CORPORATE SOCIAL RESPONSIBILITY

1. Graduate Business School
Assignment Cover Sheet
Student name:
Sumeet Duhan
Student number:
2804324
Course:
MSC INTL Business
Subject:
Business Research Methods-1
Study Mode:
Full time
Lecturer Name:
Aine McManus
Assignment Title:
CSR in Indian Companies (private or public)
No. of pages:
10
Disk included?
Yes
Additional Information:
(ie. number of pieces submitted, size of assignment, A2, A3 etc)
Date due:
15th Nov 2011
Date submitted:
15th Nov 2011
Yes
Stage/year:
1
Part-time
No
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2. Table of content
1. Introduction………………………………………………………………………………….3
2. Aims and Objectives…………………………………………………………………………6
3. Literature review……………………………………………………………………………..6
4. Advantages of CSR in Indian Companies……………………………………………………7
5. Conclusion……………………………………………………………………………………8
6. References……………………………………………………………………………………9
7. Bibliography………………………………………………………………………………….10
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3. CSR IN INDIAN COMPANIES (Private or Public)
INTRODUCTION
Corporate social responsibility is very wide and it has different meaning to everyone and
different in each country. According to Lord Holme and Richard Watts, “CSR is the continuing
commitment by business to behave ethically and contribute to economic development while
improving the quality of life of the workforce and their families as well as of the local community
and society at large”.
’Bowen has defined ‘Corporate Social Responsibility’ as “Obligation to pursue those policies,
to make those decisions, or to follow those lines of action which are desirable in terms of the
objectives and values of our society.” (H.R.Bowen, 1953, cited in C. Gopala Krishna, 1992,
p.63) This definition given by Bowen emphasizes the societal aspect of business decisions and
activities and presents that corporate social responsibility is a compulsion or an obligation (Baker
2004).
Without society business cannot exist. They provide better and useful services and products to
the society in exchange of a money price. For their survival, both business and society depend
completely on each other. At present, due to globalization and consumers’ expectations,
companies are facing very high and tough competition in the market. In this type of situation, it
is essential for a business to survive in market that is to increase its connectivity to the society in
a positive manner. So CSR is an idea that refers to a business’ responsibilities towards different
groups of the society in which it exists and grows.
The main and important objective for every company is to profit-maximization. But it is
indispensable for every business that these profits have not been gained in an unethical manner
and contributes a part of these profits to the society. The scope of CSR is just beyond any
limitations.
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4. Fig 1.1 (Lawrence J. Gitman and Carl McDaniel, 2208, p.46)
This pyramid gives a better view of the concept CSR. This is given in the book “corporate social
responsibility pyramid” written by Lawrence J. Gitman and Carl McDaniel. It has four levels
and each level shows a set of responsibilities.
In the bottom (blue level), economic responsibilities are important for the existence of the
business. The main and important aim of every business is to gain profit because these profits
help them to keep running in the market. So firstly the survival has to be assured to go into the
next level.
The second level (green level) shows the legal responsibilities. These responsibilities are very
essential to stand by the law of the country and particular industry to which the corporate
belongs.
The next level is ethical responsibilities. After the assurance of survival and legality of the
company, it can concentrate on working ethically. Ethics generally represent a set of principles
that prescribe a distinct behavior code and tell what is right or wrong. In an ethical manner
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5. conducting the activities of business is always prescribed (Lawrence J. Gitman and Carl
McDaniel, 2008, p.46).
The last and the highest level of CSR pyramid is capture by philanthropic responsibilities. These
responsibilities can be fulfilled in different ways such as donating company equipments and
products, making charity at causes like drought relief, flood relief, education for poor people,
making cash contributions in social events and many more this type of causes. These activities
are not a part of daily activities of business. These activities are carried out for the welfare of
society differently (Lawrence J. Gitman and Carl McDaniel, 2008, p.46).
BIRLA and TATA are the famous and leading companies in India that are contributed towards
the corporate social responsibility till when this concept was not famous in India. Today India is
considered to be one among the top Asian countries as far as CSR are concerned. In 2009, India
ranked fourth among Asian countries surveyed by ASR (Asian Sustainability Ranking). On
individual level also, there are four Indians out of ’48 Heroes of Philanthropy’ according to 2009
and 2010 list of Forbes Asia (The Hindu dated March 5, 2010).
Mukesh Ambani the Chairman of Reliance Industries defines CSR as “Continuous Social
Responsibility” and also said it is a combined effort of corporate world, government and people
together. Also he said that businesses should not be calculated only on the basis of financial
returns but on social returns as well (The Economic times Dated 11 July 2011).
The giant of cola industry, coca cola India won the Golden Peacock Global Award for corporate
social responsibility. This award has been given by the Deputy Minister of Economy and
Innovation, Government of Portugal, Antonio Castro Guerra recently. This award has been gifted
to this company in community development-for replenishment of ground water and setting goals
to reach a ‘net zero’ balance with respect to groundwater usage in 2009. In partnership, coca cola
with Rotary International has launched ‘Elixir of Life’ which is a project to provide potable
water to 30,000 underprivileged children in and around Chennai (Erin Lyon 2009).
The Indian corporate sector spent around US$6.31 billion on social expenditure in the year of
2007-08, up from US$3.68 billion from the last year. The country’s largest steel manufacturing
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6. company SAIL spent US$ 21.05 million on CSR; TATA Steel Ltd spent US$31.58 million as
part of its annual revenue expenditure (Prasad 2009).
Aims and objectives
What is the basic idea of CSR?
What are the advantages of CSR to the Indian corporate sector?
What are the affects of mandatory CSR in public sector units?
What are the arguments for and against making CSR mandatory for private sector units?
Literature Review
The term ‘corporate social responsibility’ is very wide and complex and it has different meaning
to different academicians and researchers. But generally, it is commonly used to mention those
activities taken by the corporate with the aim of the welfare of society. This term become an
essential part of every corporate structure and nobody neglect this fact to survive in the market
then they never neglect their responsibilities towards the society.
CSR has so many dimensions. According to the C.krishna , this term has positive and negative
side. The aim of positive side is to solve society problems and making the society a better place
to live. And the negative side aims of neglect public criticism and no welfare. Social reform and
social movement, he mentioned further. In other way, CSR states that it is as a moral duty, civic
responsibility, natural obligation and as legal compulsion (C. Gopala Krishna, 1992, p.57).
According to Adolf Berle, he states that CSR AS “The corporation’s is not purely economic,
though to be so indeed its primary functions; not purely economic, though profit is surely its
purpose” (Adolf Berle, 1932 cited in C. Gopala Krishna, 1992, p.59). He clearly stressed on the
fact that though the main aim of the company is to making profits, yet this is not only the
purpose and there are responsibilities beyond economic responsibilities.
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7. On the other hand Bowen defines that CSR is indispensable for the sake of survival of business
in its existing form. “it’s becoming increasingly obvious that the freedom of choice and
delegation of power such as businessmen exercise would hardly be permitted to continue without
some assumption of social responsibility” (Bowen, 1953 cited in C. Gopala Krishna, 1992, p.59).
If a business neglects its duties towards the society in which it exists, the society will not allow
enjoying freedom in its activities.
Everybody has different meaning of corporate social responsibility but the most common
definition accepted by many researchers that is “CSR is a commitment to improve community
well being through discretionary business practices and contributions of corporate resources”.
This is the very simple but complete definition of the term corporate social responsibility (Philip
Kotler and Nancy Lee, 2005, p.3).
Advantages of CSR in Indian Companies
The term CSR becoming famous and earning importance all over the world. The corporate is
getting aware of the benefits of adopting corporate social responsibility. These can be long-term
and immediate in nature. The government has mentioned a share/percentage of net profit to be
mandatory allocated for CSR activities by the public sector units. On the other way, in private
sector there is no such mandatory requirement in India but the government is planning to make it
mandatory to some extent. There are some benefits of CSR for Indian companies: (Fernando,
2009, p.p. 8.11 and 8.12)
1. Enhanced Brand Image and Goodwill: The term CSR is very powerful in India and it
is helping the Indian companies to enhance their brand image and the goodwill of their
company. Customers do more trust only on those companies which are socially
responsible. Today due to competition in market place it is very tough to build goodwill
but CSR is the helping tool towards this.
2. Increased sales: Indian companies are facing high competition to their local competitors
and foreign as well. It has become very difficult for Indian companies to increase their
sales due to globalization and economic liberalizations. The companies which undertake
pollution free production and protect the environment, products not tested on animals,
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8. undertake legal activities etc. getting good response from customers and secure the larger
sales.
3. Easier access to capital: The very important benefit of CSR to Indian companies is
easier access to capital. The companies which are involved in CSR activities are more
trustworthy in the eyes of financing agencies and investors.
The above discussion revels that the companies that are engaged in CSR do not get only profit or
economic advantage but also secure lot of trust and loyalty by their customers. These companies
gain positive brand image and make strong goodwill for the company. Also the government does
not put strict laws to these companies in getting licenses etc. From Human Resource side also,
they can attract best human talent available in the industries compared to other companies not
adhering corporate social responsibility.
Conclusion
The term corporate social responsibility has earned prominence from all avenues. Organizations
or companies must realize that government cannot uplift the society alone. They have to
contribute something and help the government and take advantage from government in several
issues. It is the benefit of companies, government and society. Duet to this the companies can
increase their brand image in the society and think for the future planning. The competitor risks
also reduced for those companies which are doing these activities.
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9. References:
Baker, M., 2004. Definitions of corporate social responsibility - What is CSR? Available at:
http://www.mallenbaker.net/csr/definition.php [Accessed November 11, 2011].
C. Gopala Krishna, Corporate social responsibility in India: a study of management attitudes;
1992, Mittal Publications, New Delhi [Accessed November 13, 2011].
Lawrence J. Gitman and Carl McDaniel, The Future of Business: The Essentials; 2008,
South-Western Cengage Learning, USA [Accessed November 13, 2011].
Need to make corporate social responsibility more meaningful: Reliance Industries Chairman
Mukesh Ambani - Economic Times. Available at:
http://articles.economictimes.indiatimes.com/2011-07-11/news/29761203_1_csr-corporatesocial-responsibility-industries-chairman-mukesh-ambani [Accessed November 13, 2011].
Philip Kotler and Nancy Lee, Corporate Social Responsibility: Doing the Most Good for
Your Company and Your Cause”, 2005. Wiley India Pvt Ltd., New Delhi [Accessed
November 13, 2011].
Corporate Social Responsibility Practices in India - Corporate Social Responsibility Practices
in India - E-book - Times Foundation. Available at:
http://timesfoundation.indiatimes.com/articleshow/4662536.cms [Accessed November 12,
2011].
Corporate Social Responsibility in India – Putting Social-Economic Development on a Fast
Track: CSRIndia.Info. Available at: http://www.csrindia.info/story.php?aid=168 [Accessed
November 13, 2011].
Prasad, 2009. CSR Initiatives of Indian Companies - A Study. Available at:
http://www.indianmba.com/Faculty_Column/FC955/fc955.html [Accessed November 13, 2011].
Erin Lyon, 2009. Coca-Cola India Bags Golden Peacock for Social Service. Available at:
http://www.medianewsline.com/news/135/ARTICLE/4234/2009-03-20.html [Accessed
November 14, 2011].
Fernando A C, Business Ethics and Corporate Governance; 2009. Dorling Kindersley
(India) Pvt. Ltd [Accessed November 14, 2011].
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10. Bibliography:
Pradhan, S. & Ranjan, A., 2010. Corporate social responsibility in rural development sector:
evidences from India. Available at:
http://www.iiuedu.eu/press/journals/sds/SDS_2010/SSc_Article1.pdf [Accessed
November 11, 2011].
“CSR spending should be made mandatory for private firms”; dated April 5, 2011; accessed
on May 15, 2011; available: http://www.rediff.com/business/report/csr-spending-should-bemade-mandatory-for-private-firms/20110405.htm [Accessed November 13, 2011].
Corporate Social Responsibility in India: Past, Present and Future. Available at:
http://www.easternbookcorporation.com/moreinfo.php?txt_searchstring=16156 [Accessed
November 11, 2011].
Jain, I., 2011. Corporate Social Responsibility Practices in India - Corporate Social
Responsibility Practices in India - E-book - Times Foundation. Available at:
http://timesfoundation.indiatimes.com/articleshow/4662536.cms [Accessed November
14, 2011].
Lyon, E., 2010. CSR Asia - Corporate Social Responsibility in Asia. Available at:
http://www.csr-asia.com/index.php?cat=31 [Accessed November 14, 2011].
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