept of performance for other dimensions, but they are closely interrelated. The results show that the construction of internal CSR cannot be separated from the CSR framework related to ethics, according to [13,14,24].

Internal CSR is not only an ethical orientation of the company. Internal CSR related to employees as stated in [34] both with regard to their well-being and performance. This shows the importance of the position of internal CSR in the microstructure. Internal CSR allows employees to have the necessary work flexibility, maintain work–family balance and relieve pressures due to various situational and work-related aspects. This is in line with previous studies reporting that changes in job performance are in line with internal CSR [53,54,57,60]. Internal CSR does not only encourage the increase in well-being (exhibited through high work engagement and low burnout), but also encourages job performance directly and indirectly. Both variances partially mediate the effect of internal CSR on job performance. This study supports [66,72] who report the importance of internal CSR for employee well-being and performance. Internal CSR is among the strategies to improve job performance.

The implementation of internal corporate social responsibility requires the company’s awareness of the position of employees. In other words, companies are required to care more about the welfare of their employees to ensure a more robust corporate structure. Internal CSR may serve as a microfoundation for companies [31,32]. In this regard, companies need to strengthen internal CSR activities and orientation based on ethical awareness. This awareness is the foundation for integrating internal CSR activities with HR governance functions. This aligns with [61] which states that the value of CSR may affect employees’ behaviors.

In this study, the concept of the value of internal CSR did not only affect employees, but also affected how HR governance functions operate to realize performance. The function of CSR and the mediating role of well-being (proxied by work engagement and burnout) provide companies with directions to pay attention to certain psychological aspects in the internal CSR-related decision-making process. Internal CSR is a resource for employees, and the availability of these resources is supported by companies. By prioritizing employees as the company’s CSR goals, a company is likely to improve its employees’ performance while strengthening the organizational structure to achieve the expected performance. Considering the function of job performance, the three-bottom line principle emphasizing the balance between profit, people and the planet may also serve as a reference for developing CSR programs and strengthening the company’s foundation. Through internal CSR, companies can realize the achievement of organizational goals in a more sustainable way, namely, via an organizational structure with a strong foundation sourced from the internal CSR.

5. Limitation

The limitation of this study is that it only examined non-managerial levels. The researchers had limitations to reach the selected samples themselves due to restrictions based on health protocols and reductions in company activities during the pandemic. The provision of internal CSR to employees during the COVID-19 pandemic has the potential to cause bias due to the existing conditions even though requests for random samples were proposed to companies.

The survey was only conducted on non-managerial employees without distinguishing the position or working period needed. A larger sample number was also needed considering the total number of employees at strategic SOEs is quite large. A qualitative data collection technique should also be considered to enrich the data collection process. As employees were facing pressure due to COVID-19, the viral infection may have caused biases in the employees’ responses regarding work engagement and burnout.

6. Conclusions

Foreseeable dynamics of difficult conditions require the development of proper working practices supported by adequate resources. Internal CSR for employees refers to the work and personal resources that may improve the employee performance both directly and indirectly through work engagement and burnout. The fulfilment of these resources may encourage employees to express themselves both physically, cognitively and effectively in their work. Sufficient resources are likely to decrease psychological symptoms due to stress and high job demands. Internal CSR is a basis for strengthening the foundation of individual performance and ultimately achieving the company’s performance. Orientation to the company’s ethical values receives support from employees based on the availability of resources for employees, both personal resources and resources for work. Internal CSR orientation reduces the resistance of employees to the company’s goals.

The findings of this study theoretically imply the need for exploring internal CSR concepts to broaden the understanding of the interplay between internal CSR and the fulfilment of personal and work resources and their impact on employee job performance. The explanation of performance cannot be separated from the JD-R model. From a practical perspective, the results imply the importance of CSR integration into HR governance based on an understanding of the function of internal CSR as a work and personal resource for employees. Therefore, the initiative to place employees as a priority in microlevel CSR programs should be taken into consideration. Companies need to promote internal CSR to encourage work engagement and prevent burnout at the same time. Internal CSR is aimed at meeting the needs of work resources and personal resources to increase work engagement and reduce employee burnout. Companies focus on trying to encourage high engagement amid uncertain conditions at work. Internal CSR helps employees focus more on work along with the fulfilment of resources that support the welfare of employees through microlevel or internal CSR practices such as (1) meeting the needs for education and training to increase skill variation, autonomy and expand learning opportunities for employees, (2) maintaining a balance between work and family in terms of employment income and increasing employee optimism about family welfare including vacations, flexible working hours to ensure family balance, child care services for employees and (3) showing high concern for employees and their environment so that the company can strongly benefit from employee engagement and low burnout, eventually leading to high performance. Microlevel CSR practices will strengthen the structure of corporate HR governance, which will ultimately encourage company performance.