You are on page 1of 10

Corporate Social Responsibility in Indian Organizations

N. Santosh Ranganath
Faculty Member
Department of Commerce & Management Studies
Dr. B.R. Ambedkar University
Srikakulam – 532410

CSR is a concept that frequently overlaps with similar approaches such as


corporate sustainability, corporate sustainable development, corporate
responsibility, and corporate citizenship. While CSR does not have a universal
definition, many see it as the private sector's way of integrating the economic,
social, and environmental imperatives of their activities. As such, CSR closely
resembles the business pursuit of sustainable development and the triple bottom
line. In addition to integration into corporate structures and processes, CSR also
frequently involves creating innovative and proactive solutions to societal and
environmental challenges, as well as collaborating with both internal and external
stakeholders to improve CSR performance.

CSR is generally accepted as applying to firms wherever they operate in the


domestic and global economy. The way businesses engage/involve the
shareholders, employees, customers, suppliers, governments, non-governmental
organizations, international organizations, and other stakeholders is usually a key
feature of the concept. While business compliance with laws and regulations on
social, environmental and economic objectives set the official level of CSR
performance, CSR is often understood as involving the private sector commitments
and activities that extend beyond this foundation of compliance with laws. From a
progressive business perspective, CSR usually involves focusing on new
opportunities as a way to respond to interrelated economic, societal and
environmental demands in the marketplace. Many firms believe that this focus
provides a clear competitive advantage and stimulates corporate innovation.

Corporate Social Responsibility in India

In India as in the rest of the world there is a growing realization that business
cannot succeed in a society which fails. An ideal CSR has both ethical and

1|Page
philosophical dimensions, particularly in India where there exists a wide gap
between sections of people in terms of income and standards as well as socio-
economic status. However, the concept of CSR is not new in India. The idea of social
responsibility in the Indian society, bounded by notion of caste and fate, dates back
to the time of British Rule when Indian reformers launched reform movements
which slowly became more socially responsible. During the independence struggle
Indian companies, which began to proliferate and proper from the mid 19 th century,
throw in their lot with Mahatma Gandhi and the resulting concern for the nations
caused many of them to be involved in providing education, health service and
even clean water.

CSR in the present scenario

There is a wide consensus among public and private institutions that the
concept of Corporate Social Responsibility (CSR) is based on a company attaining a
balance between the interests of all its stakeholders within its strategic planning
and operations. Over the past decade, numerous debates have emerged around the
question of whether such ‘responsibilities’ should be voluntary or not, especially
regarding growing environmental challenges in areas such as climate change, as
well as regarding the enforcement of labour standards and basic human rights.
Other critics have pointed out that the role of the private sector is defined purely
through production and profit-maximisation, generally assuming that only
government should take care of social and environmental issues through efficient
policy frameworks and mechanisms. Furthermore, concerns have been raised that
the almost total exclusion of SMEs (especially in developing countries) from
conceptual discussions on CSR could lead to a purely ‘northern agenda’ for
multinational companies. It should also be observed that CSR has frequently been
misleadingly equated simply with ‘corporate philanthropy’ and ‘charitable giving’,
which in turn are often separate from their core business and without an underlying
strategic plan behind it.

Today, CSR is widely seen a management strategy option. A growing number


of successful examples have demonstrated that respecting CSR in strategic
planning, and following these through plans in operations, either leads to increased
economic output, or at least is (in the short run) neutral in its effect on company

2|Page
profits. Furthermore, a growing number of large companies (and an increasing
number of SMEs) has recognised the need to improve their social and
environmental risk management strategies, grasp opportunities in innovative
technology development and knowledge creation, and engage more proactively
with their stakeholders. While there is growing conceptual clarity around CSR,
technical assistance activities in this field are still scarce. One of the problems is
that SMEs, notably in developing countries, often lack the capacities and
opportunities to learn about a possible CSR approach in their management planning
and daily operations. These companies are therefore either caught by surprise by
sudden ‘CSR-requirements’ from their (normally northern) customers and
counterparts, often in the form of complicated codes of conduct, or they face
increasing difficulties in accessing global supply chains.

This growing knowledge gap could have serious consequences on the


development of SMEs, especially in developing countries, but it seems to be
avoidable: the basic business concept of CSR, the inclusion of environmental and
social concerns into the company’s strategy, is also valid and feasible for small,
even micro-enterprises, and does not depend on their location. Practically, this
means that, through CSR, companies can detect and overcome inefficiencies in
their production process, continuously upgrade the quality of their products, and
gradually develop their expertise in marketing and sales in an ever-wider market
place. By doing so, they eventually improve their environmental and social
performance and, thereby, their overall competitiveness.

Social commitments of Indian Corporate Sectors

A number of Indian companies discharge their social responsibilities quite


satisfactorily. Following are few illustrations of such socially responsible Indian
companies.

Table-2. CSR activities of some Indian companies.

Sl. Corporate Area of activity Beneficiary state


No.

1. ITC • Primary education UP, Bihar, MP, AP,


Karnataka, MP

3|Page
• Livestock development
• Social forestry
• Integrated watershed
development

2. ACC • Revival of traditional arts Rajasthan, HP,


MP, Jharkhand,
• Preserving culture and heritage Maharastra, AP
• Health and medicine
• Disaster management and
relief
• Education
• Sports
• Water conservation

3. Citi group • Women empowerment AP, TN,


Karnataka,
• Rehabilitation Kerala,
• Education Maharastra, MP

• Health

4. HLL • Rehabilitation Gujarat,


Maharastra, UP,
• Education Bihar, Jharkhand,
• Health and hygiene education WB, Orissa, MP,
Chattisgarh,
• Water conservation and Maharastra
harvesting
• Women empowerment

5. TISCO • Community development MP, Bihar, UP,


Gujarat,
• Social welfare Maharastra,
• Tribal area development Karnataka,
Orissa, WB
• Agriculture
• Rural industrialization

6. SAIL • Community development Maharastra, AP,


MP, Karnataka,
• AIDS awareness Bihar, Jharkhand

4|Page
• Education
• Medical facilities and health
• Development of small
scale/ancillary industries
• Agriculture, poultry, fisheries

Adapted from http:www.indianngos.com/corporate/about–csr.htm and

http://www.itcportal.com/

Arguments for Social Responsibilities of Business

 Change in public expectations

The needs of today’s consumers have changed, resulting in a change in their


expectations of businesses. Since businesses owe their profits to society, they have
to therefore respond to the needs of society.

 Business is a part of society

Society and business are benefited when there is a symbiotic relationship between
the two. Society gains through economic development and the provision of
employment opportunities; and business benefits through the workforce and
consumers provided by society.

 Avoiding intervention by government

By being socially responsible, organizations attract less attention from regulatory


agencies. This gives them greater freedom and flexibility in their operations.

 Balance of responsibility and power


5|Page
Businesses have considerable power and authority. The exercise of this power
should be accompanied by a corresponding amount of responsibility.

 Impact of internal activities of the organization on the external


environment

Most firms are open systems, i.e., they interact with the external environment. The
internal activities of such firms have an impact on the external environment. To
avoid a negative impact on the external environment, firms should be socially
responsible.

 Protecting shareholder interests

By being socially involved, a company can improve its image and thus protect its
shareholders’ interests.

 New avenues to create profits

Social responsibility involves the conservation of natural resources. Conservation


can be beneficial for firms. Items that had been considered waste earlier (for
example, empty soft drink cans) can be recycled and profitably used again.

 Favorable public image

Through social involvement, a firm can create a favorable public image for itself and
endear itself to society. By so doing, a firm can attract customers, employees, and
investors.

 Endeavor to find new solutions

Businesses have a history of coming up with innovative ideas. Therefore, they are
likely to come up with solutions for social problems, which other institutions were
unable to tackle.

 Best use of resources of a business

Businesses should make optimum use of the skills and talent of its managerial
personnel as well as its capital resources to produce good quality products and

6|Page
services. By so doing, the business will be able to fulfill their obligations toward
society.

 Prevention is better than cure

It is in the interests of business organizations to prevent social problems. Instead of


allowing large-scale unemployment to lead to social unrest (which will harm
business interests), businesses can be sources of employment for eligible youth.

Arguments against Social Responsibility of Business

 Opposes the principle of profit maximization

The main motive of a business is profit maximization. Social involvement may not
be economically viable for a business.

 Excessive costs

When a business incurs excessive costs for social involvement, it passes the cost on
to its customers in the form of higher prices. Society, therefore, has to bear the
burden of the social involvement of business by paying higher prices for its products
and services.

 Weakened international balance of payments

A weakened international balance of payments situation may be created by the


social involvement of organizations. Since the cost of social initiatives would be
added to the price of the products, the multinational companies selling in
international markets would be at a disadvantage when competing with domestic
companies which may not be involved in social activities.

 Increase in the firm’s power and influence

Businesses are inherently equipped with a certain amount of power. Their


involvement in social activities can lead to an increase in their power and influence.
Such influence and power may corrupt them.

 Lack of necessary skills among businesspeople

7|Page
Businesspeople do not possess the necessary skills to handle the problems of
society. Their expertise and knowledge may not be relevant to deal with social
problems.

 Lack of accountability to society

Until a proper mechanism to establish the accountability of businesses is developed,


they should not get involved in social activities.

 Lack of consensus on social involvement

There is no agreement regarding the type of socially responsible actions that a


business should undertake.

Recommendations for better CSR


Corporates no doubt have made significant contributions towards the
sustainable development of our country. Considering the limitations of the
corporates in their CSR activities, we can make some recommendations which can
be used towards satisfaction.

1. Companies should extend their CSR activities in less privileged states


rather than concentrate in resource rich states.

2. It is essential that companies develop an effective value chain system


of their products through their CSR activities, which is essential for
competing in the global market.

3. It will give better results if activities are based on a more participatory


approach and touch the grassroots level.

4. Voluntarism among employees should be encouraged and


institutionalized through recognition and incentives.

5. There is also need for public-private partnership with well-defined


controls and process for the best use of resources for social change.

6. Special training need to be given to business mangers in working with


social issues.

7. Participation of small and medium business should be encouraged.

8|Page
8. Experience has shown that working with NGOs is more worthwhile and
result-oriented. Joining hands with related NGOs is therefore advisable.

Conclusion

Business houses all over the world are increasing in realizing their stake in
the society and engaging in various social and environmental activities. CSR holds a
very important place in the development scenario of the world today and can pose
as an alternative tool for sustainable development. As companies have shown great
concerns for their immediate community and the stakeholders, it can be safely
concluded that much of the fate of society lies in the hands of the corporates.

Nevertheless CSR has certain limitations which restrict its activities. The need
of the hour is to formulate effective strategic policies and adopt various instruments
according to the company history, its content, peculiarity in relationship with its
different stakeholders so that CSR can be best implemented towards its goals –
sustained environmental, social and economic growth. Corporates together can
make the world as a better place to live.

References
World Business Council for Sustainable Development (1999). CSR: Meeting changing
expectations, WBCSD. (http://www.wbcsd.org/includes/getTarget.asp?
Typed&\id=ODgwMw).

Commission of the European Communities (2001). Green Paper for Promotion of


European Framework for CSR.
(http://www.btplc.com/societyandenvironment/reports/greenpaperonCSR.pdf).

Components of corporate social responsibility (http://www.ficci-sedf. com/compo-


csr.htm)

Shinde, S (2005). Social responsibility corporate style


(http://www.expresscomputeronline.com/20050502/technologylike01.shtml).

Wood, D.J. (1991). Corporate social performance revisited, academy of


management review, 16 : 691 – 718.

http:www.indianngos.com/corporate/about – csr.htm (Sept., 2007).

Samuel, J and Saari, A (2007). Corporate social responsibility.


9|Page
(http://infochangeindia.org/corporatesrlbP.jsp, Feb., 2007).

Mineral Resource Forum (MRF), CSR, Dec., 6, 2001. (http:/www.natural-


resources.org/minerals/csr/index,htm, Sept., 2007)

http://www.ncert.nis.in/textbooks/XI/business-studies/chapter2.pdf (Feb., 2007).

http://www.hll.com/citizen-lever/csrcom.asp (Feb., 2007).

Guptara. P. Corporate Social Responsibility in India, South Asian Development


Partnership, UK. (http://www.southasian.org.uk/intro_social

Bajpai, G.N. (Nov., 2001). Corporate Social Responsibility in India and Europe: Cross
Cultural Perspective (http://www.ficci.com). http://www.itcportal.com/

Sanhdya, U (2006) Corporate Social Responsibility, The Hindu.


(http://www.thehindujob.com/0608/200608090006100.htm)

10 | P a g e