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The research objective was to analyze the role of ethical climate as a foundation for internal Corporate Social Responsibility (CSR) and employee performance. The methodology used is a causal study to test the effect by using a survey of 400 employees Holding of state-owned defense, industry randomly selected nonmanagers. The results showed that ethical climate directs internal CSR activities as a realization of ethical awareness in the environment. Employees have an ethical responsibility to restore the goodness of the company to employees in real terms according to the company's demands in the form of optimal performance. The values, beliefs, and ethical atmosphere felt by employees are the reasons for implementing CSR. Internal CSR raises employees' awareness of the company's care and attention, which in turn increases the moral obligation to work optimally for the common good. Ethical climate is guidance for companies and individuals to be involved in collective efforts that can ensure sustainability. In conclusion, ethical climate has an influence on employee performance through CSR. The practical implication is to develop an ethical climate in the company to strengthen the company's internal CSR orientation. Its value contribution can explain the ethical climate function as a foundation for internal CSR concerning employee’s performance.
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