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Academic paper
Corporate social responsibility practices inIndia: approach, drivers, and barriers
Jorge A. Arevalo and Deepa Aravind
Abstract
Purpose – The aim of this paper is to examine how corporations in India interpret corporate social
responsibility (CSR). Focusing on four commonly known approaches: the ethical, the statist, the liberal,
and the stakeholder approach, the paper seeks to investigate the reported drivers and barriers to
implementing CSR practices.
Design/methodology/approach – The paper surveyed top-level managers of a sample of companies
currently engaging in a CSR initiative, representing a variety of industry sectors.
Findings – The study finds that the CSR approach that is most favored by Indian firms is the stakeholder
approach and that the caring or the moral motive, followed by the strategic or profit motive, are important
drivers for Indian firms to pursue CSR. Further, the results indicate that the most significant obstacles to
CSR implementation are those related to lack of resources, followed by those related to the complexity
and difficulty of implementing CSR.
Research limitations/implications – The study focuses on the activities of leading Indian firms
participating in the UN Global Compact (GC), thereby restricting one’s knowledge of CSR practices of
non-participants. Future research should expand on this effort either by conducting comparative studies
of non-participants to the GC, or by investigating CSR practices of firms engaging in other voluntary
initiatives.
Originality/value – The majority of studies on CSR are still embedded in the economic and
organizational contexts of Europe and the USA. This research aims to address this gap by focusing on
the CSR framework of developing nations, particularly the emerging market of India.
Keywords Corporate responsibility, Emerging markets, India, CSR drivers, CSR barriers,UN Global Compact, Social responsibility
Paper type Research paper
Introduction
The role of business in society has undergone a dramatic change in India. From the origins of
the king’s welfare to the liberalization and reduction in the regulatory framework, businesses
have started to undertake CSR activities voluntarily. The majority of studies on CSR, however,
are still embedded in the economic and organizational contexts of Europe and the US
(Raman, 2006). Only a few studies have explored some of the multiple aspects of this
concept in India, both theoretically and empirically (Arora and Puranik, 2004;
Balasubramanian et al., 2005; Baskin, 2006; Narwal and Sharma, 2008). In general,
studies that have looked at CSR, specifically the levels of integration within the business
sector in developing countries, are limited. As globalization continues to alter the traditional
balance of power between developed and emerging nations, businesses from emerging
markets are vigorously challenging the hegemony of their international counterparts. Given
this scenario, scholars and researchers have consistently called for more research in the
DOI 10.1108/14720701111159244 VOL. 11 NO. 4 2011, pp. 399-414, Q Emerald Group Publishing Limited, ISSN 1472-0701 j CORPORATE GOVERNANCE j PAGE 399
Jorge A. Arevalo is based in
the Department of
Marketing and
Management Sciences,
William Paterson University,
Wayne, New Jersey, USA.
Deepa Aravind is based in
the Department of
Business, City University of
New York, New York, NY,
USA.
area of corporate responsibility and the growing influence of emerging markets and their
leading companies. Our study aims to address this gap by conducting an exploratory study
on the approach by Indian firms towards CSR and the reported drivers and barriers to
implementing CSR practices in this influential emerging market. Given the paucity of
research on CSR in developing economies, our research on the current state of CSR in
leading Indian firms is important.
In this paper, we examine the following research questions:
B Under which model of responsibility are Indian firms currently operating? Is it the ethical,
the statist, the liberal, or the stakeholder approach?
B What motivates companies in India to pursue CSR?
B What obstacles do Indian companies face when implementing CSR?
Studies on CSR in emerging markets are critical for a number of reasons. First, we believe
there are additional elements to be analyzed when focusing on non-contemporary western
paradigms of economic governance. With respect to management practices and CSR,
Asian markets like India can offer new insights as to how emerging economies are claiming a
greater role in defining global economic governance. A focus on CSR in India and the
practices of its leading firms can provide scholars and practitioners with a new model – one
that has been able to succeed financially while succeeding socially (Cappelli et al., 2010).
Second, a focus on the fastest growing economy could inform general managers as well as
CSR managers about the attributes of the Indian approach to sustainability, especially for a
country that has the lowest level of GNP per capita and the highest level of CSR among other
Asian economies (Reserve Bank of India, 2009; UNIDO, 2002). Our interest in India is in the
CSR practices of its business sector and the role of its leading companies as new powerful
agents of change in a post-crisis global economy.
For the purposes of this paper, the analysis is restricted to a sample of companies currently
participating in a CSR initiative, namely the UN Global Compact (GC). We chose to focus on
the activities of GC business participants in this country as the initiative is highly visible for its
strategic policy approach and for the commitment by both business and non-business
sectors in aligning their strategies and operations with the universally accepted principles of
the United Nations. Endorsed by thousands of chief executives, the GC is a practical
framework for the development, implementation, and disclosure of sustainability policies
and strategies, offering participants a wide spectrum of workstreams, management tools
and resources (UNGC, 2010). In preparation to this project, we observed that only two
businesses from India joined the initiative since it’s inception in July of 2000, and
membership has grown to 215 active participants at the time of our study (see Figure 1 for
membership statistics in India). Studies such as ours can offer a better understanding of the
growing influence of emerging market nations specifically those facing mounting economic,
social, environmental and regulatory challenges, and how the corporate responsibility role of
companies in such nations can help define the global agenda for sustainable development.
To best address our research questions, the paper is divided into five sections. The first
section defines the term corporate social responsibility (CSR), followed by a brief review of
the literature on CSR in India. The second section identifies the four general approaches to
CSR found in India. Motivations to pursue CSR as well as the reported obstacles of
implementing CSR are outlined in this section. The third section presents our methodology
for the research project. The fourth section reports our preliminary findings followed by a
discussion of these. The last section provides concluding thoughts and points to directions
for future research.
1. Corporate social responsibility – definitions and context in India
Barnett (2007, p. 801) defines corporate social responsibility as ‘‘a discretionary allocation of
corporate resources toward improving social welfare that serves as a means of enhancing
relationships with key stakeholders.’’ CSR may be viewed as the manner in which
businesses engage their stakeholders, i.e. employees, customers, suppliers, government
PAGE 400 jCORPORATE GOVERNANCEj VOL. 11 NO. 4 2011
and non-government organizations, the natural environment, and shareholders (Waddock
et al., 2002; Snider et al., 2003). As a concept, CSR is seen as ‘‘the subset of corporate
responsibilities that deals with a company’s voluntary/discretionary relationships with its
societal and community stakeholders’’ (Waddock, 2004, p. 10). CSR is typically undertaken
with some intent to improve an important aspect of society or relationships with communities
or nongovernmental organizations (NGOs) (nonprofits). CSR is frequently operationalized in
connection with community relations, philanthropic, multi-sector collaboration, or volunteer
activities. The term has been described as ‘‘brilliant’’ (Votaw, 1973), as it means something,
but not always the same, to everybody. To some it conveys the idea of legal responsibility or
liability; to others it means socially responsible behavior in an ethical sense.
There are both critics and proponents of CSR. Critics contend that by expending limited firm
resource on this discretionary activity, its competitive position is compromised and further,
that it takes away wealth from the firm’s owners or shareholders. Proponents of CSR, on the
other hand, suggest that engaging in CSR activities improves relationships with its
stakeholders, differentiates its products, and serves as a buffer from disruptive events
(Barnett, 2007). Freeman’s (1984) stakeholder theory highlights the importance of forming
meaningful relationships with the key stakeholders of a firm beyond just the shareholders.
The theory argues that firms can benefit financially by creating and maintaining such
relationships with a broad set of stakeholders. Even though empirical research on this
contention has provided mixed results (Margolis and Walsh, 2003; Orlitzky et al., 2003) and
in spite of criticisms against CSR, the business world is increasingly viewing CSR as
something that they simply cannot ignore.
In recent years, the CSR debate has transitioned from a state of passive compliance with
society’s legal and moral rules to a more proactive engagement with social issues (Husted
and Allen, 2007; Jamali and Mirshak, 2007). This new engagement ranges from harm
minimization to tangible and social value creation, and from whether corporations should act
as social agents to whether and how a business case can be made for corporate social
strategy (Margolis and Walsh, 2003; McWilliams et al., 2006). Some of the core questions
currently driving the CSR discussions are what individual, institutional, and environmental
dynamics shape corporate social activities and to what extent corporations’ relationships
Figure 1 Global Compact participants in India – July 2010
SME, 74
Company, 69
NGO Local, 28
Academic, 14
NGO Global, 9
Bus. Association, 8
Micro Ent., 6
Foundation, 3
City, 1
CSR Organization, 1
Labor Global, 1
Public Sector, 1Count of Sector
Notes: The graph reflects active Global Compact participants from both business andnon-business sectors as of July 6, 2010. A total of 215 participants are reported as“active” and represent a variety of industry sectors. Source: Data were obtained from the GC website: www.unglobalcompact.org under“participants search”
VOL. 11 NO. 4 2011 jCORPORATE GOVERNANCEj PAGE 401
with the larger environment depend on these dynamics (Bies et al., 2007). For the purposes
of our paper, we relate CSR to the continuing commitment by business to behave ethically
and contribute to economic development while improving the quality of life of the workforce,
families, as well as of the local community and society at large (WBCSD, 1998).
1.1 India – an emerging market
Asia continues to be a fast growing region. According to a forecast by the United Nations
(UNESCAP, 2008), emerging economies in Asia are expected to grow at a rate of 7.7 percent
in 2008, compared with the global growth rate of 3.3 percent forecast by the World Bank
(2008). Developing countries in this region have been demonstrating huge economic growth
since the 1980s. In particular, there has been a rising interest in investing in Asian emerging
markets, particularly India and China. Financial institutions as well as fund management
houses have been persistent in various investments that either invest solely or have an
explicit policy of investing a fixed portion of their portfolio in the region. Another important
reason for such an investment policy is that many are diversifying away from the risk
currently found in developed markets such as Europe and the US (Cheng et al., 2009).
Indian government, like many other developing nations is rolling back its regulation and
involvement in the economy in order to court foreign investment. Offering a sizeable skilled
labor force, and reporting the second-fastest growth rates in the world – the nation appears
to be a winner of globalization (Chambers et al., 2003). During much of the turn of the
century, India’s GDP has risen almost 10 percent per year – an increase much bigger than
that of the US and one closest to China. It is also reported that its foreign and institutional
direct investment have also witnessed tremendous growth, rising from $4.9 billion in
1995-1996 to $63.7 billion in 2007-2008 (Reserve Bank of India, 2009). There have been
many financial and investor surveys which have named India as one of the most favored
destinations for direct investment, with foreign exchange reserves rising from less than $1
billion in 1991 to more than $300 billion as the peak in 2008 (IBEF, 2010). In the same
decade, Indian exports have seen an increase of 2.5 times from 2004 to 2008 (Reserve Bank
of India, 2009).
Some may argue that this growth can be attributed to the ongoing globalization that has
enabled the traditional balance of power between developed and emerging nations to shift
(EABIS, 2010). Others point that this growth has occurred despite the fact that Indian firms
face much greater challenges of doing business since infrastructure in India is by all
accounts less developed than that in most western nations (Hamm and Lakshman, 2007;
Cappelli et al., 2010). Indeed, the business sector in India has come a long way since the
liberalization of its economy shortly after 1991. There are now several Indian companies that
operate globally and Indian corporations have become competitive in the global economy
(Arora and Puranik, 2004). Despite this, the country still battles with issues like high
unemployment, income inequality, lower access and standards of health, education,
nutrition, safe drinking water, etc. (Arora and Puranik, 2004).
1.2 CSR in India
For India, CSR is not a new concept and it has had a major influence on business,
government, and society relationships (Balasubramanian et al., 2005). Companies like Tata
Steel (the oldest and best known Indian steel company, whose founder was more a
nation-builder than a businessman seeking profits) were very involved in trying to tackle
many social problems even before the term CSR formally entered the vocabulary of
management texts (Singh, 2008). In fact, ‘‘so deep and extensive was the commitment that it
earned the sobriquet of being the company ‘that also made steel’ – suggesting that it often
gave the impression of being primarily a social, rather than a business, organization’’ (Singh,
2008, p. 124).
The origins of CSR in India could be traced back to the days of Kings. According to
Kautilya’s Arthashasthra, ‘‘In the welfare of the people lies the king’s welfare and in their
happiness his happiness’’ (cited in Jose et al., 2003). In the nineteenth century, merchants
and religious/ethnic groups came together to do something primarily for the community with
some benefits also flowing outside the community (Jose et al., 2003). Religion and charity
PAGE 402 jCORPORATE GOVERNANCEj VOL. 11 NO. 4 2011
have always been linked with people in India brought up in an environment founded on the
belief that giving is good (Jose et al., 2003). Even before India’s independence in 1947,
businesses made significant contributions to schools, hospitals, and rural development
(Mohan, 2001). After independence, large public sector companies carried out
state-sponsored CSR activities (Mohan, 2001). More recently, Indian CSR is becoming an
important part of longer-term business development initiatives (Balasubramanian et al.,
2005).
Corporate social responsibility is predominantly considered as a western phenomenon due
to strong institutions, standards, and appeal systems that are weak in developing countries
of Asia (Chapple and Moon, 2005). Such weak standards tend to pose considerable
challenge to firms for practicing CSR in developing countries of Asia including India. Given
that South and South-East Asian countries continue to experience many institutional
changes, particularly in India with regard to its economic sector, the academic literature
continues to focus on assessing the state of its CSR. Current research on CSR in India is
mostly limited to self reported questionnaire surveys on CSR (Khan and Atkinson, 1987;
Krishna, 1992), nature and characteristics of CSR in India (Arora and Puranik, 2004; Sood
and Arora, 2006), perceptions of the Indian society on CSR (Narwal and Sharma, 2008), CSR
perceptions of India by businesses (Balasubramanian et al., 2005), corporate social
reporting (Raman, 2006), and policies and practices of multi-national corporations (MNCs)
towards CSR in India (CREM, 2004) without linking it with any specific CSR model. This study
intends to fill that gap by replicating and extending the past findings on CSR approaches,
while examining the drivers and barriers of social responsibility in India.
2. CSR approaches, drivers and barriers
It has been suggested that there are four models of social responsibility that operate in India:
1. The ethical (Gandhian) model
2. The statist (Nehruvian) model.
3. The liberal (Friedman) model.
4. The stakeholder (Freeman) model (Balasubramanian et al., 2005; Kumar et al., 2001).
Gandhi, Nehru, Friedman, and Freeman respectively were champions of these four
models. In the ethical model the focus is on ‘‘voluntary commitment by companies to public
welfare’’, in the Statist model, ‘‘state ownership and legal requirements determine
corporate responsibilities’’, in the liberal model ‘‘corporate responsibilities are limited to
private owners’’, and in the stakeholder model ‘‘companies respond to the needs of
stakeholders – customers, employees, communities, etc.’’ (Kumar et al., 2001, p. 2). Since
the liberalization of the Indian economy in 1991, western-style ethical stances are being
promoted hence even though the ethical, statist, and stakeholder models may be
‘‘idealized’’, the liberal (Friedman) model may be more influential in India, according to
some authors (Balasubramanian et al., 2005). It is also noted that while these
interpretations, or perceptions, help to clarify different approaches, it is important to
understand that they are not mutually exclusive (Balasubramanian et al., 2005).
Considering institutional changes, particularly to economic sectors, firms in Asian
countries can report overlaps between two or more approaches, and in some cases,
multiple orientations to these four models.
Researchers have found that there is a definite trend in India towards looking at CSR in a
positive manner (Narwal and Sharma, 2008; Reddy, 2006). There was a perception earlier on
was that firms’ CSR activities were not motivated by the desire for social service, but was
instead motivated by the desire to avail themselves of tax exemptions and other government
incentives and therefore society did not really trust business (Narwal and Sharma, 2008;
Singh et al., 1980). This skeptical viewpoint is increasingly being replaced by a more
objective viewpoint as businesses start to undertake CSR activities voluntarily (Narwal and
Sharma, 2008). Post-liberalization, the Indian government, along with NGOs and the media
are becoming agents of change with regard to the CSR activities of firms (Narwal and
VOL. 11 NO. 4 2011 jCORPORATE GOVERNANCEj PAGE 403
Sharma, 2008). In fact, in a study of companies from 21 emerging markets, Baskin (2006)
found that in these markets (particularly South Africa, Brazil, India, and parts of Eastern
Europe), CSR was more developed than commonly thought, often exceeding standards in
some high-income countries.
Even though CSR in India may be in a more advanced state than previously thought, some
studies suggest that much improvement is needed in how CSR strategies are implemented
and integrated within Indian firms. For example, Arora and Puranik (2004) concluded that
even though several companies in India have climbed on to the CSR bandwagon and are
engaged in causes like health care, education, empowerment of women, micro-credit and
rural development, CSR seems to be in a confused state in the country. Individual
companies define CSR in their own ways, with the end result that activities undertaken in the
name of CSR are merely philanthropy or an extension of it (Arora and Puranik, 2004). Baskin
(2006) found that even though CSR was more developed than previously thought in
emerging market countries including India, it was found to be less embedded in corporate
strategies and less pervasive than in higher-income countries. The study also found a wide
divergence between emerging market leaders and laggards.
2.1 Drivers and barriers
Regarding what motivates firms to pursue CSR, one study has suggested the existence of
two dimensions: strategic motives and moral motives for pursuing CSR (Graafland and van
de Ven, 2006). The strategic motive suggests that firms pursue CSR in the hopes of
achieving profitability. The moral motive suggests that firms have a moral duty towards
society. Another study proposed managers’ personal values as an important motivator
(Hemingway and Maclagan, 2004). This suggests that CSR is driven by the personal values
and beliefs of individual managers. Managers have discretion in whether and what CSR
initiatives they adopt and how their own personal belief systems would drive decisions
pertaining to this.
In the last decade, several surveys have been conducted to gauge the extent of CSR
practices in India. Some of the surveys include those conducted by Tata Energy Research
Institute (TERI-Europe); The Centre for Social Marketing; Indian Institute of Management
Bangalore; IndianNGOs.com (2002); the United Nations Development Programme, the
British Council, the Confederation of Indian Industry and PricewaterhouseCoopers; and the
National Stock Exchange. Balasubramanian et al. (2005) analyzed the results of these
surveys and found the major motivators for pursuing CSR to be concern for social
improvement, ethics, and values, belief in the stewardship philosophy (Gandhian model),
corporate reputation, stakeholder relations, responsiveness to local communities,
legal compliance, etc. Further, the barriers to CSR implementation that the surveys
found include competitive business practices, poor ethical decision making, corruption in
the government, lax regulation, confused policy, excessive bureaucracy, lack of executive
commitment and unprofessional management, and inadequate evaluation of CSR
initiatives.
Based on the above literature, we further explore the current social orientations or CSR
approaches by managers, their motivations to pursue CSR, as well as the reported
challenges of integrating these practices in the Indian context.
3. Method
3.1 Data
To evaluate our research questions, we relied on a data set of Global Compact (GC)
participants in India collected from a six-part survey developed by the two researchers. We
obtained the list of participants from the UNGC website. The survey was structured on the
basis of the variables related to CSR in India for our current theoretical framework.
As of July 2010, 149 Indian firms were listed as GC business participants on the UNGC
website. Of these, we were not able to retrieve contact information for 29 firms, as some did
PAGE 404 jCORPORATE GOVERNANCEj VOL. 11 NO. 4 2011
not provide CSR information while others lacked means for electronic communication. In
August 2010, a total of 120 e-mail invitations – using a web-based survey tool which
included a link to access our questionnaire – were sent to individuals designated as the CSR
contact from our sample of business participants. In total, we invited 62 SMEs, and 58
companies, to participate in the study (see Figure 1 for GC India participants). We followed
the first email invitation with three reminders in order to prompt additional responses. We
allowed in some cases (as requested by some) up to two months for submission of final
responses.
A total of 33 CSR managers accessed the electronic link yielding a response rate of 27.5
percent (14 SMEs, 19 companies – see Table I for our list of respondents). We found of
particular interest that some of the participants reported difficulty in completing two final
parts of the survey: a section asking to verify the year of inception to the GC, as well as the
section asking for feedback on the latest communication on progress (CoP) report to the GC.
Date of inception and confirmation of latest CoP were later retrieved directly from the GC
web page and added to our data set.
Table I List of respondents
Businesstype Headquarters
Date joined globalcompact Sector Responding to survey
Co. Mumbai Mar-01 Industrial metals Director sustainability andcommunications
Co. Mumbai Jun-01 Travel and leisure ChairmanCo. Mumbai Aug-01 Oil and gas producers DirectorCo. Zurich Sep-01 Software and computer services CEOCo. New Delhi Nov-01 Food producers Managing directorSME New Delhi Jun-02 Support services President and global head, corporate HRCo. Mumbai Aug-02 Industrial metals Managing directorCo. Mumbai Sep-02 Chemicals Technical directorSME Mumbai Apr-03 Beverages Group CEOSME Hosur Jun-04 Pharmaceuticals Director sustainabilityCo. Zurich Jun-05 Technology hardware General manager CSRCo. Mumbai Feb-06 Software and computer services Director CSR reportsCo. Mumbai Jun-06 Industrial metals Head corporate communicationsCo. District
KeonjharJul-06 Industrial metals Head corporate responsibility
Co. Chennai Oct-06 Software and computer services CEOSME New Delhi Oct-07 General industrials CEOSME Nasik Oct-07 Construction and materials Managing directorSME Vadodara Oct-07 Construction and materials General managerSME Jamnagar Oct-07 Construction and materials CSR correspondentSME Mumbai Dec-07 Technology hardware and
equipmentCEO
SME Nadiad Jan-08 General industrials Manager corporate communicationsCo. New Delhi Jan-08 Travel and leisure Associate general manager and headSME Shahapur Jul-08 Technology hardware Vice president HRCo. London Jul-08 General industrials Head, community developmentCo. Mumbai Aug-08 Construction and materials Head HR and administrationCo. Bangalore Sep-08 Software and computer services General managerSME Nadiad Mar-09 General retailers Head, corporate sustainabilitySME Mumbai Jun-09 Chemicals Head, corporate citizenshipSME Hyderabad Jul-09 Health care equipment and
servicesDirector, corporate sustainability
SME New Delhi Dec-09 Support services Company secretary, head operationsCo. Mumbai Jan-10 Software and computer services CSR correspondentCo. Mumbai Jan-10 Software and computer services General manager, business developmentCo. Hyderabad Mar-10 Support services General manager, head of corporate
sustainability
Notes: SME ¼ small to medium size enterprise (EU Standardized as ,250 employees); Co. ¼ Company (EU standardized as .250employees); List is presented in descending order based on participant’s year of inception to the GC
VOL. 11 NO. 4 2011 jCORPORATE GOVERNANCEj PAGE 405
3.2 Measures
Social responsibility orientations or general approach to CSR of managers were measured
using items based on Kumar et al.’s (2001) four suggested models, i.e. ethical, statist, liberal
and stakeholder. We used the stem question ‘‘with regard to your CSR initiatives, to what
extent does your organization’’, followed by 12 statements describing each of the four
orientations, e.g. ‘‘support community development initiatives’’, and ‘‘enforce ethical
relationships with suppliers’’. Respondents recorded their opinion for these on a scale
ranging from ‘‘to a minimum’’ (1) to ‘‘to a great extent’’ (7). Based on 33 responses, Figure 2
reflects the rating average for each of the choices.
In order to confirm the general questions describing their CSR orientations, we used a
second more direct item that asked respondents to choose among the four approaches.
Managers were asked ‘‘relative to your general approach to CSR, to what extent does your
organization adopt principles and practices’’, followed by four statements describing Kumar
et al.’s (2001), description of the four models, i.e. ‘‘to focus voluntarily on community welfare
based on ethical awareness of broad social needs’’, etc. Respondents recorded their
opinions for these items on a scale ranging from ‘‘to a minimum extent’’ (1) to ‘‘to a great
extent’’ (7). We averaged the ratings for these and provide the results in Figure 3.
To measure motivations to pursue CSR practices, we derived items based on research on
CSR motives by Graafland and van de Ven (2006) and Hemingway and Maclagan (2004).
We used the stem question ‘‘how important were each of the following reasons for
implementing CSR in your company?’’ A list of 18 statements was provided including ‘‘top
management believes in CSR’’, ‘‘meeting government regulations’’ and ‘‘increasing sales’’.
Respondents recorded their opinions for the items on a scale ranging from ‘‘not important’’
Figure 2 General approach to CSR – multiple choices
With regard to your CSR initiatives, to what extent does your organization ...
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00
Help solve social problems?
Support community development initiatives?
Increase economic stability within the community?
Enforce ethical relationships with shareholders?
Empower women and other groups?
Reduce human rights abuses?
Support government policies?
Enforce ethical relationships with suppliers?
Work towards not harming the environment?
Treat all employees and job applicants fairly?
Notes: The graph reflects the respondents’ rating average for the top ten choices describingtheir general approach to CSR. Rating scale ranges from “To a minimum”, or (1) to “to agreat extent”, or (7)
PAGE 406 jCORPORATE GOVERNANCEj VOL. 11 NO. 4 2011
(1) to ‘‘extremely important’’ (7). Based on the response count of 33, Figure 4 provides the
rating average for the top ten reasons.
Obstacles and problems facing CSR implementation were measured using items based on
reported concerns for corporations in India (IndianNGOs.com, 2002). We used the stem
question ‘‘in your opinion, how important are the following barriers or obstacles to the
implementation of CSR practices for your company?’’ A total of 14 statements were provided
including ‘‘CSR implementation is too-time consuming’’ and ‘‘we do not have sufficient
financial resources for CSR implementation’’. Respondents recorded their opinions for these
items on a scale ranging from ‘‘not a barrier/does not apply to our situation’’ (1) to ‘‘a barrier
that requires some effort to overcome’’ (3), to ‘‘a major barrier that prevents our company
from implementing CSR’’ (7). Figure 5 provides the rating for all these concerns in
descending order.
4. Analysis and results
To answer our first research question ‘‘under which model of responsibility are Indian firms
currently operating? Is it the ethical, the statist, the liberal, or the stakeholder approach?’’ we
first averaged the respondent ratings for the twelve general statements measuring each of
the four CSR approaches. We then compared these averages with their responses on the
more direct choices for CSR orientations. We initially wanted to subject our data to factor
analysis in order to derive a list of explanatory constructs; however, we lacked sufficient
responses to achieve this. Figure 2 indicates that the most popular CSR approach selected
by our respondents was the stakeholder approach. Based on the top eight choices, four
described their corporate responsiveness to stakeholder interests, two emphasized the
ethical, one was state driven, and one sustained the liberal. These averages were consistent
with the more direct item on their CSR approach with the stakeholder being the most popular,
followed by the ethical, statist and finally, the liberal (see Figure 3).
To answer our second research question ‘‘what motivates companies in India to pursue
CSR?’’ We averaged all respondents’ ratings for every item measuring motivations. Here
again, we wanted to subject our data to factor analysis in order to derive a list of explanatory
Figure 3 Approach to CSR – four choices
Relative to your general approach to CSR, to what extent does yourorganization adopt principles and practices?
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00
To focus on corporate responsibilities based primarilyon shareholder objectives?
To focus on corporate responsibilities driven by thegovernment such as legal requirements?
To focus voluntarily on community welfare based onethical awareness of broad social needs?
To focus on the interests of stakeholders of the firm,such as customers, employees, and communities?
Notes: The graph reflects the respondents’ rating average for the four items describingtheir general approach to CSR. Rating scale ranges from “To a minimum”, or (1) to “to agreat extent”, or (7)
VOL. 11 NO. 4 2011 jCORPORATE GOVERNANCEj PAGE 407
constructs; however, we lacked sufficient responses. Instead, a graphical representation of
the data (Figure 4) reveals that the top three reasons for implementing CSR are related to
values and ethics (UNDP, 2002; Narwal and Sharma, 2008; Balasubramanian et al., 2005).
The remainder of the reasons is related to the pragmatic or ‘‘business case’’
(Balasubramanian et al., 2005) CSR themes, including: enhancing business reputation,
satisfying stakeholder demands, and improving profits.
To answer to our third research question ‘‘what obstacles do Indian companies face when
implementing CSR?’’, the graphical illustration (see Figure 5) of the average respondent
ratings for the items measuring the obstacles indicate that the most significant obstacles are
those related to lack of resources – training-related, financial, and informational.
Management support at both top and middle levels was found to be the least significant
obstacle. In between are barriers related to the complexity and difficulty of implementing
CSR.
4.1 Discussion
Empirical research on the corporate social responsibility activities of businesses in emerging
market economies is rarer than that in developed economies. In this paper, we sought to
address this gap in the literature by focusing on CSR practices in a fast growing emerging
market economy. India provides a particularly interesting economy to study because of its
cultural heritage and history of valuing societal concerns. We posed three research
Figure 4 Motivations for pursuing CSR
How important were each of the following reasons for implementing CSRin your Company?
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00
Satisfying major customers
Increasing sales
Satisfying employees
Brand protection
Gaining market access
Meeting government regulations
Demonstrating leadership in CSR
Top management believes in CSR
It is the right thing to do
Implementing CSR aligns with ourcompany’s ethical values
Notes: The graph reflects the respondents’ rating average for the top ten choicesdescribing their general approach to CSR. Rating scale ranges from “To a minimum”,or (1) to “to a great extent”, or (7)
PAGE 408 jCORPORATE GOVERNANCEj VOL. 11 NO. 4 2011
questions: what is the CSR approach Indian firms subscribe to, what motivates them to
pursue CSR, and what are the barriers or obstacles that they face when implementing CSR?
To answer our questions, we surveyed top managers in a sample of Indian firms in various
industries and of varying sizes. We find that the approach to CSR that is most popular among
Indian firms is the stakeholder approach, followed by the ethical, statist, and liberal
approaches. Further, our results indicate that the most significant obstacles are those
related to lack of resources, followed by barriers related to the complexity and difficulty of
implementing CSR and finally, lack of management support at both top and middle levels.
We further find that ethics and values or the moral motive is an important motivator for
pursuing CSR. Also important, but not to the extent of ethics and values, are the strategic or
pragmatic reasons such as enhancing business reputation, satisfying stakeholder
demands, and improving profits.
Our results regarding approach to CSR by Indian companies suggest that the stakeholder
approach is currently the most prevalent. Stakeholder thinking suggests that firms cannot
Figure 5 Barriers facing CSR implementation
In your opinion, how important are the following barriers or obstacles to theimplementation of CSR practices for your company?
0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00
Top management does not support CSR implementation
Middle management does not support CSR implementation
There will be no significant benefits for our company fromCSR implementation
CSR implementation is too expensive
Currently there are more important priorities for the company
CSR implementation is too complex
CSR implementation is too time-consuming
We do not have enough knowledge about CSRimplementation
Our management does not have adequate training toimplement CSR practices
Our workers do not have the necessary skills/education forsuccessful implementation
We do not have enough knowledge about CSR practices
Difficulty obtaining information about CSR implementation
We do not have sufficient financial resources for CSRimplementation
Lack of training opportunities or seminars to learn about CSR
Notes: The graph lists respondents’ rating average for all items describing barriers facingCSR implementation. Scale ranges from “Not a barrier/does not apply to our situation” or(1) to “A major barrier that prevents our company from implementing CSR”, or (7)
VOL. 11 NO. 4 2011 jCORPORATE GOVERNANCEj PAGE 409
exist without managing their stakeholders well (Freeman, 1984) and that relationships with
stakeholders have implicit moral weight (Waddock, 2004). Our finding is contrary to what
prior researchers have suggested (Balasubramanian et al., 2005; Chakraborty, 1997; Fisher
et al., 2001, UNDP, 2002) that the liberal or Friedman approach is the most influential for
Indian companies, and aligns more closely with recent research (Cappelli et al., 2010). After
deregulation of the Indian economy in 1991, there was pressure to corporatize and sell off
government-owned firms and the concern for efficiency, effectiveness, and profitability
became central (Balasubramanian et al., 2005). Consistent with global thinking, firms placed
a high level of importance on their owners or shareholders and the focus was on maximizing
their wealth. Our results indicate that Indian firms have now shifted from this model to the
stakeholder model and are now more attuned to the demands of their stakeholders. This sort
of shift from the profit-oriented or shareholder-focused model to other, stakeholder-oriented
models has been suggested in the literature (Balasubramanian et al., 2005; Waddock,
2004).
Regarding motivators for Indian firms to pursue CSR, our findings agree with suggestions by
prior studies that ethics and values serve as important motivators for Indian firms
(Balasubramanian et al., 2005; Cappelli et al., 2010; Kumar et al., 2001). There is a widely
held belief in India that service to others is important and that one’s goals in life ought to
extend beyond one’s material needs (Cappelli et al., 2010). These are some of the values
that drive the actions of Indian managers. Also important are those motivators that are
related to the business case for CSR including enhancing profits and reputation and
satisfying stakeholder demands. These motivators can be categorized as the moral versus
strategic motivators (Graafland and van de Ven, 2006) or the caring versus profit-driven
motivators (Balasubramanian et al., 2005; Van Marrewijk, 2003), with the caring or moral
motivator being the most significant as found in this study. This is in line with the historical
tradition in India. Our results suggest that despite the forces of globalization and resulting
increase in competition and the pressure to be profitable, Indian managers still view CSR
primarily from a caring or values driven mentality rather than a profit-driven one even though
profit-driven motivations are also important.
With respect to the barriers faced by Indian firms in implementing CSR strategies, our results
reveal that the most significant obstacles are those related to lack of resources, followed by
those related to the difficulty of implementing CSR, and lack of management support at both
top and middle levels. Among resource-related barriers, insufficient opportunities/resources
for providing training in CSR was found to be the most significant obstacle. The other
resources were financial – lack of sufficient financial resources for CSR implementation and
informational – lack of knowledge and difficulty in obtaining information about CSR
practices and implementation. Resources are needed to implement CSR activities
effectively and lack of sufficient resources to devote to this is indeed a significant
obstacle to firms. Even in situations where firms understand the importance of CSR and wish
to implement it in their firms, resource shortages would not allow them to do so. CSR
implementation being perceived as too expensive, complex, and time consuming formed
the next set of barriers to implementation.
Lack of management support was the least important set of barriers. Given that lack of
resources is the most important barrier and that resources are allocated by management,
lack of management support being the least important set of barriers is surprising. If
management support for CSR implementation is present, resource allocation for this
endeavor should not be a problem. One explanation for this finding could be that even when
management support is present, sufficient resources are simply not there to implement CSR.
Another explanation could be that there maybe a perception of management support
perhaps as a result of talk about the virtues of CSR by management, without real
commitment as far as translating this into real practices. This is consistent with the symbolic
adoption of practices by firms without corresponding substantive implementation or
decoupling that studies in the tradition of institutional theory have found (Aravind and
Christmann, 2011; Meyer and Rowan, 1977; Westphal and Zajac, 2001). Even when such
decoupling is present, symbolic adoption may be enough to get reputation-related benefits
PAGE 410 jCORPORATE GOVERNANCEj VOL. 11 NO. 4 2011
with the consequence that some firms lose the incentives for better implementation. Thus
CSR and associated practices may be adopted in principle without corresponding
implementation and integration into business processes of firms. This is in line with prior
observations that CSR in India and other developing nations may not be integrated into core
business processes even though there has been some level of advancement in CSR in these
economies (Arora and Puranik, 2004; Baskin, 2006).
Considering the fact that this research was conducted during a recession (even though
Indian firms were not as affected as firms in other countries) firms might have found it even
harder to devote resources to CSR. This could be another explanation for there being
management support for CSR without corresponding allocation of resources.
5. Limitations and conclusion
Glover (2007, p. 865) concluded that:
The ‘‘underlying theory’’ of the corporation needs to undergo radical transformation if companies
are to move beyond the implementation of a few small philanthropic projects at the margins, and
truly bring the values and principles of CSR into the mainstream of their activities.
It calls for an inclusive strategy involving a majority of the workforce. With a stakeholder
approach to CSR and a strong moral or caring motive as found in this study, we believe that
Indian firms have the right framework in place to implement CSR practices. However, lack of
sufficient resources to expend for this endeavor seems to be a key limitation in the Indian
context.
This study, though exploratory and indicative, does have its limitations. First, given its
structured survey design, our findings do not indicate what the responding organizations are
actually doing. More ‘‘on the ground’’, detailed and empirical work needs to be conducted.
Given the remote location of some of these firms, alternative qualitative techniques such as
interviews and observations also set certain budgetary limitations to the research. A few of
the managers in our sample indicated that surveys were not normally addressed in their
daily routines and that not enough time could be allotted to conducting long-distance
interview sessions. Other managers suggested we review their CSR and Sustainability
reports in order to find answers to our research questions. Considering these limitations, we
find that an alternative and fruitful avenue to extend the current framework is to partner and
collaborate with local/global NGOs currently operating in India, as well as developing
case-based research methodologies in direct partnerships with regional centers for
corporate governance and citizenship. As of June 2010, the GC enlisted approximately 37
NGOs (majority local), offering plenty of research opportunities and collaborative projects
with the non-business sector.
Second, our sample is limited to a population of companies that is already engaging a
corporate citizenship initiative that restricts our knowledge of CSR practices for
non-participants. We chose GC participants as the listing of corporations is publicly
available, providing in some cases website information as well as CSR contact information.
Hence the findings of this study should be viewed as an initial assessment of the current
state and perceptions of CSR in India. A more elaborate study covering companies from
other CSR networks or that make up a higher percentage of the total market capitalization
would further refine these results.
Third, our paper studies the perceptions of the corporate sector on CSR, and it is not known
whether these perceptions align with those of the Indian society. Considering the corporate
sector is making an increased effect on the rapidly transforming Indian society, it is important
to understand society’s views of CSR activities and what its expectations are regarding
responsible and ethical behavior. In their empirical study of CSR perceptions of the Indian
society on business, Narwal and Sharma (2008), found that society holds both positive and
skeptic views of CSR activities by their corporations. What is reported as missing is a
process of further integration of the society and business so that various stakeholders can
share their concern for CSR issues in their own ways (Narwal and Sharma, 2008, p. 73). The
VOL. 11 NO. 4 2011 jCORPORATE GOVERNANCEj PAGE 411
Indian society views the business enterprise as making use of the resources of society and
continually depends on it for its functioning. Given this scenario, society feels the business
enterprise should also contribute to enhance the welfare of the society and expects
businesses to discharge CSR activities. Future studies that can examine how the
non-business sector, including academic institutions, local and global NGOs and the media,
are increasing the societal awareness on CSR in India can offer an understanding of how the
corporate sector is responding to various stakeholders’ concerns.
CSR in emerging market economies like Brazil, India, and South Africa have been found to
be quite comparable to that in developed economies (Baskin, 2006). In this study, we
examined the state of CSR in one important emerging economy, India, and found that similar
to the dominant Western paradigm, Indian firms also approach CSR primarily from a
stakeholder perspective, driven primarily by the ‘‘caring’’ model. Lack of resources to spend
on CSR activities is a major obstacle to move CSR forward in India. However, given India’s
mounting social problems, it is much more urgent for Indian firms to find resources to devote
to CSR than for firms in the West in order to address these social issues. We can foresee
India as the base for a new focus for CSR, one with a more proactive, optimistic framing.
What would complement a more proactive framing is the growing recognition by the
business sector to treat CSR and corporate citizenship as an imperative for change.
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About the authors
Jorge A. Arevalo is Assistant Professor of Management, Department of Marketing andManagement Sciences, William Paterson University. He earned his PhD and MS fromRutgers, the State University of New Jersey, and his BA from Montclair State University. Hisresearch interests are found at the intersection of corporate responsibility (CR), voluntarycorporate citizenship initiatives, and the impact of CSR practices on the firm’s strategy. Priorto his academic career, he held Marketing and Customer Relations positions for the AirlineIndustry, and the Public Utilities Sector. Jorge A. Arevalo is the corresponding author andcan be contacted at: arevaloj1@wpunj.edu
Deepa Aravind is an Assistant Professor of Management in the Department of Business, CityUniversity of New York – College of Staten Island. She received her PhD from RutgersUniversity. Her current research interests are in the areas of adoption and implementation ofmanagement practices/innovations in firms and corporate social responsibility initiatives.
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