You are on page 1of 14

Practice, Theory, & Challenges

Prepared By Ahad Popatputra Foram Jivrajani

Details about Topic

Journal Name : Volume :Vikalpa 37

Month :Authors :-

April June 2012

Neharika Vohra Rahul Sheel

Corporate Social Responsibility

CSR has gained considerable interest among academicians and business org. in the past decade. There are different expectations from different stake holder group, diff standards, and diff practices. CSR can be implemented with both for profit and non-profit intentions.
For profit :-Developing a marketing channel aimed for rural population. For non-profit :- initiatives to community development

The CSR programs are aimed not only at the external community. As more and more companies like to provide benefits to their employees for greater productivity and retention. As CSR is gaining prominence, there is need for incorporating social responsibility in management curriculum

Theories on CSR
There are broadly two streams of literature seeking to explain CSR activities. Ethical Instrumental Ethical arguments emphasize CSR to be self-less altruistic activity that involves ethical obligation of going beyond the interest of the org. Even if it result in unproductive resource expenditure for the company

Instrumental arguments explains CSR as a purposeful activity involving benefits in the long term. Rectifying past mistakes and lessening the repercussions of future mistakes

Institutional Theory
Under this theory the Field is given importance. This field includes an Organization's social context, area of activities, practices / norms, and social relationship. This theory provides CSR with a multilevel theoretical explanation which includes actions within and outside an org.

Institutional Determinants of CSR

Players in the institutional field of an org shape its CSR activities. Internal org factors may enable or inhibit CSR . Institutional players such as industrial associations, institutional investors, labour unions, consumers, media and the government are equally important determinants of CSR activities. Organizations with strong labour unionizations act in more socially responsible manner towards their employees.

Industrial Associations Government CSR Activities of an Organization


Institutional Investor


Imitation of CSR Activities

CSR may have benefits for an organization in the form of image improvement against Customers Media limelight Satisfied employees Better word of mouth, leading to better financial performance. Org observe benefits accrued by others from their CSR activates and try to imitate their norm and practices. Another reason for imitation steams from institutional investors and government benefits.

Role of Governments
Most national govt. today have regulations, acts and sanctions for CSR of Org. In USA Fair Labour Standards Act 1938 Energy Policy Act (EPA) Clean Water Act 1948 India has companies act, 1956 that had nothing on CSR until the Companies bill 2009 Despite this acts and regulations, there are evidences of socially irresponsible behavior by org. Wal-Mart, Exxon mobile In the USA Satyam in India

In India
Currently CSR practices in India are dictated by guidelines notified by Ministry Of Corporate Affairs in Dec-09 These guidelines are voluntary and require business entitles to formulates CSR policy to guide its strategic planning. Those government regulations exist but there is absence of monitoring and enforcement of these regulation on the part of government.

CSR is an outcome of various institutional factors such as, Compliance with the institutional norms, Compliance with the mandatory rules, and Imitations of other successful companies These factors help org. in gaining legitimacy in the eyes of Stakeholders Mitigating actual harms done to the society Leveraging on CSR in case of future harms.