Post on 20-Jan-2015
description
CSR as relationship marketing strategy in Indian firms: An Empirical
Investigation
By:Sharad AgarwalFPM , IIM Ranchisharadiitian@gmail.com
Business for Social Responsibility: 2001 defines CSR as ‘‘operating in a manner that meets and even exceeds the legal, ethical, commercial and public expectations that society has of business’’
It is proposed that the Indian firms, knowingly or unknowingly, conduct their CSR practices, oriented towards their stakeholder
These CSR practices are aligned with their stakeholders’ needs and expectations,
Corporate Social Responsibility
Indian government has proposed to implement a bill which will make it mandatory for Indian corporations either with a turn over of INR 10 Billion or net profit of INR 50 million to spend 2% of the preceding three years profit on CSR
CSR has a special relevance for India as India has a rich and living spiritual heritage to complement the “analytical ethics” from the West with her “intuitive” or “being” or “consciousness” ethics (Enderle, 1997)
Relevance of CSR In INDIAN Context
CSR and Profitability
CSR and Profitability
One of the oldest questions in moral philosophy is whether it pays to be a morally good person
Many scholars, in the past, have tried to find the relation of CSR spending with the bottom line of the company and majority of them have found positive relationship between them
The literature shows link between CSR and financial performances of the companies.
CSR and Profitability (Continued)
We are interested to investigate the difference in CSR orientation of the companies on the basis of the difference in their profits
Hypothesis 1: The CSR orientation of the firms differs on the basis of the Profits (PAT) they make
CSR of firm and nature of its customer
Widely discussed in the literature about the difference in need, behavior and expectations of business customers, with the non business customer to a large extent ( kreindler and rajguru, 2006)
industrial marketing situations show unique characteristics that must be distinguished from consumer marketing: a small number of customers for any given supplier, buyer-seller interdependence and the existence of the durable customer supplier relationship (Bonoma and Johnston, 1978; Corey, 1976; Webster, 1979)
CSR of firm and nature of its customer
According to “Consumer culture theory” (CCT) proposed by Arnould and Thompson (2005), there exists the dynamic relationships between consumer actions, the marketplace, and cultural meanings
CSR of firm and nature of its customer (Continued)
Hypothesis 2 :The CSR orientation of the firm depends on the nature of its costumer i.e. B to B firms has distinct CSR behavior to that of B to C
firms
CSR of Firm and impact of firms’ operations on
environment
CSR of Firm and impact of firms’ operations on environment
Environmental protection is generally paid lot of attention in the area of CSR, (Reinhardt and. Stavins, 2010), probably because of the direct and indirect impact, the companies’ activities can have on its stakeholders
Bhopal gas Tragedy resulted in a loss of 10,000 lives and permanently disabled nearly 50,000 people and continued life-long misery for over 300,000 with certain genetic defects passed on to the next generation
CSR of Firm and impact of firms’ operations on environment (Continued)
Different industrial sectors are expected to have varied impact on society and environment for e.g Tobacco companies , Auto and oil companies
Deegan and Gordon (1996) noted that an industry whose activities modify or affect the environment might disclose more detailed social responsibility information than the companies in other industries
Hypothesis 3: The CSR orientation of the firms depends on the nature of their impact on environment i.e. manufacturing industries practice CSR distinctly when compared to non manufacturing or service industries
CSR of firm and its ownership structure
Graves and Waddock (1994) and Johnson and Greening (1999) document a relationship between firm ownership structure and CSR
Keim (1978), Ullmann (1985), and Roberts (1992) all document a positive relationship between dispersed corporate ownership and CSR disclosure in the context of developed countries.
A recent study by Li and Zang, (2010), in China, found difference in behavior of the firms controlled by state towards CSR when compared with the non state firms
CSR of firm and its ownership structure
Hypothesis 4: The CSR orientation of public sector firms is different from the CSR orientation of private sector firms in India
Methodology We collected data regarding the CSR policies
and practices of top 200 public listed companies in India
Content analysis was used to generate the underlying data for our research.
It is a ‘‘technique for making inferences by objectively and systematically identifying specified characteristics of messages”
We analyzed the websites, annual reports and sustainability reports of the companies in our sample
Methodology (Continued) We found that these companies worked on
one or more of the 100 areas and deployed any or a combination of 38 methodologies
We categorized those 100 areas into 8 broad areas those are ‘Education’, ‘Health’, ‘Community Welfare’, ‘Entrepreneurship Development’, ‘Environment’, ‘Work Place’, ‘Market Place’, ‘Rural Development’
Z test of proportions was used to test our hypothesis
Activities Explanation
EducationThe companies working in the area of promoting education for e.g. Child
education, girl education, providing scholarships , etc.
HealthThe companies working in the area of health care for the needful for e.g.
Rural health, preventing HIV/AIDS etc.
Community WelfareThe companies working for welfare of various sections of society for e.g.
Philanthropic donations, promoting inclusive growth
Entrepreneurship
Development
The companies working towards promotion of entrepreneurial activities or
helping people to set up their own enterprises to earn their livelihood for
e.g. Imparting technical know how, provision of start up capital, etc.
Environment
The company states a policy of minimizing negative environmental
impact or positively benefiting the natural environment as a part of
their business practices. For e.g. Not lending to industries depleting Ozone
layer
Market PlaceThe companies working in issues related to its market having impact on its
business. For e.g. Provisions of micro finance in villages etc.
Work Place
The companies working in issues related to its workplace development,
primarily aimed for the welfare of internal customers i.e. employees. For
example education of employees’ children etc.
Rural Development
The companies carrying out activities for the development of rural areas. For
e.g. Carrying out agriculture development activities, provisioning of street
lights in rural areas etc.
Results
Hypothesis Description Supported at p<0.05 in areas
H1 Profits (PAT)Education,
Health and Community welfare
H2 B to B Vs B to C Community Welfare
H3 Manf. Vs Non Manf. Health
H4 Public Vs Private ‘None'
Greater proportions of companies with higher Profits (PAT> 10 Billion) works in areas of Education, Health and Community Welfare
Larger proportions of B to B companies works for the cause of community welfare
Greater proportions of Manufacturing industries work for the cause of Health, they should also focus on environment
Conclusions and Implications
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References
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