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Corporate Social Responsibilities Growing Challenges and Strategies with reference to Public sector and Private Sector in India.

Type: Literature review/ Conceptual Paper Authors: Santhosh Basavaraj Research Scholar in Management, Anna University of Technology, Coimbatore. Dr. B.Rajasekaran, Principal Cum Director, RKKR School of Management Studies, Salem. Purpose of the research The purpose of this research paper is to identify and gain an insight in to the set of challenges faced by Public sector and Private sector companies in implementing and good Corporate Social Responsibility practices and exploring the conceptual solution to face the challenges. Design/methodology/approach This is an exploratory research design and it is used to seek insight in to challenges faced in implementing Corporate Social Responsibility (CSR).here an attempt is made to explore the conceptual strategies to meet these challenges. Definition of Corporate Social Responsibility (CSR). CSR remains a very relevant strategic Marketing tool. Adam Lindgreen, et al (2009), observed that CSR practices are more prevalent in organizations that employ relational marketing practices. European Commission (2001) defines CSR as a concept whereby companies decide voluntarily to contribute to a better society and cleaner environment and as a process by which companies manage their relationship with stakeholders. Business cannot escape from society and society cannot exist without business (Davis and Frederick, 1985). Thus, there is a two way relationship between business and society, Cannon (1994) holds the view that business is expected to create wealth, supply market, generate employment, innovate and produce a sufficient surplus to sustain its activities and improve its competitiveness while contributing to the maintenance of community in which it operates. Consumers consider switching to another company's products and services, speak out against the company to family/friends, refuse to invest in that company's stock, refuse to work at the company and boycott the company's products and services in case of negative corporate citizenship behaviours (Edenkamp, 2002).In today's competitative environment CSR practically has the same effects as advertisements, because it sheds a positive light on a brand or product. People want to be engaged with companies that share their values (Scott Beaudoin, 2009).CSR has shifted decisively from the realm of `nice to do' to the realm of `need to do' not just because it is a serious and sustained interest of consumers but also because opinion leaders recognize the fact and will act accordingly.

A number of studies conducted in past arrived at positive association between CSR and financial performance (Ruf et al, 2001).Companies going for CSR find it comparatively easy to recruit and retain the skilled employees for a sufficient long period of time which are vital for the success of business (Krishna, 1992).Effective partnerships between corporates,NGOs and the government will place Indias social development on a faster track ( Ramya Sathish,2010).In fact companies can successfully make a business case for improving profitability through higher market share and increased customer loyalty if they can demonstrate their CSR practices as unique differentiator (Balasubramanian,2007). Companies consider themselves as an integral part of the society and act in a socially responsible way (European Commission, 2001) Though the earlier decades are referred to as false dawns wherein CSR had a regional, person centered philanthropic focus, it is now viewed to be inclusive, broad and diverse (Silberhorn and Warren, 2007).They view these activities not as a cost but an investment, as a long term strategy minimizing risks linked to uncertainty. (European Commission, 2001). Literature Review This research is an effort to identify various challenges faced in the area of Corporate Social Responsibility and explores the various strategies to optimally meet these challenges. These strategies are originally conceptualized by these researchers with a strong literature review as the bases of study. CSR is not a new concept for Indian corporate as it is started from the last century in the beginning of Industrialization process in India. From last fifteen year CSR has gained the momentum in India. Today CSR has become one of the integral part of marketing strategy to build the Brand Image for the product in market.Corporates also going beyond their limitations to serve social responsibility imposed to them by the society. Under these circumstances corporate scandals unveils the other face of corporate and questions authentication of their responsibility. Today changing environment made corporate to think seriously about their investments on CSR activities and they can not merely consider it has an optional activity. Even a small activity like child labor in local factory will affect the business reputation across the globe and it will spread swiftly with the help of mass media. It is very clear that investment made now by companies on CSR leadership will be handsomely repaid by brand sales in the future. It is the need of the hour for companies to behave with consistent social responsibility and even when incurring additional cost and gaining no commercial advantage from doing so. Eventually company which earns good reputation through CSR and creates the image of honesty in its dealing will earn the distinguished competitive advantage for tomorrow. Consumers expect firms to conduct business ethically, and they also showed their willingness to reward ethical behavior and punish the unethical behavior of firms through their purchase behavior. Customers prefer to purchase from the companies which are conscious about CSR. Corporate social responsibility ensures that corporations promote corporate citizenship as part of their culture by demonstrating a commitment to improving the quality of life in the communities in which they operate. CSR contributes positively to firms market value.

CSR is not an occasional act of charity or contribution to a school, hospital or an environmental NGO, but an ongoing commitment that is integrated into the core business objectives and strategy. Organizations are increasingly realizing that CSR is no longer a collection of discreet practices or occasional gestures motivated by marketing or public relations. It is rather a comprehensive set of practices and policies that should be integrated into the organizations operations and activities. (Kirti Dutta, M. Durgamohan) In this research paper Corporate Social Responsibilities challenges have been identified and classified as intrinsic challenges and extrinsic challenges. Intrinsic challenges are posed by the internal environment. On the other hand this research has classified extrinsic problems which are related to external environment An extensive secondary literature survey has been adopted by researchers to identify these challenges. Both public sector and private sector face these Corporate Social Responsibilities challenges and here an attempt is made to explore the conceptual strategies (solutions) to meet these challenges. Corporate Social Responsibilities challenges and conceptual strategies are classified as follows:

Corporate Social Responsibility Challenges

Intrinsic Challenges
Management related challenges. Safety, welfare & Social Initiatives related challenges. Employee/Workplace related challenges. Employee/Workplace Regulatory related challenges. Other Challenges

Extrinsic Challenges
Environmental related challenges. Prospective Challenges. Community/Social Development related challenges. External Agencies related challenges. Awareness/Market related challenges.

Intrinsic Challenges

Conceptual strategies to overcome challenges

1. Management related challenges.

a. Monitoring mechanism for implementation of CSR activities. b. System of planning, targets, Budget, allocation and budget utilization for CSR activities. c. Proper CSR Guidelines/Policy. d. Corporate accountability. e. Implementation. f. Short term Vs Long term perspective. g. Narrow Perception towards CSR Initiatives h. Achieving significant reductions in resource use. i. Aligning organizations goals and direction with CSR. j. Inefficiencies and confusion. k. Code of conduct. l. Training & Development: Inadequately trained personnel. m. Insufficient business justification of CSR investments. n. Cost-benefit analysis framework. o. Top-down policing approach to CSR. p. Corporate governance.

1. It is namely Top Management and Board

a. Top management commitment and dedication. Forming implementation teams and Regular follow ups. b. Holistic approach to CSR and taking each step seriously and making individual responsible for each function. c. Flexibility in guidelines and avoiding deviations policy. d. Imbibing the sense of ownership of CSR in organisation culture. e. Bridging the gap and ensuring that short term objectives are aimed at achieving long term objectives. f. Bridging the gap g. Educating and creating awareness. h. Optimum utilization of resources and proper utilization of resources. i. All function, activities, decisions of organisation must reflect CSR efforts. j. Clarifying the roles and responsibilities, creating awareness. k. Thorough implementation and continuous updation. l. Sourcing experienced external training agencies. m. Matured and specific approach and thorough deliberations on CSR implementation. n. In short term it may not give results, but increased brand image and identification is confirmed Involving Finance department in CSR cost-benefit analysis. o. Direct involvement of Management is required. p. Board commitment, transparency in decisions regarding CSR.

2. Safety, welfare & Social Initiatives related challenges.

a. Maintaining continuous improvements in employee safety. b. Waste Management and recycling. c. Energy and water conservation. d. Employee welfare training, healthcare. e. Affirmative action employment of backward sections.

2. Encouraging zero accidents, OHSAS and EMS implementations, Mock drills

a. Role of production department is vital , encouraging Kaizen activities and following ISO 14001 standards. c. Following the various provisions given in Factory Act 1948 and other regulatory acts

3. Employee/Workplace related challenges.

a. People management framework to develop a positive and productive working environment. b. Workforce Diversity. 4

3. Attitudinal surveys and training programs on attitudinal changes and

rewarding good work practices.

a. Attitudinal surveys. b. Training and developing programs, respecting other languages and cultures. c. Enhancing the personal commitment through awareness programs. d. Surprise checks on agencies work, strict monitory control, and result based rewards. e. Organization wide campaign on ownership of CSR.

c. Enhancing employee attitude survey ratings. d. Lack of Transparency of implementing agencies Process of trust building. e. Shared ownership of CSR.

4. Regulatory related challenges.

a. Legal obligations. b. Quality Management Systems.

4. Following government norms.

a. Most difficult challenge for corporate, reducing the complexity, trusteeship approach, Regular audits. b. Following the industry benchmarking and honest obligations avoiding last minute cook up and bribing. Integrating QMS wit day to day activity.

5. Other challenges
a. Consistency in the management of people & processes across the business. b. Lack of definitive direction to CSR initiatives of companies. c. Lack of Consensus on Implementing CSR Issues. d. Lack of consensus amongst local Agencies. e. Lack of infrastructure (IT, space, people, etc.)

5. Strong emphasis on policy.

a. Reengineering of policies, programs, procedures and processes. b. Strong leadership which gives proper direction to CSR activities c. If the cause of CSR is strong then there is no need to bring consensus. d. Strong MoU with NGO and local agencies e. Financial commitment by Management, educating the benefit of CSR

Extrinsic Challenges 1. Environmental related challenges.

a. Global warming implications. b. Energy conservation. c. Sustainable Development environmental protection.

Conceptual strategies to overcome challenges 1. Thorough analysis of decision which impact environment.
a. Thorough check on release of hazardous gases. b. Using more renewable source of energy eg: Solar energy, wind energy etc. c. Forestation, Waste management and soil erosion projects.

2. Prospective Challenges.
a. Emerging trends and future challenges. b. Global Issues and Challenges. c. E-initiatives Online Information, 5

2. Anticipating future Challenges.

a. Preventive or Proactive approach.

education, etc

3. Community/Social Development related challenges.

a. Human rights related problems. b. Execution of CSR initiatives in a rural developing economy. c. Population explosion. d. Poverty eradication. e. Health f. Education School Dropouts/Adult Education. g. Capacity Building skill development, training h. Hesitation/Non participation by the village folk i. Women empowerment and girl child.

b. During economy slowdown working on core competencies. c. Educating rural population in computer literacy

3. Working with a strong relationship with agencies and local authorities/NGO.

a. Immediate response to unpleasant incidence and raising the voice. b. Identifying and recruiting candidates from the rural background. c. Extensive promotion of family planning and educating the social acceptance of such decisions. d. Education is only the panacea for poverty. e. Constructing the public toilets and encouraging villagers to construct toilet in their house, more hospitals. f. Identifying School Dropouts and providing encouraging programs like mid day meal/Bicycles/Books/Scholarships etc. g. Opening Industrial Training Institutes (ITI) and Diploma colleges, providing more apprentice training and organising Job fairs. h. Rewarding the participation and taking the help of Anganawadi teachers and other local government servants. i. Educating and convincing male senior members of the family who is the ultimate the decision maker. 4. Participation and thinking beyond

4. External Agencies related challenges.

a. Convergence and co-regulation. b. Integration of environmental considerations into supply chain management and purchasing decisions. c. Building the relationship with business in the community and with Local Authorities. d. Contractual relationships among suppliers and buyers. e. Monitoring and external verification audits. f. Need to Build Local Capacities: local nongovernmental organizations as there is serious dearth of trained and efficient organizations. g. Non-availability of Well Organized Nongovernmental Organizations in remote and rural areas

a. Accountability and periodic result analysis b. Emphasis on Quality Management systems accreditation for suppliers. c. Trust building and profit sharing (Nominal). d. Fine tuning the contracts as per latest requirements and mutual trust and mutual benefit should be core for this relationship. e. Aligning the quality standards with day to day activities. f. Continuous training and awareness program to NGOs on CSR objectives. g. Encouraging unemployed village youths to start 6

5. Awareness/Market related challenges.

a. Visibility Factor: The role of media in highlighting good cases of successful CSR.

NGO which create employment opportunities also in rural India. 5. Careful articulation of CSR message to

public and using media appropriately.

Conceptual strategies for these challenges are arrived first and to confirm the practical feasibility and relevance an empirical study has been carried out in selected business organizations both in public sector and private sector. Empirical study of CSR challenges and practical implementation of Conceptual strategies to overcome challenges Steel Authority of India Limited, Coimbatore (SAIL) From Public sector SAIL, Coimbatore has been identified and a senior executive has been interviewed with the help of questionnaire. SAIL adopted following strategies to address internal challenges. SAIL is being a public sector; societal needs are kept on priority. Management foresees most of the challenges noted down by researchers except challenges regarding achieving significant reductions in resource use and insufficient business justification CSR investments. About the Monitoring mechanism a Nodal Officer at every unit of SAIL is placed and he/she will directly report to Chief Executive to ensure proper control and planning at each unit level and further clearance of budget allocation happens at corporate level. SAIL provides clear corporate guidelines for CSR activities and to ensure corporate accountability SAIL conducts Quarterly review of Budget utilization and project implementation Short term Vs Long term perspective is ensured based on sustainability of projects undertaken. Narrow Perception is eliminated through wide communication amongst employees and beneficiaries. A reduction in resource use doesnt arise at all because of whole hearted efforts made full use of funds. Inefficiencies and confusion are clarified through better communication. Code of conduct resolved through discussions HRD takes all necessary steps to train personnel. Proper Cost-benefit analysis framework is being done periodically. Concept of Corporate governance practices are observed such as regular Top Management Reviews, even from the ministry concerned. Safety, welfare & Social Initiatives related challenges are exclusively taken Care by relevant functional departments such as Safety and Human Resource departments. Other Employee/Workplace related challenges are not a part of CSR activities and legal obligations are dealt on Issue to issue. Lacks of Consensus on Implementing CSR Issues are dealt with better communication and awareness. On the other hand SAIL adopted following strategies to address its external challenges all environmental related challenges like global warming, energy conservation methods at unit level and sustainable projects for environment protections are considered. Prospective challenges are not anticipated. At SAIL more emphasis is given on community development related challenges. 7

Executions of CSR initiatives in a rural developing economy are complied. Medical camps for sterilization programs to control population are being conducted. Self employment training programs to overcome poverty and medical camps conducted in villages for regular health checkup and providing infrastructure for education. Self employment training programs is organized to enhance skill level. Better Communication channels are established to address the hesitation/non participation by the village folk Women's empowerment is being carried out with sustainable measures. Good relationship has been established with Local agencies and NGOs and constant interaction with local village panchayats is being conducted and involved suppliers in quality requirements. Lack of Community Participation in CSR activities is tackled by continuous interactions and ascertaining their needs from time to time. Need to Build Local Capacities is being done in areas of specialized needs to make visible their efforts for this purpose local and national press and e-media has been used. VOLVO BUSES INDIA PVT. LTD From Private sector VOLVO BUSES INDIA PVT. LTD., Bangalore has been identified and a senior executive has been interviewed with the help of questionnaire. VOLVO adopted following strategies to address its internal CSR challenges In VOLVO Management focus more on monitoring mechanism with the proper system of planning, targets, Budget allocation and proper budget utilization for CSR activities which is supported by good CSR policy and corporate accountability. Well defined document procedure and guideline with well defined responsibility structures are established to address all these issues in VOLVO. VOLVO does not support the most of the conceptual strategies framed by researchers but rather it focus on safety and says Safety being a 'Core Value' of Volvo we have a well built mechanism in place in all our activities right from the top management to the bottom line to address these concerns with respect to safety. Again CSR of VOLVO does not support employee/Workplace related challenges and realizes it has strong belief in its core values, which directly reflect in their day to day management of operations and all these issues with respect to employee / work place related challenges are addressed in policy guidelines. Volvo complies with all legal requirements vis--vis local, state, national and international. A well established and fool proof system is in place. Volvo reiterate that it has not experienced such challenges with respect to environment, social related and agency related activities and assures that it care for the environment which is being a 'Core Value' of Volvo and well built mechanism in place in activities right from the top management to the bottom line to address these concerns with respect to environmental care, be it local issues or otherwise. For Community/Social Development related challenges a well thought over and defined process is followed by management and it is being handled accordingly as per the management guidelines for the same.

With respect to Agency related challenges Volvo says it has no issues, as all actions are as per clearly established and laid out policies and guidelines be it selection of agencies or contractual relationships. Practical implications The findings of this research paper will enable the managers to consider the various options available to face the Challenges of Corporate Social Responsibility. The output of this research paper is useful for academic purpose also. Originality/value Changing scenario has brought many changes in the operation of both public and private organizations and today organizations are realizing the importance of Corporate social responsibility activity. This paper is first of its kind where it has explored various challenges of CSR and potential solutions for such challenges. Findings These researchers gained an insight of various challenges faced by ne Public Sector organisation and One Private Sector organization in India and tests the various challenges faced by them in external and internal environment. Conceptual strategies are hypothesized and empirical tests are conducted to ascertain the practical implementation of conceptual strategies. It was found that Public sectors employ more measure and meets most of the challenges than private sector. Recommendations: All the challenges conceptualized by this researcher are appropriate for Public sector and Private sector organization and most of the strategies are practically implemented in selected sample organization. It is recommended that organizations must give a thought on this challenges and respective proposed strategies before implementing CSR activities. An effective implementation of CSR activity is only possible when an organization considers all the given challenges before hand. It can not neglect either external or internal both demands equal amount of dedication. Clear Guidelines/Policy is the core for effective implementation of CSR activity and this is proved by empirical test in the case of private and public sector. So, it is recommended for organizations to have clear policy/guidelines for its CSR activities. Some time it becomes very difficult for organizations to spend the allotted amount for CSR activity even though organizations ensures proper planning it fails to anticipate the challenges and this research paper provide good inputs for such problems. During this research some bad trends has been observed by this researchers in the case of public sector companies one out of that is owning the NGOs by politicians to take the money allotted for CSR. This research paper provides a holistic approach for various challenges for CSR. 9


During empirical work Public sector organization shown positive signs for this researchers hypothesis than in Private sector. This research reiterated the importance of partnering of NGOs and their role in implementing CSR activities.

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