Evaluating Social Performance in Dual Banking Systems: The Case of North Sumatra

This study explores how Corporate Social Responsibility Orientation (OCSR), along with attitudes, competencies, government regulations, public pressure, organizational environmental pressure, and mass media, influences the social performance of Islamic and conventional banks in North Sumatra. Using a mixed-methods approach, data were collected from 106 respondents from five Islamic banks and 120 respondents from fifteen conventional banks. Quantitative analysis was conducted using SEM-PLS, while qualitative insights were derived from in-depth interviews and analyzed with NVivo 12. The findings reveal that OCSR in both types of banks encompasses philanthropic, legal, ethical/social, and economic dimensions. However, the drivers of social performance differ across the two banking systems. In Islamic banks, OCSR, employee competencies, and public pressure were the most influential, while in conventional banks, employee attitudes, government regulations, organizational environmental factors, and media influence played a more prominent role. Notably, across both banking models, employee motivation toward CSR is strongly influenced by philanthropic values and religiosity. This research provides new empirical evidence on the distinctive ways CSR is implemented in Islamic versus conventional banking in Indonesia, which contrasts with trends observed in other countries. The study highlights the importance of aligning CSR strategies with both institutional characteristics and the socio-religious context. As the first study in Indonesia to examine CSR orientation using Carroll’s Pyramid among employees in both Islamic and conventional banks, it offers a unique contribution by identifying a local CSR framework that differs from those found in other regions such as Asia, the Americas, and Europe.