From CSR to MCSR: The Journey Towards Mandatory Corporate Social Responsibility in India
In: Golden Research Thoughts, ISSN No.2231-5063, Vol.-III, Issue-II, August-2014
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In: Golden Research Thoughts, ISSN No.2231-5063, Vol.-III, Issue-II, August-2014
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Working paper
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In: Social responsibility journal: the official journal of the Social Responsibility Research Network (SRRNet), Band 19, Heft 3, S. 429-445
ISSN: 1758-857X
Purpose
This paper aims to investigate the customers' response to mandatory activities as per the corporate social responsibility (CSR) laws of India in the Indian hotel industry. Further, it analyzes the influence of mandatory CSR activities of the companies on the purchase intention (PI) of customers with the mediating role of customer satisfaction (CS). It also examines the link between mandatory CSR activities and the customers' evaluation of corporate.
Design/methodology/approach
The customers of five-star hotels in Kerala, India, were surveyed, and the proposed model is analyzed with factor analysis and structural equation modelling with mediation analysis.
Findings
The study proves three propositions, namely, the mandatory CSR activities influence the PIs of customers, the CS partially mediates the relationship of CSR activities on the PI of the customers and the mandatory CSR activities demonstrate a positive impact on customers' evaluation of corporate in the Indian hotel industry.
Originality/value
The comprehensive CSR assessment based on hotel customers' response by considering CSR law in India is a novel outlook. The study will aid in determining the association between mandatory CSR and PI and evaluate the role of mandatory CSR on favorable corporate evaluation.
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Working paper
In: GFJ-D-23-00201
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In: International Journal of Social Science and Humanity: IJSSH, S. 33-35
ISSN: 2010-3646
In: Business and Society Review, Band 127, Heft 1, S. 49-68
ISSN: 1467-8594
AbstractThe transition in governmental approach towards corporate social responsibility (CSR) from voluntary to mandatory has received much attention in the recent literature, mainly because the delegation of its role in social development has rarely been provided. In this context, the questions we raise are: Does mandatory CSR leads to higher expenditure? How does it affect business leaders' intrinsic motivation to spend on CSR? The case of India's section‐135 of Companies Act, 2013 shows that mandatory CSR has made companies more responsible by raising the level of CSR expenditure and positively affecting business leaders' intrinsic motivation to incur CSR expenditure. However, this gain has come at a cost as CSR expenditure has become more sensitive to profit, which is undesirable from society's perspective. The study uses instrumental theory and motivation‐crowding theory to explain the CSR behavior of NIFTY 100 companies from financial year 2009–2010 to 2018–2019. Overall, results of the present study suggest that government should prefer the approach of mandatory CSR with some precautions to instrumentalize the rising success of corporate sector for addressing the environmental and social issues in country.
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In: Business strategy and development, Band 5, Heft 1, S. 30-43
ISSN: 2572-3170
AbstractMany governments seek the private sector to meet their development goals. One possible means to enlist this support is to impose mandatory or "hard" corporate social responsibility (CSR) requirements on large companies. To shed light on how mandatory CSR could be helpful in this regard, we study the case of India, where the government has required large companies to spend a fraction of their income toward development as CSR since 2014. We analyzed the expenses of leading Indian companies and found statistically significant similarities among these companies in their spending pattern across the different categories, which we interpret as isomorphism. By looking for the government's motivation and the companies' motivations—both perceive the priorities in unmet social needs—we present a conceptual model to explain this isomorphism in CSR expenditure across different categories. The model suggests that governments may find mandatory CSR helpful to direct corporations in achieving development goals.
In: Madhu Bala and Deepak Verma (2019). An Empirical Investigation of Managerial Perceptions in Indian Organisations Regarding CSR After Legislation of CSR in India. International Journal of Research in Social Sciences, 9(4), 1098-1136.
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International audience ; The article examines the effects of non-financial disclosure (NFD) on corporate social responsibility (CSR). We conceptualise trade-offs between two ideal types (government regulation and business self-regulation) in relation to CSR. Whereas self-regulation is associated with greater flexibility for businesses to develop best practices, it can also lead to complacency if firms feel no external pressure to engage with CSR. In contrast, government regulation is associated with greater stringency around minimum standards, but can also result in rigidity owing to a 'one size fits all' approach. Given these potential trade-offs, we ask how mandatory non-financial disclosure has been shaping CSR practices and examine its potential effectiveness as a regulatory instrument. Our analysis of 24 OECD countries using the Asset4 database shows that firms in countries that require non-financial disclosure adopt significantly more CSR activities. However, we also find that NFD regulation does not lead to lower levels of corporate irresponsibility. Furthermore, our analysis demonstrates that, over time, the variation in CSR activities declines as firms adopt increasingly similar practices. Our study thereby contributes to understanding the impact of government regulation on CSR at firm level. We also discuss the limits of mandatory NFD in addressing regulatory trade-offs between stringency and flexibility in the field of corporate social responsibility.
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International audience ; The article examines the effects of non-financial disclosure (NFD) on corporate social responsibility (CSR). We conceptualise trade-offs between two ideal types (government regulation and business self-regulation) in relation to CSR. Whereas self-regulation is associated with greater flexibility for businesses to develop best practices, it can also lead to complacency if firms feel no external pressure to engage with CSR. In contrast, government regulation is associated with greater stringency around minimum standards, but can also result in rigidity owing to a 'one size fits all' approach. Given these potential trade-offs, we ask how mandatory non-financial disclosure has been shaping CSR practices and examine its potential effectiveness as a regulatory instrument. Our analysis of 24 OECD countries using the Asset4 database shows that firms in countries that require non-financial disclosure adopt significantly more CSR activities. However, we also find that NFD regulation does not lead to lower levels of corporate irresponsibility. Furthermore, our analysis demonstrates that, over time, the variation in CSR activities declines as firms adopt increasingly similar practices. Our study thereby contributes to understanding the impact of government regulation on CSR at firm level. We also discuss the limits of mandatory NFD in addressing regulatory trade-offs between stringency and flexibility in the field of corporate social responsibility.
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In: Management and labour studies: a quarterly journal of responsible management, Band 48, Heft 1, S. 64-75
ISSN: 2321-0710
This study is an insight into Securities Exchange Board of India's (SEBI) mandatory corporate social responsibility (CSR) provisions for corporates and the status of their implementation in an emerging economy. We have analysed a sample of listed Indian companies with regard to expenditure on CSR activities, that is, whether they meet the legislative requirements for CSR spend. The study examines relevant data from 2015 to 2020 post the introduction of the mandatory 2% CSR bill. We have assessed the implementation status of mandatory CSR reforms introduced by The Companies Act, 2013 and followed up in the amendment bills. The results show that there is a substantial increase in the expenditure on CSR after acquiring the mandatory status. Although all sample companies have made disclosures on CSR norms, some companies have not fulfilled the mandatory CSR expenditure norms under Section 135. Corporate entities are cognisant of the legislation on CSR and the level of compliance is exemplary. The mandated CSR policy in India has shown remarkable results in terms of CSR spend but to set further norms in this area, it should be analysed whether this ideology of incurring expenses on socially responsible activities has any adverse corollaries. In this study, we have discussed the practical implications of the regulatory amendments in CSR provisions on the Indian corporate sector.
In: Social responsibility journal: the official journal of the Social Responsibility Research Network (SRRNet), Band 18, Heft 4, S. 704-722
ISSN: 1758-857X
Purpose
The purpose of this paper is to investigate the impact of mandatory corporate social responsibility (CSR) expenditure on the firm's financial performance in the aftermath of insertion of Section 135 in the Companies Act, 2013 for Indian listed companies.
Design/methodology/approach
The paper uses independent sample t-test, one-way ANOVA, fixed effect panel regression model and principal component analysis on a data set of 153 non-financial companies listed in BSE-500 companies for a period of 2015–2019.
Findings
The empirical results of the paper suggest that the mandatory CSR expenditure negatively impacts the company's profitability.
Practical implications
The study has important implications for regulators and listed companies. Firstly, the mandatory CSR expenditure acts as a burden onto the on-going activities of the firms. CSR activities, therefore, should be integrated with the existing skillsets and expertise of the firms. Secondly, the government can encourage CSR activities by making the expenditure tax deductible. Moreover, the Schedule VII list of activities has a scope to become more inclusive rather than the present exhaustive list.
Originality/value
The paper highlights the gap in the expectation and actualisation of the CSR mandate by studying the recent data of the sample companies of the BSE-500 index. The paper adds to the CSR literature in the emerging market context.