Corporates and Social Responsibility

Corporates & Social Responsibility
Corporates
&
Social Responsibility
K.N.Ajith
Corporates and Social Responsibility

ISBN 978-81-8465-225-3
Copyright K.N.Ajith
Authors email:knacsr@gmail.com
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iv
FOREWORD
Corporate dominance of global trade is neither
new nor recent. Students of Indias history know
that the East India Company was indeed a global
trading corporation, chartered in December 1600
by Queen Elizabeth I to expand colonial markets.
The Company quickly established military and
administrative control over territories in India to
dominate trade, especially in opium, tea, cotton,
silk, and spices. In fact, English imperialism in
India began as a form of corporate colonialism
that lasted for 100 years following the East India
Companys victory in the Battle of Plassey in 1757.
The Government of India Act of 1858 established
the British Raj as the English monarchys surrogate
to control colonial trade across the Indian
subcontinent.
The Dutch East India Company was another megacorporation that traded in spices with Asia and
colonized Indonesia and parts of Africa. In fact,
it established the Cape Colony in South Africa as
early as 1652. To be sure, these mega-corporations
were the architects of colonialism and all the
v
suffering that accompanied it in occupied

countries. Parallels exist with US corporations in
Central America in the 19th century, in examples
such as the United Fruit Company in Guatemala,
where repressive military dictatorships emerged
and partnered with the US military to serve
corporate interests. The South Manchurian
Railway Company did the same for Japanese
imperialism in China. As the great Chilean Poet
Pablo Neruda wrote:
United Fruit Co.
When the trumpet sounded
everything was prepared on earth,
and Jehovah gave the world
to Coca-Cola Inc., Anaconda,
Ford Motors, and other corporations.
The United Fruit Company
reserved for itself the most juicy
piece, the central coast of my world,
the delicate waist of America.
It rebaptized these countries
Banana Republics
General Smedley Butler (1881-1940) of the US

Marines, a two-time winner of the Congressional
Medal of Honor, and author of the famous book
vi
War is Racket (1935), in a speech in 1933,

described himself as a...
high-class muscle man for big business, for Wall
Street and the bankers. I helped make Mexico
safe for American oil interests in 1914 and Haiti
and Cuba decent places for the National City
Bank boys. I helped purify Nicaragua for the
International banking house of Brown Brothers
in 1909-1012. In China I helped Standard Oil
operate unmolested.
Sadly, very little has changed to this day. In recent

years John Perkins, a global corporate insider and
an economist by training, wrote two confessional
autobiographies to assuage his guilt. In The
Confessions of an Economic Hit Man (2005) and
The Secret History of the American Empire: The
Truth about Economic Hit Men, Jackals, and
How to Change the World (2008) Perkins shows
how billions of dollars of wealth is transferred from
poor countries using deceptive tools of economic
forecasting, predatory lending and unending debt
obligations, bloated corporate contracts, bribery,
pimping, assassinations, and when those fail, even
military interventions.
vii
Corporations were also charted by states, for a

limited time to serve the common good for a
specific purpose, such as building a rail road or a
bridge, and once this was done, those
corporations were dissolved. In the US the Santa
Clara County v. Southern Pacific Railroad
decision bestowed on corporations rights of
persons (life, liberty, property, and speedy
trial by jury, among others) and freedoms (speech,
press, assembly, religion and others) guaranteed
in the first ten amendments (known as the Bill
of Rights) to the US Constitution. Those
permitted corporations to enjoy all the rights
of persons without either the responsibilities or
the consequences expected of actual
persons. When you apply standards of human
behavior to corporations, as the award-winning
documentary, The Corporation, does through
case analysis of criminally pathological corporate
behavior and applying the criteria, as psychologists
and psychiatrists do, from Diagnostic and
Statistical Manual of Mental Disorders (DSM),
conclude that corporations would be
unquestionably diagnosed as psychopaths, if they
were persons.
viii
Corporations are amoral legal entities. Their

primary function is not to produce goods or
services for consumers. Most importantly, they
are legally obligated to maximize returns for their
shareholders. In fact, the notion of social
responsibility is not a part of the DNA of corporate
structures. Occasionally, programs of social
responsibility are put forth as a public relation ploy
to deal with growing public resentment. From
time to time, people had to intervene to rein in
the corporations in from their exploitative practices
through legislation to control their powers, such
as the break-up of Standard Oil following
passage of the Sherman Anti-trust Act in the US.
There is a movement to abolish corporate
personhood and return to a time when they were
mere legal instruments to serve the public good.
Yet, if we look back at history, the notion of
corporate social responsibility appears to be an
oxymoron.
In this book, Ajith , after conducting a survey of
corporate executives in Chennai, gives a glimpse
into how these functionaries view CSR. His
findings make clear that there is very little
understanding of CSR and imply that CSR is still
ix
viewed in traditional terms of providing education

and health care. While those services may earn
the goodwill of people in their communities, they
are also largely self-serving. Although such CSR
programs may provide companies with a healthy
and educated workforce, they also serve as a
public relations strategy to bolster the companies
image.
Capitalists like Warren Buffett realize the imminent
political, economic, and ecological dangers of
accumulating unlimited wealth in few hands. They
have much to lose when there is an apocalyptic
collapse. The recent global economic meltdown,
barely rescued by the U.S. tax-payer bailout of
giant corporations like AIG , Solomon Brothers,
Citibank, Bank of America and huge mortgage
companies like Freddie Mac and Fannie Mae, was
a clear indication of the extent of economic risk.
Capitalism is unsustainable economically if it
impoverishes the working class that forms the bulk
of its consumers. When it impoverishes large
sections of the population, as Ajith observes about
India, capitalism inevitably leads to political
turmoil.
x
The rise of politically destabilizing Naxals in rural

areas of 22 states in India, and the recent electoral
victory of the Maoists in the adjoining country of
Nepal after a protracted armed struggle, have not
escaped the attention of some shrewd capitalists
and perceptive politicians . The question is
whether 0.2 to 2 per cent of money that is
recommended by Karmayog for CSR is adequate.
I am afraid that the answer is definitely no. Nation
states do redistribute wealth, often to those who
control it. In India, corruption has been a longlasting practice of controlling the nation state.
Obviously, the poor who form the majority do
not have the means either to control the nation
state or to use it as a means of redistributing wealth
in its favor.
Finally, can mother EarthBhoodevi Laxmibear
an unrelenting assault on her capacity for capitalist
accumulation that knows no limits? The severe
sickness and feverglobal warming, that the Earth
Goddess is suffering is alarming, and she begs us
to heal it. The CSR initiative in India is certainly a
response that parallels Kyoto and other feeble
protocols by the nations of the world. We, indeed,
xi
are consuming ourselves out of existence, a

paradox that calls to mind a Zen Buddhist
meditation imagery of a snake coiled in a circle
beginning to eat its tail in four quadrants of a
window; in the second, it had eaten a fourth of its
length, in the third, three fourths, and the last
quadrant, was blankthere was no snake. That
picture did not make any sense to me until I read
about how we are destroying the planet in pursuit
of insatiable profits and consumption. Certainly,
there is much wisdom in the nursery story I
remember about the greedy farmer who killed the
goose that laid golden eggs.
Given the environmental degradation and
enormous poverty that still victimizes the majority
of the population in India, as author Ajith urges,
CSR has to emerge beyond its current charitable
framework and look toward how corporations can
change their structure to reduce environmental
degradation, growing inequalities, poverty, and
hunger. Paradoxical as this task is given the logic
of capitalist accumulation, there is no escaping it.
We will need to set up corporations that are legally
bound to improve the quality of air, water, food,
xii
shelter and quality of life for all or else we will be

speeding toward an apocalyptic dooma
shamefully short evolutionary life for a species
that makes scriptural claims to be the crown of
creation or as in the ancient Hindu Advaita
tradition Aham Brahmasmi.
Dr.Henry J. DSouza,
Professor
Grace Abbott School of Social Work
University of Nebraska at Omaha
Omaha, Nebraska, 68182 USA
xiii
AUTHORS NOTE
Ethics in corporate governance; corruption, scams
and black money which plunder public resources;
and deficit in governance by the central and state
governments were in the centre stage of public
scrutiny in 2010. Vigilant press and electronic
media have incessantly been bringing into public
domain vital issues, and campaigning vigorously
for justice and equity despite being criticized often
for trial by media. Many business leaders and
persons of eminence have expressed their
apprehension about the possible negative impact
on Indias growth story leaving behind millions of
Indians at the bottom of the economic pyramid.
For instance, child mortality in India due to
malnutrition is greater than in sub-saharan Africa.
Two key entitlements of the people are education
and health care, both of which are not within the
reach of the large proportion of the population.
The State appears to prefer the privatization and
PPP (public private partnership) modes.
Prof.Amartya Sen cautions that premature
privatization of the education and health sectors
xiv
has the effect of generating both inefficiency and

inequality. Corporate social responsibility
initiatives , therefore, are crucial for sustainable
social development. As the great scientist Albert
Einstein observed, it is everymans obligation to
put back into the world at least the equivalent of
what he takes out of it.
Corporate social responsibility has become an
integral element of the business lingua. In a short
span of one decade, CSR has become high on
the agenda of any assessment of corporate
performance. The evolution of sustainable
corporate social responsibility from unstructured
corporate philanthropy has been demonstrated by
the contribution of many Indian companies
embracing the well-being of a wide spectrum of
stakeholders. At the same time, many companies
are indifferent to their mandatory and moral
responsibilities towards society and the
environment.
As part of my professional education, I was placed
in a child care institution for practical training which
is normally unconventional for a management
oriented education. This phase of my training
xv
helped me acquire values, skills and attitude

towards working with the disadvantaged.
Subsequently, I joined a corporate group with a
strong social orientation as a management trainee.
As I grew up in the profession, the various
experiences motivated me to undertake a research
study on CSR. On the advice of my HR
colleagues, I am bringing this out as a book, which,
I am aware, is only a small addition to the field of
CSR research.
During the various stages of my research study
and bringing out this book, there were well wishers
who helped and encouraged me. I am grateful to
Dr.K.Balasankaran Nair, Professor of Sociology,
Madurai-Kamaraj University, for his guidance
during this research. The executives, who were
selected for the study and the companies were
very co-operative. I express my deep sense of
gratitude to them.
It is a privilege that Prof. Henry DSouza has
written the Foreword. A well-known social analyst
and academic, Prof.DSouza spared time to read
the text of my beginning attempt and to offer useful
comments. He has always been my well-wisher
xvi
and I am deeply touched by his support.

My father Dr.T.K.Nair has been my continuous
source of strength and motivation that enabled me
to complete the research project and this book.
My sister Minii worked hard in collecting
substantial information for writing this book. She
also did the strenuous type-setting of the
manuscript. I am indebted to her. I owe a great
deal to my wife Deepti and our son Aditya who
have been bearing the brunt of my long hours of
work patiently. My mother Thankam has always
been a gentle motivator and I am beholden to her.
Chennai
February, 2011
K.N.Ajith
xvii
xviii
CONTENTS
Foreword
Authors Note
xiv
Corporate Social Responsibility
The Setting and the Methodology
24
Corporate Executives and
42
Their Perceptions
CSR and A Just Social Order
83
Bibliography
117
xix
1
CORPORATE SOCIAL RESPONSIBILITY
SOCIETY AND BUSINESS

A growing global population needs to be fed,
clothed, housed, educated, protected against
diseases and otherwise supported. It is difficult
for the affluent to imagine the widespread poverty
and squalor found in numerous countries. Life
span is short, diseases rampant and malnutrition a
constant threat for millions of people in many
countries. The majority of the people in the world
live much closer to the margin of existence than
those in the advanced nations. These people look
to business for help in boosting their living
standards. Involvement by business would help
solve difficult social problems, thus creating a
better quality of life. Business provides equal
opportunity through jobs and as a result a multiplier
effect may occur to improve other areas of life
also. Business also benefits from a better social
environment. The firm that is most responsive to
2 / Corporates & Social Responsibility
improvement of a communitys quality of life will

as a result have a better community in which to
conduct its business. This multiplier effect is
illustrated below (Davis and Frederick, 1984).
Social Needs
Business Response
Social Benefits
Secondary Benefits
Better Quality of Life
Business and society, taken together, consist of

an interactive system. Each needs the other. Each
can influence the other. They are intertwined so
completely that an action taken by one will
inevitably affect the other. The boundary line
between the two is blurred and indistinct. Business
is part of society, and society penetrates far and
Corporates & Social Responsibility / 3
often into business. Business is involved with

society in two basic ways. Its primary relationship
is economic and arises out of producing goods
and services. A secondary relationship with
society occurs when these economic activities
create social impacts such as pollution or industrial
accidents. These primary and secondary
relationships make up an interactive model
of business and society (Davis and Frederick,
1984).
ORIGIN OF CORPORATE SOCIAL RESPONSIBILITY
(CSR)
Charity has been an integral part of the Indian
social tradition motivated by both religious and
altruistic considerations. Hindus worship Goddess
Lakshmi, the Goddess of Fortune, who is also
believed to be the Mother of the Universe. The
wealthy, who are blessed with wealth by the
Goddess Lakshmi, are expected to share their
wealth with the needy. This is the path of dharma.
The trading communities in India have been
traditionally charitably disposed. Rich business
families built temples, dharmasalas with food and
shelter for pilgrims in many religious sites, and
orphanages for the indigent. The Birlas, for

example, are known for their temples in many cities.
The richest deity Lord Venkateswara in Tirupathi
receives offerings every day in the form of gold,
jewellery, diamonds, platinum and huge sums of
cash from business groups and individuals. The
offerings are utilized for a variety of educational,
social and other humanitarian causes. Charitable
contributions with religious motive by business
families, however, cannot be considered corporate
social responsibility.
Sundar (2000), philanthropy researcher, traces the
historical evolution of corporate citizenship from
merchant charity. Merchant charity has been in
existence in India even before the advent of
industrial revolution and it has been largely a story
of family business groups. CSR, as is understood
now, was pioneered by the Tatas. Jamsetji
Nusserwanji Tata not only founded the Tata Steel,
but also created the city of Jamshedpur that
created a niche for itself as a model township.
Established in 1907, Tata Steel introduced the eight
- hour work day in 1912, and a provident fund in
1920 for employees social security. Prestigious
academic institutions like the Indian Institute of

Social Sciences and the Tata Institute of Social
Sciences are the creations of the Tatas.
During the Independence movement, Mahatma
Gandhis philosophy on trusteeship became
popular:
Supposing I have come by a fair amount of wealth
- either by way of legacy, or by means of trade
and industry - I must know that all the wealth
does not belong to me; what belongs to me is
the right to an honourable livelihood, no better
than that enjoyed by millions of others. The rest
of my wealth belongs to the community and must
be used for the welfare of the community.
Gandhijis influence prompted various Indian

companies to play active roles in nation building
and promoting socio-economic development
during the twentieth century through donations,
community investments in trusts, and provision
of essential services such as schools, infirmaries,
etc.
Robert Owen (1771-1858), most probably, is the
pioneer of CSR as it is understood now. Born in
Wales, Owen demonstrated at New Lanark Cotton
Spinning Mills (Scotland) management policies
that are recognized as precursors of the modern

theories of human resources management and
ethical business practices. Under the leadership
of Robert Owen, one of the founders of socialism
and co-operative movement, the cotton mills and
the village of New Lanark became a model
community. Creation of a better society for all
was the driving ambition of Robert Owen. In the
United States, the idea of corporate social
responsibility appeared around the turn of the
twentieth century. Corporations came under attack
for being too big, too powerful, and guilty of
antisocial and anticompetitive practices. But some
of the wealthier business leaders like steelmaker
Andrew Carnegie became great philanthropists
who gave much of their wealth to educational and
charitable institutions. The king of steel Andrew
Carnegie (1835-1919), one of the richest
entrepreneurs of his time, sold his assets and gave
away his enormous fortune to educational,
scientific and cultural institutions. The famous
Carnegie Foundation was founded in 1905.
Automaker Henry Ford (1863-1947) developed
paternalistic programmes to support the
recreational and health needs of the employees of
Ford Company. Henry Ford and his son

established in 1936 the Ford Foundation, which
is a philanthropic institution for advancing human
welfare in the world.
As a result of the early ideas and action, two broad
principles emerged. These principles have shaped
business thinking about social responsibility during
the twentieth century and are the foundation stones
for the modern idea of corporate social
responsibility (Post, et al, 1994). The first is the
charity principle, the idea that the wealthier
members of society should be charitable towards
those less fortunate. It is a very ancient notion.
Royalty through the ages has been expected to
provide for the poor. The same is true of those
with vast holdings of property from feudal times
to the present. When wealthy industrialists reached
out to help others, they were accepting some
measure of responsibility for improving the
conditions of life in their communities. Before long,
the community needs outspaced the riches of even
the wealthiest persons and families. When that
happened, beginning in the 1920s, much of the
charitable load was taken on by business firms
themselves rather than by the owners alone. The

symbol of this shift from individual philanthropy
to corporate philanthropy was the community
chest movement in the 1920s in the United States.
The co-operative organization of citizens and
social welfare agencies, also known as the United
Fund, took the name community chests and
councils in 1927 and the present name is United
Way.
The stewardship principle is the second
principle. Many corporate executives see
themselves as stewards, who act in the interests
of the general public. Although their companies
are privately owned and they try to make profits
for the stockholders, business leaders who follow
the stewardship principle believe that they have
an obligation to see that those who are in need
benefit from the companys actions. According
to this view, corporate executives have been placed
in a position of public trust. They control vast
resources whose use can affect people in
fundamental ways. Because they exercise this kind
of crucial influence, they have a responsibility to
use those resources in ways that are good not just
for the stockholders alone, but also for the society

in general. In this way, they have become stewards
for society. As such, they are expected to act with
a special degree of social responsibility in making
business decisions.
DEFINITIONS
Social orientation of corporate organizations is an
evolving ideology. It is also known as corporate
citizenship. Three concepts arose about the social
performance of companies since the beginning of
the twentieth century. During the 1950s and 1960s,
the concept of corporate social responsibility
became popular. The concept of corporate social
responsiveness emerged during the early 1970s
followed by the concept of social rectitude during
the mid-1970s (Frederick, 1987). All these
concepts now exist side by side. Corporate social
responsibility (CSR) is the widely popular concept
globally.
Corporate social responsibility defies an objective
definition. Definition of CSR is based on the
general social expectations and the ideological
stance of those who define. Carroll (1991) explains
CSR through the pyramid of social responsibility

with four stages: economic, legal, ethical and
philanthropic. Economic responsibility expects
business to perform in such a manner that it
maximizes earning per share and remains as
profitable as possible. The legal responsibility
demands that the conduct of business should be
in conformity with the laws, and the national, state
and local regulations as a law abiding corporate
citizen. The ethical responsibility is adherence to
normative rules, justice and fairness, which may
not have been codified as law, but are expected
by society. The philanthropic responsibility
includes being a good corporate citizen such that
the business gives back to society and the various
stakeholders by undertaking activities and
programmes that lead to human welfare. But
philanthropy is the discretionary function of
business.
Holme and Watts define corporate social
responsibility as 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.

CSR to Ward and Fox (2002) is environmental,
social and human rights based impacts and
initiatives of companies.
Researchers have found that companies respond
to external social change in different ways. Post
(1980) categorizes these ways into three
approaches: (a) an adaptive strategy, (b) a
proactive strategy, and (c) an interactive strategy.
The first strategy is usually adopted after some
significant social change is already under way. The
firm then tries to adapt to a change in its
environment that it may not have anticipated.
Often, company practices will be modified only
after strong pressures are applied. Proactive
companies are a step ahead of those that merely
adapt in a reactive way, because they understand
the need to get on top of the changes that are
occurring in their environment. Such companies
try to manipulate the environment in ways that will
be to their own advantage; and these steps may
or may not be in the broader public interest. When
a company is able to anticipate environmental
change and blend its own goals with those of the
public, it has adopted an interactive strategy. An

interactive strategy promotes harmonious relations
between a firm and the public by reducing the gap
between public expectations and business
performance. Post concludes that in the long run
an interactive strategy will bring greater, more
lasting benefits for both business and society.
Any organization and executive must seek to juggle
multiple responsibilities as shown in the figure
below (Post, et al, 1994). Business has challenges
in managing its economic responsibilities to its
stockholders, its legal requirements to societal
laws and regulations, and its social responsibilities
to various stakeholders. Although these obligations
may conflict at times, a successful firm is one for
which management finds ways to meet each of its
critical responsibilities and develops strategies to
enable these obligations to help each other.
Legal
Responsibility
Economic
Responsibility
Social
Responsibility
CSR: PROS AND CONS

Though social responsibility of business can
benefit both the business and stakeholders of the
firm, there are arguments against corporate social
responsibility. The views against corporate social
responsibility are that it lowers profit, imposes
unequal costs among competitors, introduces
hidden costs passed on to stakeholders, and
requires social skills which business may lack.
Perhaps the most powerful argument against social
involvement is the classical economic doctrine of
profit maximization presented by Adam Smith in
1776, which has influenced economic thought
since that time (Davis and Frederick, 1984). Adam
Smith in his book An Enquiry into the Nature
and Causes of the Wealth of Nations launched
the economic doctrine of free enterprise. He is
considered the father of economic liberalism. The
publication of his book in 1776 coincided with
the Declaration of Independence of America. The
book provided the theoretical framework of free
market. Accordingly, business is most socially
responsible when it attends strictly to its economic
interests and leaves other activities to other
institutions*. Nobel laureate Milton Friedman

(1971), an outstanding economist and a major
proponent of this point of view, asserts as follows.
A corporate executive is an employee of the
owners of the business. He has direct
responsibility to his employers. That
responsibility is to conduct the business in
accordance with their desires, which generally
will be to make as much money as possible while
conforming to the basic rules of the society.
Insofar as his actions in accord with his social
responsibility reduce returns to stockholders, he
is spending their money. Insofar as his actions
raise the price to customers, he is spending the
customers money. Insofar as his actions lower
the wages of some employees, he is spending
their money.
The unbridled market forces of the capitalist

economy do not deliver the goods in a fair manner
according to John Maynard Keynes (1883 1946),considered the father of modern economics.
He was critical of capitalism: It is not intelligent.
It is not beautiful. It is not virtuous.
________________________
*A less known fact is that Adam Smith devoted a considerable
part of his income to charitable activities.
Keynesian economics influenced the fiscal policies

of many capitalist governments for the cause of
social liberalism. According to Friedmans line of
reasoning, if executives use resources for social
purpose, they are in effect spending other peoples
money without those people having a voice in the
decisions made. The strong counter argument is
that business should be socially responsible
because responsible actions are right for their own
sake. As stated by Goodpaster and Mathews
(1982), A corporation can and should have a
conscience. The language of ethics does have a
place in the vocabulary of an organization. It
follows that if business insists on avoiding social
responsibility, then other groups gradually may
take its social power away. This idea may be
expressed as the Iron Law of Responsibility.
In algebraic terms the law states that for a long
period of time, if Power/Responsibility is greater
than one, social forces eventually will arise to
reduce power until there is an approximation
of Power/Responsibility = 1 (Davis and
Blomstrom,1966).
Economic profit is basic to business success.
Business uses economic resources, and if these

resources are wasted, both society and business
are adversely affected. In business, economic
outputs have to exceed inputs. If they do not,
business cannot make profit and societys
resources will be wasted. Business has to be both
economically and socially productive. The
business that achieves both the objectives is the
one that will be immensely stronger and better
accepted by society. The difficult task of business
is to balance economic and social outputs in
accordance with the priorities of each society in
which it operates. The public expects business to
be part of the community and to act responsibly
therein. But this does not change the basic
economic mission of business, because society
still expects business to provide economic goods
and services efficiently. What is happening is that
new social constraints are being placed on business
to assure that it responds to the needs and social
goals of a changing society. Business is expected
to respond to both market forces and social (non
- market) forces because both of these affect
business costs, revenues, profits, and long-run
success (Weidenbaum, 1981). To summarize, there
is an increasing recognition that the bottom - line

is no longer Profits only. People, Planet and
Profit form the triple bottom-line which stresses
the following:
The stakeholders in a business are not just the
companys shareholders
Sustainable development and economic
sustainability
Analysis of corporate profile in conjunction
with social prosperity.
However, a company that undertakes activities
aimed at communities whether they are
philanthropic or social investment initiatives, but
does not comply with business basics cannot be
termed socially responsible (Srivastava and
Venkateswaran, 2000).
REVIEW OF STUDIES
For a long time, the role of business in society
has been debated in economic literature. But the
origin of the modern debate on social
responsibility was a book written by Howard
Bowen and published in 1953. The book, entitled
Social Responsibility of the Businessman, was

devoted fully to the theme of social responsibility
and how it might apply to business. Bowen
discussed the general economic and social benefits
that might result from the recognition of broader
social goals in business decisions. This book
provided an excellent coverage of a subject that
was very much undeveloped at that time. As the
concept of corporate social responsibility is still
at the initial stage, Indian studies on corporate
social responsibility are limited in number and
significantly, all the studies are conducted after
2000.
The first major survey on CSR in India was carried
out in 2001 by TERI Europe, the London affiliate
of the Tata Energy Research Institute in New Delhi,
covering 1212 individuals in five Indian cities
Chennai, Kolkata, Mumbai, New Delhi and
Tiruppur (in Tamilnadu). The study is on the
perceptions and expectations of workers,
corporate executives and the general public
towards business in India. The survey was the
first of its kind to include workers in a survey on
corporate responsibility, thereby providing a
broader cross-section of opinion. Five major

findings emerged from this survey:
The information technology (IT) sector is
regarded as the most responsible, and the
alcohol and the tobacco industries as the least.
Public expectations of corporations on social
and environmental matters are high and rising.
More trust is placed in the media and nongovernmental organizations (NGOs) than in
business or trade unions, and global companies
operating in India are rated low in terms of their
trustworthiness.
Gender discrimination is a prominent issue in
the workplace.
Workers and management have sharply
diverging perceptions of labour conditions
including child labour issues (Kumar, et al,
2001).
Another survey was conducted in 2001 by the
Centre for Social Markets (CSM), a UK and Indiabased non-profit organization dedicated to
promoting the triple bottom-line. The survey
report presents a broad brush picture of modern
Indian business perceptions of, and attitude

towards corporate social and environmental
responsibility. Data was collected online from a
cross section of Indian industry. Companies were
selected from the database of CSM and partner
organizations, and an Indian business directory
website (Indiamart.com). But the report does not
indicate the sample size. The survey report states
that when asked to rank the main factors driving
the changing attitude towards CSR, the executives
named increasing awareness and reputation. Also,
over 80 per cent of the respondents feel that CSR
is an important characteristic of business success.
All respondents say that there is a definite link
between corporate citizenship and corporate
might. The government has been mentioned as a
key barrier with unclear policies, bureaucracy, lack
of proper monitoring, complicated tax system and
poor infrastructure.
The National Stock Exchange, in 2003, conducted
a survey of 50 companies, out of which only 19
companies responded. Including the information
from published sources of 11 companies, the
survey report presents the findings of a total of
30 companies. Areas in which large proportions

of the sample companies are active are education
and training (80 per cent), healthcare (66 per cent),
environment (60 per cent), welfare of the
underprivileged sections of the society (57 per
cent) and rural development (23 per cent). There
are two surprising results, which emerge out of
the above analysis, according to the authors of
the report.
None of the companies have said that they are
doing anything actively in the area of religion
and spiritual development, while it is well known
that many companies are doing a lot in this area.
One probable reason for this could be that these
activities are being undertaken by trusts formed
specifically for the purpose, though under the
umbrella of the group.
Only less than a half (46 per cent) of the
companies in the sample have mentioned natural
and other calamities as part of the area in which
they are active. One would have probably
expected all companies to be doing their bit in
this area.
The National Stock Exchange survey report cites
another survey of CSR practices in India

conducted by CII, UNDP, British Council and
Price Water Coopers in September-October 2002.
Though the ambitious survey included 1000 small,
medium and large companies, only 102 responded.
The main findings are as follows. Passing
philanthropy is no longer sufficient and many
recognize that CSR would enhance long-term
stakeholder value. Most companies do not have a
systematic approach to CSR as well as
implementation of CSR. Most companies lack
comprehension of CSR and capacity to implement
corporate social responsibility.
The popular website Indian NGOs.com conducted
a survey of 196 companies in 2003, and 58 per
cent of the companies surveyed are involved in
CSR initiatives. An increasing number of
executives, particularly in the IT sector, have
expressed the desire to give back something to
the society, according to the survey. The survey
has indicated that Indian companies are aware
and sensitive of corporate social responsibility,
but quite a few executives say that they do not
know what it means. Also, some executives
express their reservations about the need for CSR.

The issue that draws most support from Indian
companies is health with 52 per cent of the
companies surveyed saying that they support
health related issues. Education follows next with
50 per cent, while 30 per cent of the companies
support causes relating to the environment. The
survey reveals that many companies have internal
CSR policies for issues like disaster management,
environment, disability and sexual harassment. The
survey concludes that the major obstacles to the
implementation of CSR in India are lack of
awareness and conviction among the corporate
managers.
Studies on corporate social responsibility are at a
nascent stage in India. This is a reflection of the
state of CSR among the companies in India as
cited in the TERI survey report. The report states
that a 20-country public opinion survey carried
out by the Toronto-based Environics International
in 2001 has concluded that India ranks last in terms
of the level of social responsibility demanded from
companies.
2
THE SETTING AND THE METHODOLOGY
CHENNAI AND CSR INITIATIVES
Chennai, the first city of South India and capital
of the state of Tamilnadu, owes its genesis to
Andrew Cogan and Francis Day of John Company
or the East India Company. They received a grant
of 3 square miles of land, about 2 miles north of
Santhome, from Venkatadri Nayak in August 1639
and established on it a factory, which was a
trading post that grew into the seat of British power
on the Coromandel Coast. The settlement founded
over three and a half centuries ago was known by
different names. In 1653, the settlement was named
Madras, which was renamed Chennai in 1996.
According to the 2001 census, the population of
Chennai was 4.34 million and the area was 174
square kilometres. In December 2009, the
government of Tamilnadu extended the boundaries
of the city by annexing 42 local bodies (9
municipalities, 8 town panchayats and 25 village
panchayats) with an estimated area of 430 square
kilometres.
Chennai, the fourth largest city in India, has been

growing as one of the most important industrial
centres. It is called the Indian Detroit. Chennai is
emerging as Asias automobile capital as it is the
home for seven automajors out of the top twenty
global automobile manufacturers. It also aims at
becoming a global health hub.
Chettiars and Brahmins are two communities that
have contributed significantly for the economic
development of Tamilnadu. Chettiar is a title,
commonly used by people of south Indian origin.
The linguistic origin of the word is derived from
Dravidian usage. One theory is that the root word
is etti that means look up, jump up, or forward
jerk and around simultaneously calling out to sell.
Chettiars are known for business acumen and
benevolence to people in need. The community is
also known cuisine. Many castes of different ethnic
origins use the title chettiar today. The foremost
in Tamilnadu are the Nattukottai chettiars or
Nagarathars, who are ethnically Tamil and
originated from the Nattukottai region. The
Nagarathar community has nine clan temples. The
Nagarathars first settled around the Ilayathankudi
clan temple after migrating from Cholanadu to

Pandyanadu in the thirteenth century. AMM
Murugappa Chettiar, the eldest son of Diwan
Bahadur AM Murugappa Chettiar, is considered
to be a leader among the industrialists who enabled
the industrial advancement in South India after
Independence.
Prominent among the business groups in
Tamilnadu are the Murugappa group and the TVS
group. The Murugappa group has its origin in 1900,
when Dewan Bahadur AM Murugappa Chettiar
established a money-lending and banking business
in Burma (now Myanmar) which then spread to
Malaysia, Sri Lanka, Indonesia and Vietnam. In
these 100-plus years, it has withstood enormous
vicissitudes, including strategically moving its
assets back to India and restarting from the scratch
in the 1930s, before the Japanese invasion of
Burma in World War II. The Murugappa group,
headquartered in Chennai, is a major business
conglomerate with interests in engineering,
abrasives, sanitary ware, fertilizers, finance,
insurance, cycles, sugar, farm inputs, plantations,
bio-products, and nutraceuticals. It has
manufacturing units spread across many states in

India. Started more than one hundred years ago
as a small family-run business in indigenous
financing, the Murugappa group is the first
business group in Asia to have been awarded the
IMD Distinguished Family Business Award by
the Management Development Institute (IMD),
Switzerland.
East India Distilleries Parry (India) Limited, known
as Parrys, is the oldest British mercantile name
surviving in Chennai and the second oldest in
India. EID Parry traces its history to Thomas Parry,
who established it in 1788. The junction where
the business is located came to be known as
Parrys Corner, an important landmark of the
geography of Chennai for more than three
centuries. Dare House, the headquarters of the
company at Parrys Corner, was built in the late
1930s and named after a dynamic partner J.W.
Dare. The company has survived many challenges
and it has written a glorious chapter in Indian
commercial history. In 1981, the Murugappa group
acquired EID Parry. But the company retains its
separate identity.
TVS group is another prominent business

enterprise of Tamilnadu. T.V.Sundaram Iyengar,
the founder of TV Sundaram Iyengar and
Sons group of companies, was born in
Thirukkurungudi, Tirunelveli district . He started
his career as a lawyer, then moved to work for the
Indian railways and later in a bank. He later quit
his job and laid the foundation for the motor
transport industry in south India when he first
started a bus service in the city of Madurai in the
year 1912. During the second World War, when
Madras Presidency faced petrol scarcity,
Sundaram Iyengar designed and produced the
TVS gas plant. What started as a single mans
passion soon became the business of a family.
TVS group is currently the largest automobile
distribution company in India. The group operates
in diverse fields like automotive component
manufacturing, automotive dealership, electronics
and finance. Sundaram Iyengar was also a staunch
supporter of social reform movement. He got his
daughter T.S. Soundaram, then a teenage widow,
remarried under the auspices of Mahatma Gandhi.
She became active in the Indian Independence
movement. She, along with her husband, was the
force behind the Gandhigram Rural Institute,

which is now a rural university. She was honoured
with a postal stamp by the government of India.
Many Tamilnadu-based companies are engaged
in CSR activities. Health, education, vocational
training and rural community development are the
major areas of CSR. The community development
projects generally promote self-help groups of
women as key change agents. Srinivasan Services
Trust and AMM Foundation are two prominent
CSR models. Some companies are active in the
welfare of the differently abled. Sakthi Masala and
Cavinkare are two such companies. Sakthi Devi
Charitable Trust, the social welfare arm of Sakthi
Masala, runs a well-equipped medical centre for
therapy and rehabilitation of special children.
Sakthi Masala is a progressive employer of
differently abled persons.
AMM Foundation
The Murugappa group of companies has been
promoting social development in Tamilnadu by
setting aside a portion of its annual profits.
Nagarathar Chettiars have a tradition called
mahemai, which is a practice of earmarking a
portion of the profits each year by families for the

clan temple. The founder of the company set aside
a large fund for charity to launch the AMM
Charities Trust in 1953, which was later renamed
AMM Foundation. The thrust areas of the
Foundation are education, health and rural
development. The Foundation runs four schools
in and around Chennai, where about 9,000 boys
and girls are given education till the senior
secondary level. These schools are equipped with
good libraries, advanced laboratories and play
grounds. Meritorious students are given
scholarships from primary school to postgraduate
levels.
The Foundation started the Murugappa
Polytechnic in 1957. It is a government aided
polytechnic. The institution has a state- of- the art robotics and mechotronics laboratory. The
government of India, the World Bank and the
Swedish government assist the polytechnic. The
polytechnic, under the project of Canada - India
Institutional Co-operation, trains teachers in diverse
areas like management principles, team building
and human relations. The polytechnic collaborates
with two polytechnics in Singapore for a series of

exchange programmes. The polytechnic is an ISO
certified educational institution training around
1,000 students annually.
The Foundation has set up four hospitals, one
near Chennai and three outside the city. One of
them, the Sir Ivan Stedford Hospital, situated in
the industrial belt of Ambattur near Chennai,
houses excellent facilities in specialized areas of
medical care.
Shri AMM Murugappa Chettiar Research Centre
(MCRC) at Tharamani was founded in 1977. It is
recognized by the Council for Scientific and
Industrial Research, government of India. The
centre comprises specialists from multidisciplinary backgrounds ranging from social
sciences to molecular biology. The centre has
given training to people including the nomads of
the Kumaon Hills in Uttaranchal and the fishermen
on the Coromandel coast in the fields of fodder,
forestry and agriculture. The Foundation has
adopted a number of villages where villagers have
been encouraged to take up self-help schemes.
The MCRC has developed high quality rafts for
de-weeding and insect control in the waterways

of Chennai. The centre has also reclaimed
agricultural land and used it for high density
cultivation of casuarinas*, which is a source of
livelihood for many people. The centre has trained
rural women in the state to grow the spirulina algae,
a good source of essential amino acid, vitamins,
nutrients and other minerals in their own backyards
on a commercial scale. The centre is also
promoting solar energy, vermin composting,
organic farming and the use of micro-organisms
in paper making and natural dye extraction. All
these measures have enabled the organization to
earn the prestigious Jamnalal Bajaj Award for rural
development.
Tube Investments of India, the nucleus of the
Murugappa group, identified as a trumpcard
making the poor mans vehicle, the bicycle, for a
nascent nation in 1949. Another significant social
contributon of Tube Investments of India is the
promotion of traditional arts. Its subsidiary TI
Cycles and India Foundation for the Arts jointly
_______________________
* Casuarina is an Australian tree.
organize festivals to bring alive traditional forms

of dance .The festivals travel to different states.
Srinivasan Services Trust
The Srinivasan Services Trust (SST) is an
organization founded by Sundaram Clayton Ltd
and TVS Motor Company. SST has been
promoting community development programmes
in Tamilnadu and Karnataka. Working through
grass- root organizations, SST has active presence
in 703 villages(as in May 2010). The specific
activities are as follows:
Self-help groups of women and income

generation
Health: primary health care and promotion

of sanitation
Education: 100 per cent enrolment in

schools
Adult education of women
Environment: garbage collection from

houses by SHGs. Degradable waste is
converted into vermin compost.
Infrastructure development such as roads,
drinking water facilities, sewage and

sanitation, pre-school centres, schools,
health centres and community buildings in
partnership with government bodies and
local communities.
Motivating farmers to adopt modern

agriculture practices.
Regular veterinary camps and awareness

programmes to introduce modern livestock
management practices
Rehabilitation in tsunami affected villages
Watershed development: micro-watershed

programmees.
Culture and heritage: restoring 109 temples

in Tamilnadu, Karnataka and Kerala.
Chennai Willingdon Corporate Foundation

(CWCF), founded in 1990, is a body comprising
many corporate groups.The Foundation came into
being with the proceeds of the sale of the Lady
Willingdon Nursing home to Sankara Nethralaya.
CWCF has been funding many voluntary
organizations engaged in health care, health
research and education.
The Tamil Nadu government instituted in 2007 the

CSR award under the auspices of the department
of rural development and panchayati raj. Private
companies, public sector undertakings and NGOs
with a good record in the past five years would
be eligible for the award. It is a first of its kind
initiative among Indian states. The CSR award
carries a cash award of Rs five lakh and a certificate
to each company commending the CSR activities
in different spheres including agriculture, education,
womens empowerment and renewable energy.
RATIONALE OF THE STUDY
Society counts on business for employment
generation, much of the well-being of the
community, the standard of living people enjoy,
the tax base for municipal, state and national
services, and many other needs. Business is one
of the most powerful institutions in society. Its
influence is felt throughout society in education,
in government, in the market place, and even in
the home. It moulds many social values. All these
are shaped and guided by corporate executives
and corporate leaders. A societys well - being
depends largely on having a high and rising level

of productivity. A societys productivity depends
on how efficiently it uses its resources. If the
natural, human and capital resources are
combined and managed effectively by business
firms and executives, then societys productivity
is high. Corporate executives perform multiple
functions. They direct an open system and operate
in the boundary between an organization and its
environment receiving inputs from both and, in
turn, receiving outputs as change agent, facilitator
and leader (Davis and Frederick, 1984).
Input
Output
O
R
G
A
N
I
Z
A
T
I
O
N
E
N
V
I
R
O
N
M
E
N
T
Corporate
Executives
Input
Output
One study in the United States concluded that only

a relatively small number of top managers
determine major social policies and practices of
corporations. These managers may be narrow and

rigid in their views, with the result that their firms
respond less creatively to social change. Or they
may be insightful and sensitive to social needs, so
that creative, constructive policies are developed
(Sturdivant and Ginter, 1977).
Socially responsive executives are more likely to
modify their business policies and practices than
those who discharge their responsibilities only in
an economic context. Executives in socially
responsible companies consider not only the
interests of their core stakeholders but also the
interests of all the stakeholders. Hence studies
on the social orientation of corporate executives
are a necessity. That is the rationale of the present
study.
RESEARCH METHODOLOGY
Objectives of the Study
To study the perceptions of corporate

executives on corporate social
responsibility and related issues.
To examine the major developmental issues
and their implications for corporate social

responsibility initiatives.
Sampling Design
A two-stage sampling design was used for the
study. At the first stage, companies were selected
and at the second stage, corporate executives were
selected from the sampled companies.
Business World, a leading business magazine,
conducts annual financial analysis of companies
and ranks 500 biggest public limited companies,
both listed and unlisted, in India. The Business
World ranking published in the magazine dated
28th February 2005 was the source for preparation
of the first stage sampling frame. Business World,
in collaboration with the Centre for Monitoring
Indian Economy, covered all public limited
companies, which were statutorily required to file
their annual returns with the Registrar of
Companies. Out of the 500 companies, 26 were
registered at Chennai, which constituted the
sampling frame at the first stage.
Out of the 26 companies, five were selected
purposively for the study; three with a long
tradition belonging primarily to the manufacturing

sector and two recently established belonging to
the information technology sector. One of the two
companies in the information technology sector
expressed its inability, while the study was in
progress, to spare the time of their executives.
Thus the final sample had four companies.
The sampling frame at the second stage comprised
902 executives in the four companies having
designations from Assistant Manager to VicePresident, and a sample of around 100 executives
was considered statistically sufficient and efficient.
Hence it was decided to select around 11 per cent
of the universe for the final sample. The human
resource (HR) departments of the four companies
advised against the selection of random samples
because of the likelihood of no-response cases.
Therefore the quota sampling method was
preferred. Accordingly, around 11 per cent quotas
were fixed for each of the companies and the
persons for administering the questionnaires were
identified by the HR departments. The total
number identified by the HR departments was 102,
out of which one did not respond due to heavy
professional commitments. Thus the final sample

was 101.
Table 1
Universe and Sample
Designation
Universe Sample
Percentage
of
Representation
Assistant manager(AM)
406
44
10.8
Manager(M)
247
29
11.7
Senior manager(SM)
107
13
12.1
Deputy general manager (DGM)
63
11.1
General manager (GM)/ Vice- president (VP)
79
10.1
Total
902
101
11.2
Research Instruments
Data for the study was collected from both primary
and secondary sources. The primary data was
collected from the sampled corporate executives
using a structured questionnaire, which was mailed
to them. The draft questionnaire was pre-tested
on eight executives; two from each company and
all of them strongly preferred a brief questionnaire
because of their heavy workload. The HR
departments also wanted a short questionnaire.
The secondary data was collected from the annual
reports and information from the websites of the
companies.
Limitations
Collection of data was a very time consuming task.
Many reminders were needed to get the filled-in
questionnaires from the corporate executives.
Though a random sample of corporate executives
was not possible because of valid circumstances,
it is a limitation. However, that weakness was
compensated to a great extent by the selection of
an effective quota sample.
3
CORPORATE EXECUTIVES AND THEIR PERCEPTIONS
The profile of the corporate executives selected
for the study, and their perceptions of corporate
social responsibility and related aspects are
presented in detail in this chapter.
PROFILE OF THE EXECUTIVES
Recruitment and other human resource
management practices in industrial and business
establishments have been undergoing drastic
changes and improvisations. In a highly
competitive market economy, shortage of
competent personnel and increasing attrition of
human resources make it imperative for business
organizations to recruit young graduates with
attractive salary and perquisites, preferably through
campus recruitment. Well-planned training
programmes and challenging career growth
opportunities are offered to the young entrants.
Attracting talented young persons, identifying
leadership potentials and developing future
corporate leaders are visible in many companies.
Even family business houses have been becoming

increasingly professionalized in their management
styles. Therefore, the demographic profile of the
executives in the corporate organizations is
undergoing transition. In the sample selected for
the study, slightly more than 50 per cent are below
35. Nearly one third of the executives are in the
age group 35-39, while less than one fifth of
the executives are in the older age group of 40
and above. As young executives are in a larger
proportion in the companies than those in
the higher age groups, the analysis of data has
been attempted by dividing the executives into two
Table 2
Executives by Age and Designation
Age group
Designation
(Years)
AM
SM/DGM
GM/VP
Below 35
42
(95.5%)
5
(17.2%)
3
(15.0%)
1
(12.5%)
35-39
2
(4.5%)
21
(72.4%)
8
(40.0%)
2
(25.0%)
3
(10.3%)
9
(45.0%)
5
(62.5%)
44
(100%)
29
(100%)
20
(100%)
8
(100%)
40 and above
N
strata: below 35, and 35 and above. In the analysis

of data, executives in the 35 and above age group
are referred to as older instead of the term senior.

The sociological definition of organization as group
effort is most suited for a company. This group
effort has been undergoing significant changes in
structure and functions. The career growth
opportunities in companies have been on the
increase. The relationship patterns have been
changing from boss- subordinate to a warm
lateral relationship, often addressing each other
by first name. The decision making process is
being facilitated by shared inputs instead of mere
vertical commands from top to bottom. Senior
mangers today are mentors of younger executives.
Some companies have introduced reverse
mentoring programmes whereby younger
employees teach older employees.
Normally young recruits join as management
trainees before being inducted as officers and then
promoted as assistant managers. Assistant
manager is the first level on the management ladder.
Assistant managers and managers form the middle
management, senior managers and deputy general
managers are categorized as higher level
management, and general managers and vice-
presidents are among the top management. In the

earlier period, becoming a general manager was
possible only after many years of service and most
likely when the person is around fifty. But now,
becoming a general manager is common in the
thirties. The decision making process today,
therefore, is influenced by younger management
personnel.
Almost all the assistant managers are below 35,
while nine out of ten managers are below 40.
Among the senior managers and deputy general
managers, more than a half are less than 40. The
top management categories of general managers
and vice-presidents have nearly 40 per cent in
the younger age cohort.
OPINION ON FOCUS AREAS
The major focus areas of the four companies are
presented below:
Company
Focus Area
II
III
IV
Education/Vocational training
Health
Environment
Rural development
The executives were asked to mention the CSR

focus areas of their companies. There are three
significant features of the responses of the
executives.
a)
There is confusion among many executives
with regard to the focus areas of social orientation
activities undertaken by their companies. All the
four companies promote education and /or
vocational training, while only about 75 per cent
of the executives report correctly. All the executives
of company I are aware of this, whereas the
corresponding percentages of the executives in
the other companies range from 65 to 69. Health
is a focus area of companies I and II. At the same
time, only 35 per cent of the executives in company
II have knowledge of this fact. Significantly, all
the executives in company I have information on
this area of their company activity. Environment
protection is a major concern of companies II and
III. But only slightly more than 50 per cent of the
executives are aware of this focus area. Rural
development is a key focus area of three
companies. But the responses of the executives
are at variance. Only 17 per cent of the executives
in company III and 30 per cent of the executives

in company II are aware of this. However, nearly
two - thirds of the executives in company I are
informed of their companys rural development
work.
b)
Often the executives refer to occasional
financial or other support given by their companies
for different causes, when they mention the
different areas as focus areas, which actually they
are not.
c)
Quite surprisingly, a significant number of
executives in all the four companies ranging from
13 to 22 per cent report that their companies have
no specific CSR programme, which indeed is a
dark area of ignorance.
KNOWLEDGE OF POLICY
It is desirable that corporate social responsibility
is part of the stated policies of corporate
organizations to guide their business and social
commitments. It is also equally desirable that these
policies are made known to all the employees,
particularly to the executives. Among the four
companies studied, Company IV does not have a

well-specified CSR policy, probably due to the
fact that the company has been striving hard to
make profit and to establish itself as a viable
corporate unit. But the other three companies have
clear CSR policies. However, two out of every
five executives interviewed do not know whether
their organizations have CSR policies or not, while
nearly one - third of the executives assert that their
companies do not have such policies. It is
surprising that in company III, more than 50 per
cent of the executives fall in the do not know
category. These do not appear to be encouraging
findings.
KNOWLEDGE OF DEPARTMENT
At present there does not appear to have a separate
department of corporate social responsibility in
the companies in Chennai. Normally, the human
resources department directly or otherwise coordinates the CSR programme. It is significant
that one - fifth of the executives say that they do
not have any knowledge of the department
responsible for promoting CSR activities.
PERCEPTION OF CSR
The common understanding of corporate social
responsibility among the majority of the executives
is any socially useful activity; 60 per cent
have this opinion. A substantial proportion of the
executives (22 per cent) report that ethical practices
should be the prime focus of corporate social
responsibility. Nearly a fifth of the executives (18
per cent) stress protection of environment as the
key element of CSR.
Socially useful services reported by the executives
include the following:
Helping the needy sections to have a better
standard of living
Providing basic
underprivileged
necessities
to
the
Contributions to social causes

Taking up challenging national service issues
Doing service, which would be of real value to
the society
Participating in activities positively impacting
the society
Upliftment of society by responding to the

needs of the communities in a systematic
manner
Executives, who advocate ethical practices, say
that the companies should formulate and practise
a code of conduct, and aim at achieving a vision
for society. Ethical corporate governance is
necessary to be responsible organizations.
Looking after the welfare of stakeholders should
only be through ethical means. By adhering to
values and ethics, the companies would be able
to make a difference to the quality of life of the
people through their products and services.
Executives, who want corporate social
responsibility to focus on protection of the
environment, express the following views. An
industry should not cause damage to the
environment and as a conscientious company, it
should protect the immediate surroundings. It
should contribute towards neighborhood and
environment development. Companies, being an
integral part of society, should accept the
responsibility in creating a cleaner environment and
in protecting heritage, culture and nature. There
should be a mutually symbiotic relationship

between industry and environment, and causing
damage to the environment intentionally or
unintentionally is a violation of human rights.
Though in a minority, the views of the executives
on the environmental thrust are commendable.
The reasons attributed by the executives to the
need for corporate social responsibility are worth
mentioning. Companies derive benefits from
society in many ways. So accountability of a
business organization is towards the society at
large. Awareness and acceptance of this
accountability should be the basis of corporate
decision-making process. Many corporate
decisions have a direct impact on the immediate
as well as the larger interests of society. Business
interests need to be combined with community
welfare. Doing something for people around may
help add to the bottom line of a company, but
would not contribute to sustainable benefits to the
community.
GROWING AWARENESS OF CSR
Corporate social responsibility has been gaining
wider acceptance among the companies in India.

Even though the concept is understood in different
ways, the corporate executives are aware of the
growing awareness of CSR. Most of the
executives (86 per cent) say that there is a growing
awareness of corporate social responsibility.
Opinion of 14 per cent of the executives that
corporate social responsibility is not gaining
increased recognition should be taken note of
seriously as this group of executives is either
ignorant of or indifferent to social realities.
The major factors that are contributing to the
greater awareness of CSR among the companies
are as follows :
a)
Competition in the market
b)
Rising domestic standards
c)
Growing international standards
d)
Public opinion
e)
Corporate reputation
f)
Group pressure
The executives selected for the study were asked

to rank the factors in order of importance ranging
from a score of 1 for the least important to a score

of 9 for the most important. The scores are
grouped into three categories: low, moderate and
high. Scores 1 to 3 fall in the low category, 4 to 6
fall under moderate category and 7 to 9 in the
high category. The same method of rating and
categorization is followed in the subsequent
sections also.
a)
Competition in the Market

Table 3
Executives by Ranking of Competition in the Market
Age group
Ranking
Low
Moderate
High
Below 35
20
(45.5%)
13
(29.5%)
11
(25.0%)
44
35 & above
22
(51.2%)
11
(25.6%)
10
(23.3%)
43
Total
42
(48.3%)
24
(27.6%)
21
(24.1%)
87
Fierce competition is the order of the day in the

present market economy backed by imaginative
advertisement campaigns, particularly in the
electronic media, as part of the efforts to boost
the sales of products and services. Companies
sponsor sports, reality shows and various other
competitions spending a substantial part of their
income to create a sustainable brand image in a

highly competitive market. Yet nearly a half of the
executives give a low rating to market competition
as a factor driving to the increased awareness of
corporate social responsibility. This factor is
ranked high only by about a quarter of the
executives, while slightly more than a fourth of
the executives give moderate rating. This may be
because of the assumption that competition is a
natural feature of free market economy. The
opinion pattern is almost similar among the
younger and the older executives.
b)
Domestic Standards
Table 4
Executives by Ranking of Domestic Standards
Age group
Ranking
Low
Moderate
High
Below 35
8
(18.2%)
21
(47.7%)
15
(34.1%)
44
35 & above
14
(32.6%)
18
(41.9%)
11
(25.6%)
43
Total
22
(25.3%)
39
(44.8%)
26
(29.9%)
87
Volume of sales of any product or service is

directly related to the quality of the product or
service. As the buyers have many options in the
market, domestic standards of products have been

on the increase. The market of today has shifted
from the sellers market to the buyers market.
This shift has propelled the companies to give
great attention to the constant improvement in the
standards of products and services. Three out of
every four corporate executives rate increase in
domestic standards as a factor of greater
awareness of corporate social responsibility,
which includes thirty per cent giving high rating.
There is a substantial difference between the two
groups of younger and older executives in the
rating. While 82 per cent of the younger executives
give moderate or high rating, only about 68 per
cent among the older executives give such a rating.
c)
International Standards
Globalization of capital necessitates continuous

upgradation in the standards of products and
services. International Standards Organization and
the Indian affiliate determine globally acceptable
standards securing of which has almost become
a necessity to gain acceptance of the quality of
the products of companies. Not only the
companies, but also hospitals, schools, and even
police stations value certification of standards as
a mark of respectability. Most of the corporate

executives (82 per cent) give moderate or high
Table 5
Executives by Ranking of International Standards
Age group
Ranking
Low
Moderate
High
Below 35
7
(15.9%)
21
(47.7%)
16
(36.4%)
44
35 & above
9
(20.9%)
16
(37.2%)
18
(41.9%)
43
Total
16
(18.4%)
37
(42.5%)
34
(39.1%)
87
ranking to rising international standards as a factor

of awareness of corporate social responsibility.
The assessment is not at much variance between
the younger and the older executives giving higher
ranking to international standards.
d)
Public Opinion
Public opinion influences all aspects and facets

of society. Public opinion can make or mar the
fortunes of companies. The recently witnessed
protests throughout the country against GM seeds
(Bt brinjal) demonstrate the power of public
opinion. More than a half of the corporate
executives quite naturally rate this factor of
corporate social responsibility awareness high.
Table 6
Executives by Ranking of Public Opinion
Age group
Ranking
Low
Moderate
High
Below 35
1
(2.3%)
14
(31.8%)
29
(65.9%)
44
35 & above
4
(9.3%)
20
(46.5%)
19
(44.2%)
43
Total
5
(5.7%)
34
(39.1%)
48
(55.2%)
87
Age-wise, the difference in proportions between

the younger and the older executives is as high as
22 per cent with about two - thirds of the younger
executives giving high ranking. Nearly 40 per cent
of the executives give moderate ranking to public
opinion and the proportion of older executives
rating so is substantially in excess of the proportion
of younger executives. The percentage difference
in ranking between those in the two age groups is
significantly perceptible.
A companys reputation is vital for its existence.
All levels of management as well as all employees
are likely to be sensitive to the reputation of their
company. Associating oneself with a reputed
company is a matter of great prestige. A good
company, which is also socially oriented, has
greater reputation and hence it is natural that most

of the executives give high rating to this factor.
e)
Companys Reputation
Table 7
Executives by Ranking of Companys Reputation
Age group
Ranking
Low
Moderate
High
Below 35
3
(6.8%)
9
(20 .5%)
32
(72.7%)
44
35 & above
5
(11.6%)
38
(88.4%)
43
Total
3
(3.4%)
14
(16.1%)
70
(80.5%)
87
The difference in percentages between the younger

and the older executives is substantial. While 73
per cent of the executives in the below 35 age
group give companys reputation high ranking, 88
per cent of the executives above 35 are more
sensitive to the reputation of the organization. This
probably is because of the longer experience of
the older executives.
f)
Group Pressure
The Confederation of Indian Industry (CII) is an

influential national level organization of Indian
companies. In addition, there are chambers of
commerce in the states and they are combined

into Associated Chambers of Commerce and
Industry of India (ASSOCHAM) as well as the
Federation of Indian Chambers of Commerce and
Industry (FICCI) as national federations. These
bodies give guidance and professional support on
Table 8
Executives by Ranking of Group Pressure
Age group
Ranking
Low
Moderate
High
Below 35
12
(27.3%)
14
(31.8%)
18
(41.0%)
44
35 & above
8
(18.6%)
21
(48.8%)
14
(32.6%)
43
Total
20
(23.0%)
35
(40.2%)
32
(36.8%)
87
government policies, economic issues, corporate

social responsibility and other matters, which
are of concern to industrial and business
organizations. The corporate group pressure,
thus, is an important factor influencing increased
awareness of corporate social responsibility.
More than onethird of the corporate executives
give high rating to this factor, and more of
them are younger executives. A slightly greater
proportion of executives consider group
pressure as a moderately influencing factor of

greater awareness and the older executives rating
so exceed the younger executives by 17 per cent.
Parameters of Increasing CSR Awareness
The executives, as stated earlier, have identified
six drivers that propel increased awareness of
corporate social responsibility. The ratings of each
factor by the younger and the older executives
have also been discussed. This section examines
the comparative ratings of the six factors based
on mean scores.
The reputation of a company stands out as the
most prominent factor causing greater awareness
Mean Scores of Factors of Awareness
M
e
a
n
S
c
o
r
e
8
7
6
5
4
3
2
7.5
6.5
5.2
5.7
5.3
4.2
1
0
Market
competition
Domestic
standards
International
standards
Public
opinion
Corporate
reputation
Group
pressure
of corporate social responsibility. Closely

associated with this factor is public opinion, which
is the second - ranked factor. Rising international
standards is rated third. Group pressure and rising

domestic standards are the next two factors in
order of importance with a very small difference
in mean scores. Competition in the market is ranked
last as an awareness - enhancing factor.
STAKEHOLDERS
The interests of many sections of society are at
stake when a company comes into existence and
starts growing. Seven main stakeholders are
identified for assessment of the opinions of the
corporate executives.
a)
Providers of funds
b)
Shareholders
c)
Employees
d)
Unions
e)
Regulatory bodies
f)
Customers
g)
Community
It is significant to understand the perceptions of

the corporate executives regarding the importance
they attach to the seven corporate stakeholders.
a)
Providers of Funds
It is common knowledge that capital is the most

important component to establish a business
organization. Promoters, banks, financial
institutions and institutional investors are the
Table 9
Executives by Ranking of Providers of Funds
Age group
Ranking
Low
Moderate
High
Below
1
(2.0%)
17
(33.3%)
33
(64.7%)
51
35&above
2
(4.0%)
12
(24.0%)
36
(72.0%)
50
Total
3
(3.0%)
29
(28.7%)
69
(68.3%)
101
sources of capital inflow. Naturally, more than two

- thirds of the executives give high rating to the
providers of funds. This rating is almost
independent of age difference. However, nearly
thirty per cent of the executives give only moderate
ranking possibly because there are other equally
important stakeholders in their perception.
b)
Shareholders
Shareholders are crucial sources of funds like

others who provide funds as discussed earlier.
Shareholders range from individuals who are small
investors to major institutions holding a large

number of shares in a company. The fluctuations
Table 10
Executives by Ranking of Shareholders
Age group
Ranking
Low
Moderate
High
Below 35
1
(2.0%)
14
(27.5%)
36
(70.6%)
51
35 & above
2
(4.0%)
7
(14.0%)
41
(82.0%)
50
Total
3
(3.0%)
21
(20.8%)
77
(76.2%)
101
in the share market, which are monitored and

analyzed regularly by the media and other
specialized agencies, make many ordinary
investors millionaires and reduce dramatically the
fortunes of many others. More than three - fourths
of the executives consider shareholders the highranking stakeholders of the company.
Shareholders and providers of funds as sources
of capital do overlap, though there is a difference
between the two. Age-wise, older executives rating
shareholders high exceed the younger executives
by 11 per cent.
c)
Employees
Human resources constitute the backbone of any
Table 11
Executives by Ranking of Employees
Age group
Ranking
Low
Moderate
High
Below 35
3
(5.9%)
20
(39.2%)
28
(54.9%)
51
35 & above
4
(8.0%)
24
(48.0%)
22
(44.0%)
50
Total
7
(6.9%)
44
(43.6%)
50
(49.5%)
101
performing company. Motivating and retaining

employees are challenging tasks facing the human
resource managers of the companies. More than
90 per cent of the executives consider employees
as important stakeholders of a company with
moderate or high ranking. However, only a half of
the executives give high rating to employees as
stakeholders. An important point in this context is
that younger executives exceed the older executives
by 11 per cent as regards their perception of the
employees as high ranking stakeholders.
d)
Unions
The perception of employees as individuals is very

different from that of employees as members of
trade unions, which are power organizations. But
quite surprisingly two out of every three executives
Table 12
Executives by Ranking of Unions
Age group
Ranking
Low
Moderate
High
Below 35
42
(82.4%)
4
(7.8%)
5
(9.8%)
51
35 & above
28
(56.0%)
10
(20.0%)
12
(24.0%)
50
Total
70
(69.3%)
14
(13.9%)
17
(16.8%)
101
do not consider unions as important stakeholders.

The younger executives giving low rating to the
unions constitute a strikingly high percentage of
82. There are two significant explanations for this
opinion. One, managing employees has shifted in
emphasis from the traditional fire fighting industrial
relations to the employee - centered human
resource management. The younger executives
with their exposure to the modern management
methods are justified in not holding unions as
important stakeholders. Further trade unions have
lost much of their sharpness of teeth after the
introduction of economic reforms in India.
e)
Regulatory Bodies
Regulatory bodies like the government agencies

may not appear to be stakeholders of companies.
Table 13
Executives by Ranking of Regulatory Bodies
Age group
Ranking
Low
Moderate
High
Below 35
16
(31.4%)
22
(43.1%)
13
(25.5%)
51
35 & above
15
(30.0%)
19
(38.0%)
16
(32.0%)
50
Total
31
(30.7%)
41
(40.6%)
29
(28.7%)
101
But they are indeed crucial stakeholders because

the way the companies function is a very important
parameter of the economic health of the country.
The volatile share market affects the well - being
of investors. More or less equal proportions of
executives assign high and low ratings respectively
to regulatory bodies in their importance as
stakeholders. The remaining two- fifths give
moderate ranking to regulatory agencies. These
ratings are shared almost equally by the younger
as well as the older executives.
f)
Customers
The mantra of the market economy is that

customer is the king. There is a well- enforced
law to protect the interests of the customers from
deficiency of services and defective products. The
Table 14
Executives by Ranking of Customers
Age group
Ranking
Low
Moderate
High
Below 35
2
(3.9%)
8
(15.7%)
41
(80.4%)
51
35 & above
4
(8.0%)
9
(18.0%)
37
(74.0%)
50
Total
6
(5.9%)
17
(16.8%)
78
(77.2%)
101
companies compete with each other to influence

the customers as well as to retain customer loyalty.
The executives naturally recognize this reality and
more than three- fourths of the executives give
high rating to customers as stakeholders. The
younger executives reporting so are only slightly
in excess of the older executives making high
assessment of the customers as stakeholders.
Thus the importance given to customers cuts
across age groups.
g)
Community
Customers are a part of the community. But all

members of the community are not customers of
the products and services of a company. Hence
the executives of companies may view the
customers as differently from the community
Table 15
Executives by Ranking of Community
Age group
Ranking
Low
Moderate
High
Below 35
15
(29.4%)
27
(52.9%)
9
(17.6%)
51
35 & above
22
(44.0%)
15
(30.0%)
13
(26.0%)
50
Total
37
(36.6%)
42
(41.6%)
22
(21.8%)
101
because of the selective perception of the

customers and the community. Consequently, only
one fifth of the executives give high rating to the
community as stakeholders. However two out of
every five executives give moderate ranking to the
community as stakeholders of companies. Age
appears to be associated with these opinions.
Interestingly, more older than younger executives
give low as well as high ranking to the community
as stakeholders.
Comparative Ratings of Stakeholders
Customers top the list of stakeholders as rated by
the executives and indicated by the mean scores.
Shareholders and providers of funds are the next
two major stakeholders according to the ratings
of the executives. These three are almost equally
ranked stakeholders by the executives. Employees

get a close fourth rank in the order of importance
of stakeholders, while the unions are the lowest
Mean Scores of Stakeholders
8
M
e
a
n
S
c
o
r
e
7.1
7.4
7.2
7.4
6.5
7
6
4.6
5
4
3
2
1
0
Providers
of funds
Share
holders
Employees
Unions
Regulatory Customers Community

bodies
ranked among the stakeholders. Regulatory bodies

and the community are ranked fifth and sixth
respectively. The highest rating to the customers
is understandable. But the lowest ranking of unions
is a significant pointer of the changing climate of
union - management relations, and the declining
strength of unions as power organizations.
ADVANTAGES OF CSR
When a company undertakes socially useful
programmes, the resultant benefits to the company
are many. Image, customer satisfaction, employee
loyalty, capital flow, support of government
agencies, and increased profit are the major
benefits, each of which is ranked by the executives

in the succeeding sections.
a)
Social Image
Table 16
Executives by Ranking of Social Image
Age group
Ranking
Low
Moderate
High
Below 35
1
(2.0%)
12
(23.5%)
38
(74.5%)
51
35 & above
1
(2.0%)
13
(26.0%)
36
(72.0%)
50
Total
2
(2.0%)
25
(24.8%)
74
(73.3%)
101
Industry is a social system. Companies are,

therefore, conscious of their social image. The
perceptions of the various organs of the society
towards a company influence the volume of
business very significantly. The executives would
be keen to create a good social image of their
companies. Consequently, three - quarters rate the
advantage of a positive image high. The rating is
shared equally by the younger and the older
executives.
b)
Customer Loyalty
Customer loyalty is a direct function of customer

satisfaction of the products and services of a
Table 17
Executives by Ranking of Customer Loyalty
Age group
Ranking
Low
Moderate
High
Below 35
4
(7.8%)
21
(41.2%)
26
(51.0%)
51
35 & above
11
(22.0%)
14
(28.0%)
25
(50.0%)
50
Total
15
(14.9%)
35
(34.7%)
51
(50.5%)
101
company. The social orientation of a company

need not imply that the products and services of
the company are of good quality. That may explain
why only 50 per cent of the younger and the older
executives give high rank to customer loyalty as a
benefit. A substantial 22 per cent of the older
executives consider customer loyalty as a lowranked benefit of socially oriented efforts of the
companies. While 41 per cent of the younger
executives feel that customer loyalty is a moderate
benefit, only 28 per cent of the older executives
share this opinion.
c)
Retention of Employees
Employee turnover is a serious stress-causing

problem to the companies. So it may be presumed
that a company, which is socially committed, is
Table 18
Executives by Ranking of Retention of Employees
Age group
Ranking
Low
Moderate
High
Below 35
10
(19.6%)
22
(43.1%)
19
(37.3%)
51
35 & above
7
(14.0%)
16
(32.0%)
27
(54.0%)
50
Total
17
(16.8%)
38
(37.6%)
46
(45.6%)
101
also likely to be concerned more about the welfare

of its employees. However, only less than a half
of the executives give high ranking to retention of
employees as a benefit of CSR initiatives.
Significantly, the older executives giving high rating
to retention of employees are in a majority. They
consider retention of employees as an important
benefit of socially meaningful activities by the
companies in contrast to the younger executives
who may view employee attrition as quite natural.
However, nearly two out of every five executives
state that retention of employees is a moderate
benefit of CSR activities.
d)
Reduced Regulatory Control
Regulatory control is a statutory responsibility of

the government. It may not be diluted by mere
Table 19
Executives by Ranking of Regulatory Control
Age group
Ranking
Low
Moderate
High
Below 35
21
(41.2%)
25
(49.0%)
5
(9.8%)
51
35 & above
16
(32.0%)
25
(50.0%)
9
(18.0%)
50
Total
37
(36.6%)
50
(49.6%)
14
(13.9%)
101
involvement in social orientation activities by the

companies. That may be the reason for a
substantial proportion of executives (37 per cent)
giving low rank to reduced regulatory control as a
possible benefit of corporate social responsibility.
At the same time, a half of the younger and the
older executives are of the view that organizing
socially useful projects may have a moderate
influence on regulatory control. The executives
assigning high rank to reduced regulatory control
constitute only 14 per cent.
e)
Financial Performance
Companies are expected to make profit and social

development activities by companies would mean
regular outflow of financial resources. The low
ranking to improvement in financial performance
Table 20
Executives by Ranking of Financial Performance
Age group
Ranking
Low
Moderate
High
Below 35
30
(58.8%)
18
(35.3%)
3
(5.9%)
51
35 & above
23
(46.0%)
20
(40.0%)
7
(14.0%)
50
Total
53
(52.5%)
38
(37.6%)
10
(9.9%)
101
as a benefit of corporate social responsibility

efforts by the majority of the executives may be
because of this apprehension. Quite unexpectedly,
the younger executives giving low rank are in
excess of the older executives by a substantial
difference of 13 per cent. Only 10 per cent of the
executives give high rank to the possibility of
improvement in financial performance when
companies engage themselves in socially beneficial
tasks.
f)
Access to Capital
It is presumed that corporate social responsibility

activities undertaken by a company would
positively influence investors resulting in greater
capital inflow. But a large number of executives
do not share this optimism as 45 per cent of the
Table 21
Executives by Ranking of Access to Capital
Age group
Ranking
Low
Moderate
High
Below 35
20
(39.2%)
22
(43.1%)
9
(17.6%)
51
35 & above
25
(50.0%)
21
(42.0%)
4
(8.0%)
50
Total
45
(44.6%)
43
(42.6%)
13
(12.9%)
101
executives give low ranking to easier access to

capital as a likely benefit of corporate social
responsibility. More older than younger executives
give low rating. Only 13 per cent of the executives
view that increased availability of capital is highly
possible because of CSR activities and more of
them are younger executives. A substantial number
of younger as well as older executives (43 per
cent) give moderate ranking to higher capital
inflow.
Comparative Analysis of CSR Advantages
Executives are highly sensitive to the social image
of their companies and obviously that is ranked
first among the advantages of corporate social
responsibility. Customer loyalty and employee
loyalty are ranked second and third respectively
with only a minor difference. The executives give

low ranks of four and five respectively to reduction
in control by the regulatory bodies as well as to
easier access to capital because of CSR. The
executives do not consider the possibility of
improvement in financial performance seriously,
which is given the lowest rank.
Mean Scores of Advantages of CSR
8
M
e 7
a 6
n 5
4
S 3
c
o 2
r 1
e
0
7.3
6.1
5.9
4.3
Social
image
Customer
loyalty
Retention of
employees
Reduced
regulatory
control
3.7
Financial
performance
Capital
inflow
CORPORATE MODELS AND ICONS

The companies and the business leaders, the
executives admire, are important indicators of the
way the executives view corporate social
responsibility. Three out of every four executives
admire other companies, which is a staggering
proportion indicating higher levels of expectations.
The executives, who admire their group most,
mention the employee - oriented caring policies
and the socially inclined practices of their

companies or groups as reasons for their choice.
Of the 75 executives, who admire other business
organizations, 41 mention the Tata group, while
22 mention the IT giant Infosys Technologies.
The reasons for the high admiration of the Tata
group are many. Tata companies are leaders in
diverse industrial fields and their initiatives have
made lasting impact on the lives of millions of
Indians. They created the famous city of
Jamshedpur and administered it admirably. The
best business and ethical practices of the Tata
group are widely acclaimed. Beyond business,
they have established educational, research, health
and other institutions of national importance and
excellence. They have grown with the nation and
they have also made the nation grow. The
commitment and concern for social development
of the Tata group is unimpeachable. The Tata Iron
and Steel Company (TISCO), the flagship
company of the Tata group, is the pioneer of
corporate social responsibility in India. Long
before other companies started thinking of
corporate social responsibility, the TISCO had
the vision to initiate such an innovative step, which

has cut across several aspects of society. Without
doubt the Tata group is a very highly respected
Indian industrial house.
In the recent industrial history of India, no
company has stirred the imagination of people like
the Bangalore - based IT company Infosys
Technologies. Founded in 1981 by N.R.Narayana
Murthy with a small personal investment in
partnership with a small group of persons, Infosys
has become a famous IT company in the world in
a short span of twenty five years. The Infosys
leadership believes that wealth created must be
equitably distributed. They have strong faith in
the philosophy that by putting public good ahead
of private good in every decision the company
makes will, in fact, result in enhancing the private
good. The executives interviewed admire Infosys
for bringing about a revolution in the IT industry
along with WIPRO and TCS, by firmly
entrenching India in the global IT market. By
setting up a corporate foundation for the upliftment
of society, the company is a front-runner in
corporate social responsibility.
The business icon ranked first by the corporate

executives surveyed is N.R.Narayana Murthy, the
founder and chief mentor of Infosys Technologies.
The qualities of Narayana Murthy described by
the respondents are many. He has created a world
class organization, which is a pride of the country.
He has made ordinary people amazingly
extraordinary and with them created enormous
wealth for Infosys, which was shared in an
admirably equitable manner. He is a socially
committed person and has built an equally socially
oriented organization. Simple living, humility,
uprightness and integrity are his well-known traits.
Being a great humanitarian with a vision for India,
Narayana Murthy is a dream personality and a role
model for every Indian, which epitomizes the
choice of Murthy as the number one business icon.
J.R.D.Tata is the second ranked business icon.
All the respondents say that he laid the foundation
for the modern industrial development of India
and pioneered the concept of corporate social
responsibility, not by preaching but by practising
in a manner, which has no parallel in Indias
corporate history. A great visionary and a true
leader, he gave primacy to the progress of the

country internally and the glory of India externally.
The Tata group is synonymous with patriotism
and high ethical standards, and J.R.D.Tata is
mainly responsible for this reputation of the
industrial group. The man, who piloted planes to
daring heights, was immensely proud of being an
Indian.
Ratan Tata is ranked third among the business
icons. Ratan Tata is rated as the worthy successor
to J.R.D. Tata. A highly respected business leader,
Ratan Tata is heading the largest industrial house
in India. Azim Premji and Dhirubai Ambani are
the two other icons. The business icons chosen
by the executives are prominent leaders of the
recent entrepreneurial movement in the country,
which is driving India to be an economic
superpower in the twentyfirst century.
SUMMARY
While the main thrust areas of corporate social
responsibility undertaken by the four companies
selected for the study are education/vocational
training, health, environment and rural
development, it is significant that 13 to 22 per cent

of the executives in the four companies say that
no specific CSR programme is carried out by their
organizations. A large proportion of executives
report that they do not know whether their
companies have any policy on corporate social
responsibility. At the same time, nearly a third say
that their companies do not have any CSR policy.
A good number of executives have no knowledge
as to whether a separate department is functioning
for carrying out CSR projects. Surprisingly, 14
per cent of the executives even think that awareness
of CSR is not on the increase contrary to the facts.
Thus significant levels of lack of knowledge as
well as confusion prevail among the executives.
There is a substantial extent of vagueness among
the executives regarding the concept of corporate
social responsibility and its dimensions.
Systematic training modules on corporate social
responsibility may be developed by CII and other
apex bodies for the benefit of the member
organizations. The member companies may
arrange training programmes for the executives on
a continuing basis. Companys reputation and
public opinion are the two major factors for the

growing awareness of CSR according to the
executives. Among the seven stakeholders, they
rank customers, shareholders and providers of
funds higher than others. Social image is rated the
most significant advantage of CSR. On the whole,
the executives are sensitive to the image and
reputation of their companies.
4
CSR FOR A JUST SOCIAL ORDER
Wealth creation is the primary responsibility of
business organizations, and it is their responsibility
to create wealth through ethical means. Corporate
social responsibility is an inalienable part of the
process of creation of wealth. CSR is closely
linked to sensitive development issues such as
displacement of people, rehabilitation of the
displaced, protection of environment and
reduction of inequality in society.
CSR AND DISPLACEMENT
A daunting task facing the corporate groups and
the government is the conflict between
developmental priorities, and deprivation of
peoples land and livelihood because of land
acquisition. Mass protests and violent
demonstrations have forced even the best face of
corporate India to retreat from a nationally
prestigious project despite strong state support.
Estimates of people displaced by development
projects since Independence using the doctrine

of pre-eminence for public interest especially for
power, mining, heavy industry and irrigation
projects are staggering. More than 50 million
persons have been displaced and only abut a
quarter of them are resettled in some way or the
other. But the real magnitude of displacement and
the actual position of resettlement could be very
grim. Indias rehabilitation and resettlement (R and
R) record is poor, if not horrific. The Rehabilitation
and Resettlement Bill, 2007 is yet to become a
law.
The Supreme Court, expressing concern over the
plight of farmers and others whose vital rights are
affected when their land is acquired for
development, suggested in May 2010 that the more
than a century old, Land Acquisition Act, 1894
should be revisited by the Parliament. The Supreme
Court pointed out the serious flaws in the
acquisition of land such as absence of proper
survey and planning before acquisition,
indiscrimate use of emergency provisions,
notification of areas far larger than what is actually
required for acquisition, and then making arbitrary
deletions from the acquisition, offer of a very low

amount as compensation and delay in payment
necessitating litigation in almost all cases, and the
absence of rehabilitation. In another case, the
Supreme Court observed in July 2010 that to
millions of Indians, development is a dreadful and
hateful word that is aimed at denying them even
the source of their sustenance. Some enlightened
companies in the public and private sectors have
executed fair R and R programmes. The
irresponsible behaviour of business organizations
has created scepticism among the people and there
is a need to address this issue while setting up
large projects, according to N.M.Nerurker of Tata
Steel (The Hindu, May 23, 2010).
Tata Steels Parivar project for those displaced
by its development initiatives merits attention. The
displaced families are given identity cards.
Promises to each beneficiary are documented and
monitored. One member of every displaced
extended family is given employment or one-time
assistance in lieu of employment. The company
offers a tenth of an acre of homestead land to
each family in its resettlement colonies; and the
plots are developed ones with civic amenities like

roads, water, electricity and drainage, and also
medical facilities. A house assistance of Rs.1 lakh
is given over and above the Rs.1.5 lakh mentioned
in the R and R policy. The families are given a
monthly maintenance allowance till they are
employed. Training for skill upgradation,
educational scholarships to children and womens
self-help groups are other supports which the
displaced families get. The per family expenditure
on the rehabilitation package works out to Rs.16.91
lakh (Sanjay Nag, Tata International).
Forcible acquisition of forest land, encroachment
of forests by powerful vested interests, denial of
land and forest rights, and glaring development
deficit have pushed tribals into insurgency and
political extremism. It is reported that about onethird of the 626 districts in the country have
extremist presence. Started as a movement centred
around Bihar in the 1970s and 1980s, the naxalite
movement now virtually controls 83 districts in
the country. Noted journalist Aroon Purie writes
that the countrys own citizens have taken up arms
against the state which is reflective of the lack of
development in remote parts of the country, where

the most impoverished live. He adds that in these
areas,there are no roads, schools or hospitals or
even attention (India Today, April 19,2010).
Union Home Minister, P.Chidambaram admitted
that people in naxal-dominated areas do not have
good faith in the good sense of corporate India
and also lack faith in government. He exhorted
the corporate leaders at the national conference
of the CII to set up industries to drive development
in these areas. The response from the CII was
quick and it announced that certain pilot districts
in the disturbed areas would be chosen to invest
and create an alternative mechanism to deliver
development, jobs, goods and services as pilot
projects (The New Indian Express, May,13
&14,2010). Serious result-oriented action is
awaited.
CSR AND ENVIRONMENT
The theory of trade off between growth and
environmental protection is unsound. Indias
development approach, according to
environmentalists, lacks environmental sensitivity.
The mining policy is cited as an example. Felix

Padel,London born social anthropologist, is a
crusader against Indias mining policy. Padel has
been working among Orissas adivasis. He is
critical of bauxite mining. The function of bauxite
in conserving water and maintaining perennial
streams in mountains is established by research.
Bauxite mines are in the mountains maintaining
an ecological balance with bio - diversity. Mining
would mean its destruction. On the one side there
is ecocide and on the other, displacement and
dispossession of adivasis which is cultural
genocide (Felix Padel, The New Indian
Express, April 17,2010).
At the same time, there is a need for mining bauxite.

The close proximity of aluminium and coal would
help produce cheap aluminium so that India will
have a commanding position in the global nonferrous market. On environment, there are two
divergent views. One is that protection of
environment cannot be by perpetuation of poverty;
and there must be a right balance between
environmental concerns and industrial needs.
Development should not be a victim of
ecofundamentalism. The other view is that
sustainable development is not possible without

protecting the environment. For instance, while
ordering the closure of a company in Tamilnadu,
the Madras High Court stated in its order that
Those who discharge noxious polluting effluents
into water bodies and the atmosphere harming
public health at large should be dealt with
strictly(September,2010).
Carbon dioxide emission into the atmosphere not
only by industries, but also by even non-industrial
activities makes up nearly 75 per cent of the
greenhouse gases causing catastrophic global
warming. Consequently, extreme climatic events
are causing destruction of lives and livelihoods.
The abnormal increase in floods causes extensive
damage to agriculture. These disasters are hydrometeorological phenomena. The Climate
Vulnerable Forum in its report titled Climate
Vulnerability Monitor of 2010 noted as follows:
In absolute terms India will face the highest
number of excessive deaths due to health impacts
of climate change. India will alone carry more
than a third of total global health burden.
The UN Framework Convention on climate
change, Kyoto Protocol, is not legally binding on

India, but global pressure and national interest pose
a great challenge to business and government in
dealing with carbon emission and climate change
issues without compromising the pace of
development. While many industries are polluting
the environment with impunity, many companies
are responding to the challenge in a positive
manner. Companies, media and other civil society
groups are promoting green consciousness in the
country. Many Indian companies are keenly trying
to develop green technology which also has big
business prospects.
One carbon credit is given for every tonne of
carbon dioxide reduced and the carbon credit
mechanism helps reduce the carbon dioxide
emission. All activities that utilize energy ranging
from manufacturing to municipalities and to
forestry are eligible to earn carbon credits for the
green initiatives. The framework to measure the
quantum of carbon dioxide emission has been
developed by the UN and credit certificates are
issued only after UN monitoring and verification
by third parties. Trading can be done through
exchanges like the Chicago Climate Exchange,

European Climate Exchange and European Energy
Exchange to name a few. Companies, particularly
those in the developed countries, which have
caused most of the environmental damage, are
keen to buy carbon credits from clean technology
companies which are registered under the Clean
Development Mechanism (CDM). Tata Motors
earned 3.6 million dollars in 2010 from the sale of
carbon credits. Trading in carbon credits is not a
license to pollute the environment. But trading in
carbon credits can adversely affect the profitability
of the companies which may compel them to look
for low-carbon emitting processes. India is still in
the early stage of the development trajectory and
can afford to adopt a low-carbon economy, and
prevent the ill-effects of extreme climate change
which poses the greatest threat to sustaining high
level of growth.
CSR AND INEQUALITY
Indian economy has been growing at a fast pace
because of deregulation and economic
liberalization policies pursued since 1991. Indias
1.31 trillion-dollar economy (2009-2010) is

projected to approach 5 trillion dollars by
2022(Prime Ministers Economic Advisory
Council).The gross domestic product (GDP), the
indicator of economic growth, does not indicate
the real well-being of societies. Capitalism, no
doubt, creates wealth, but it also results in high
inequity. The recent global financial crisis triggered
by the meltdown of the American economy, and
the crash of the Irish economy projected as the
show piece of free market success have
exploded the myths of capitalism. Deveshwar
(2010), chairman of a leading corporate behemoth,
wrote in a recent article that in the last five decades,
world GDP multiplied 60 times to reach more than
60 trillion dollars. At the same time, two-thirds of
the world population live in poverty, with more
than a billion people in acute deprivation and
hunger. Economist Utsa Patnaik asserts that
capitalism can never ameliorate the condition of
the masses but will only result in declining food
security and nutritional standards, and rising
unemployment.
Many countries with high GDPs have high Gini
coefficients, which measure the inequality of

income and wealth. The Gini coefficient of India
rose from 0.32 to 0.37 on a scale of 0 (complete
equality) to 1 (complete inequality) during the peak
period of high GDP growth. In India, high GDP,
without inclusive growth and with a dismal record
on the distribution of wealth, has failed to reach
the poorest of the poor.The benefits of economic
development have not been witnessed in real terms
among the vast majority indicating unsatisfactory
human development index (HDI) which is a
measure of life expectancy, adult literacy and
standard of living. The UNDPs Human
Development Report of 2010 puts India at the
119th place among 182 countries. India is
categorized under Medium Human
Development. The unprecedented economic
boom between 2004 and 2008 with an average
growth rate of over 8 per cent has been
overshadowed by the pervasive income inequality
levels. The egregious record of many government
agencies in implementing well-intentioned
programmes has been adding misery to the masses.
Oxford Poverty and Human Development Initiative
(OPHI) directed by Sabina Alkire has recently

developed a Multi-dimensional Poverty Index
(MPI) taking into into account ten variables for
measuring poverty. MPI starts with each person
in a household and the index is based on multiple
deprivations. MPI is not an alternative to the
conventional definition of poverty based on
household income and consumption data. It only
complements the commonly adopted definition.
For instance, if a household has a disabled person
it may not be income poor, though it may
experience multiple deprivations. The Oxford
study covered 104 countries with MPIs ranging
from 0 to 0.64. India ranks 63 in contrast to China
which ranks 46. The study team concludes that
poverty in 8 Indian states (Bihar, Uttar Pradesh,
Rajasthan, West Bengal, Orissa, Madhya Pradesh,
Chhattisgarh and Jarkhand) is worse than in 26
poorest countries of sub-saharan Africa. Their
MPIs were equal or greater than 0.32. In terms of
number the MPI poor in the 8 Indian states were
421 million whereas the MPI poor in the 26 African
countries were 410 million. A recent World Bank
report states that out of the estimated population
of 1,080 million in 2005 in India, 455.8 million
lived on less than 1.25 dollars a day. Another

poverty estimate was by the Arjun Sengupta
Commission (National Commission for
Enterprises in the Unorganized Sector) which
estimated that 836 million people (77 per cent)
lived on Rs.20 a day or less in 2004-05.
Hunger is a routine experience for millions of
Indians. India is home to the worlds largest food
insecure population, with more than 200 million
people who are hungry, observes US-based
International Food Policy Research Institutes
report of 2008. The report adds that India which
secured 66th place in the 2008 global hunger list
of 88 countries does not have a single state in the
low hunger or moderate hunger categories.
Being in 88 itself is shameful. Among the Indian
states, 12 are in the alarming category and one
state (Madhya Pradesh) is in the extremely
alarming category. Assam, Haryana, Kerala and
Punjab are in the serious category. Hindustan
Times reported on April 4,2010 poor hungry
children eating mud and silica in Ganne village in
Allahabad district. When millions starve,
thousands of tonnes of food grain get rotten on
open yards. Finally, the Supreme Court had to
intervene and tell the government in August 2010

to consider distributing food grain to the deserving
population at a very low cost or no cost. At the
present rate of progress, the Millennium
Development Goal 1 target of eradicating extreme
hunger may remain a distant dream.
Bihars success story of an average growth rate
of 11.3 per cent for the period between 2004 and
2009 is a striking example of the mismatch between
growth and societal good. Bihar has one of the
highest rates of child mortality in India according
to the third National Family Health Survey of India
during 2003-06. This anomaly is not confined to
Bihar alone as the country as a whole suffers from
such an anomalous pattern. An important
barometer of social and economic progress is
child mortality. In 2008, 5.3 lakh children under 5
died in the lowest income quintile in contrast to
1.78 lakh among the wealthy quintile (Save the
Children Fund,2010).
Around a quarter of the worlds population who
are deprived of food live in India and 43 per cent
of all children in the country under the age of five
are malnourished claims a recent report of the
Actionaid International in 2010 called Hungerfree Score Card. While Indias per capita income
tripled between 1990 and 2005, the number of
hungry people also increased by 53 million bringing
the total number of chronically hungry people in
India to a staggering 270 million. Out of 28 nations
ranked in the report, India got a dismal rank of 21
while Brazil and China are ranked 1 and 2,
respectively. The report says that India cannot
halve its number of people starving until 2083
nearly 70 years after the MDG target date of 2015.
India is not the only country where mass poverty
and marginalization of the poor co-exist with high
economic growth. Even the affluent countries have
poverty and deprivation in the midst of prosperity.
In the United States, the poverty rate in 2009 rose
to 14.3 per cent from 13.2 per cent in 2008. In
terms of number, 43.6 million people were in
poverty in 2009 up from 39.8 million in 2008
according to the US Census Bureau. The US
department of agriculture, in its report, stated that
14.7 per cent of American households faced food
insecurity in 2009. Nobel laureate and economist
Stiglitz (2010), in his book on the sinking of the
global economy, comments as follows:

We have gone down the path creating a society
in which materialism dominates moral
commitment, in which the rapid growth that we
have achieved is not sustainable environmentally
or socially, in which we do not act together as a
community to address our common need, partly
because rugged individualism and market
fundamentalism have eroded any sense of a
community.
The Indian economy after the economic reforms

has created a middle class comprising more than
200 million, growing in number and wealth. In
2008-09, India had 84,000 high networth
individuals (HNI) with a combined wealth of 310
billion US dollars according to the World Wealth
Report. The HNI population is expected to triple
by 2016 to 2.5 lakh.
The recent scams in the country in which mindboggling sums of public money were siphoned
off affect the growth and development of the
country. These scams are symptomatic of crony
capitalism which benefits a small number of
companies and individuals by bending established
rules and procedures.
Corruption and black money are closely interlinked.

The Washington based think-tank Global
Financial Integrity (GFI), in the report on illicit
fund flow from 1948-2008 authored by Dev Kar
(2010), states that Indias underground economy
is half the size of its GDP. At the end of 2008, the
black money stashed abroad at current rate
amounted to 462 billion dollars. The GFI study is
limited only to illicit flow of money which the
World Bank could monitor. The report asserts that
It should make the world re-look at India not
only as a rising economy but as a gigantic supplier
of black money to be parked wherever possible.
Private companies and High Networth Individuals
(HNIs) are the largest drivers of black money in
Offshore Financial Centres (OFCs) according to
the report. Arun Kumar (2011), author of The
Black Economy in India, claims emphatically that
Underlying this vast illegality is a Triad
involving the corrupt business class, the political
class and the executive. He adds that the criminal
has also entered the Triad since the mid-1980s.
He attributes the high food inflation (17.05 per
cent in January 2011) and rising prices of food
articles in the country to these scams which are
causing even policy failure. Inauguarating the

national conference of the top administrators of
the states in February 2011, Prime Minister
Manmohan Singh cautioned them that Corruption
strikes at the root of good governance. It is an
impediment to faster growth. It dilutes, if not
negates, our efforts at social inclusion. As
corruption dents Indias international image and
it demeans us before our own people, the Prime
Minister wanted the challenge of corruption to
be faced frontally, boldly and quickly.
The rampant corruption that has been plaguing
the country compelled a group of eminent
persons, including influential captains of Indian
industry, to issue an open letter to the government
in January 2011. The signatories expressed concern
about the possibility of Indias huge growth
potential getting diluted, which would be a great
loss, especially to the poor and the dispossessed.
They wrote that they were alarmed at the
widespread governance deficit almost in every
sphere of national activity covering government
and institutions.
The mismatch between economic development
and social development has unsettling effects on

society. Large sections of the population are
disconnected from the socio-economic mainstream.
There is a growing disaffection with the newly
affluent minority cornering the fruits of high growth.
Simmering social violence is an ever-present reality
as has been witnessed in many parts of India.
Mahatma Gandhi, while explaining the trusteeship
philosophy warned that a violent and bloody
revolution is a certainty one day unless there is a
voluntary abdication of riches and the power that
the riches give and sharing them for the common
good. Nobel laureate Amartya Sen says that If
we generate more public resources and use them
with a better identification of the prevailing injustices,
we could make a big change (An Unequal Country,
India Today, August 24, 2010).
PHILANTHROCAPITALISM
Mathew Bishop and Michael Green coined the
concept of philanthrocapitalism. They, in their
book by the same title, recommend it as the
remedy for the many social problems that face
even the rich societies. They comment that the
track record of the governments in tackling these

problems has been, at best, mixed. Because of
the fiscal fall out of the financial crisis of 2008 in
the United States, the book calls for a new
approach to solving social problems, based on
innovative partnerships between business,
nonprofits and government. A group of wealthy
business leaders is active in creating these
innovative new solutions. These philanthropists
think that the winners from the economic system
should give back and that business can do well
by doing good. Bishop and Green assert that
philanthrocapitalism revolution will have huge
implications: As governments cut back their
spending on social causes, giving may be the
greatest force for societal change in our world.
The philanthrocapitalist movement is on the move
led by Warren Buffett, Bill Gates and a web of
motivated givers. Buffett has pledged to donate
99 per cent of his wealth, and Bill and Milinda
Gates have already donated half of theirs to charity
for improving the health of humanity. Bill Gates
and Warren Buffett have called on American
billionaires to pledge at least half of their wealth,
and it is reported that as in December 2010, 57
wealthy individuals and families in the United States

have signed the Giving Pledge. Buffett and Gates
are also expecting the super-rich in India , China
and other countries to pledge half of their wealth
to social causes. President Bill Clinton, one of the
prime movers of the philanthrocapitalist
movement, exhorts the business leaders to be
partners in the new movement:
Our interdependent word is too unequal, too
unstable, and because of climatic change,
unsustainable. We have to transform it into one
of shared responsibilities, shared opportunities,
and a shared sense of community.
Azim Premji is the first Indian billionaire to give

away a huge amount of personal wealth for social
causes. He announced the transfer of 213 million
equity shares of Wipro controlled by him worth 2
billion dollars (about Rs 8,846 crores) at current
market rates in December, 2010 to an irrevocable
trust. The trust, in addition to supporting education,
will fund five areas of development: child and
maternal health, ecological sustenance, livelihood,
nutrition and governance at panchayat level.
Business groups in India have been forming trusts
and foundations like the business organizations in
Western countries. Tatas, Wipro and Infosys are

examples. The Tata Council for Community
Initiatives has crafted the Tata Industry for
Sustainable Human Development in collaboration
with UNDP (India) to provide guidelines to Tata
companies to fulfil their social responsibilities.
Infosys founded the Infosys Foundation in March
1997 which receives one per cent of the total posttax profit of the company. The foundation
supports the disadvantaged sections directly or
through non-governmental organizations. The
foundation is committed to giving 30 per cent of
its funds to the elderly, the differently abled and
the destitutes, 30 per cent for education of talented
poor children, 15 per cent for rural development,
15 per cent for cultural activities, and 10 per cent
for health care in villages as well as in urban areas.
Infosys Science Foundation is a landmark
contribution of the company. In 2009, the first
Infoys Science Prize for physical sciences,
mathematical sciences, engineering sciences, and
social sciences and economics was awarded. The
prize money for each of the five categories is Rs.50
lakh. HRD Minister Kapil Sibal hailed the prize as
Indias Nobel Prize. In Tamilnadu, the TVS group
has not only been in the forefront of CSR, but

also has collaborated with the CII in setting up
the CII-TVS Centre of Excellence for Responsive
Corporate Citizenship in 2007.
The successful PPP(Public Private Partnership)
model in developing physical infrastructure like
the modernization of the Delhi international airport
has been advocated for the delivery of social
development programmes, particularly in the health
and education sectors. Azim Premji Foundations
teacher development programmes for government
schools mainly in rural India have helped improve
the quality of education imparted to over 2.5
million children from standards 1 to 10 in over
25,000 schools in partnership with 16 state
governments. Bharti Foundations Adarsh schools
in Rajasthan and Punjab run in buildings allotted
or leased by the government are an encouraging
example. The Karuna Trust manages 46 public
health centres in five states with 1300 medical and
paramedical staff. The PPP model needs
systematic monitoring as it involves utilization of
the assets of the government by the private sector
for providing social infrastructure as some early
experiences were not satisfactory.
CSR projects are promoted only by well regulated

companies. Many companies carry on with their
business without bothering about their societal
obligations. The living manifestation of corporate
negligence in the world was the Bhopal gas tragedy
caused by Union Carbides pesticide plant. At
midnight of December 2, 1984 tonnes of lethal
methyl isocyanate gas spewed out of the plant
killing over 15,000 people, and causing illnesses,
injuries and disabilities to over 5,00,000. It is the
worst industrial disaster in human history. But the
verdict pronounced 26 years after the disaster by
a Bhopal court on June 7, 2010 has created huge
public outcry in India and abroad as too little
and too late. Frank Pallone Jr, US congressman,
criticized the grossly small quantum of punishment
- two years imprisonment - as outrageous for
the worst chemical disaster. The deafening
criticism of the soft verdict made the government
of India to constitute a Group of Ministers (GOM)
to look into relief, rehabilitation and other
measures. However, there is widespread
dissatisfaction over the inadequacy of the
governments response.
American law provides for provisions for

enforcing corporate responsibility. An instance is
a law suit by a consumer group, Centre for Science
in the Public Interest, against the global fast food
giant McDonalds over its Happy Meals
campaign. California has passed a law against
offering free toys with any meal that does not
satisfy a nutritional standard. McDonalds hands
out candy to children. The law suit states that its
creepy and predatory practice . warrants
injunction as McDonalds marketing has the effects
of conscripting Americas children into an unpaid
drone army of word of mouth marketers(Zoe
Williams, Enforcing Corporate Responsibility,
The Hindu, July 25,2010). In India ,such laws to
enforce accountability are necessary.
CSR RATING
The first systematic CSR rating in India has been
pioneered by Karmayog, an organization that
connects citizens, civil society groups, business
organizations, academicians, media, and
government through online and offline methods
for social and civic issues. Founded in June 2004,
it is an initiative of the Shri R.O.Somani Charitable

Trust.
Karmayogs concept of CSR stems from the
assumption that every company harms the
environment and people. CSR, therefore, has two
dimensions according to Karmayog.
a. The steps taken by a company to neutralize,
minimize, or offset the harmful effects caused
by its processes and products.
b. The additional steps a company takes using
its resources, core competence, skills,
location and funds for the benefit of the
community and the environment.
Karmayog rating (0 to 5) is based on the
companys main products and services. The rating
criteria are categorized into necessary ,sufficient
and negative.
Necessary Criteria
Level 1: CSR activities that cover any developmental
or community work.
Level 2: CSR activities that aim at improving the
processes and products of the company and to
reducing the negative impact of the companys

own products or processes.
Level 3: CSR activities that are focussed on those
who are affected directly by the company.
Level 4: CSR activities that form a part of the daily
business activities of the company operations.
Level 5: CSR activities that enable sustainable and
replicable solutions to problems faced by society.
Sufficient Criteria
Companies doing the following automatically get
rating 1 or 2.
Company fulfilling the basis needs of society
through its products or services such as
manufacture of food. (1)
Unique CSR activity being undertaken by the
company which is not being done by government,
non-governmental organizations, etc. such as a
software Teleopthalmology developed by an
Indian company to help eye patients any time
anywhere in the world .(1)
Companys products or services provide solutions
to mitigate the harm or negative impact caused by
actions of companies, their products, such as

making water purification and waste recycling
systems.(1)
Company is committed to measuring and reporting
its CSR initiatives as per a voluntary globally
accepted GRI framework. (1)
Companys annual expenditure on CSR is at least
0.2 per cent of sales which means that the company
is committed to a minimum expenditure on CSR
annually and thus considering CSR as an integral
part of its business.(2)
Negative Criteria
Companies in this category will not normally get a
higher rating than shown.
Companies that make liquor, tobacco, genetically
modified crops, etc.: these products are not
needed by society, and cause harm to people. The
CSR to do is to stop making these products. (0)
Companies that violate laws, rules and regulations:
CSR is not limited to just how a company spends
its money, but also to how it makes that money in
the first place.(1)
Companies engaged in high impact processes:

processes that severely damage the environment
require extraordinary efforts by the company to
reduce and repair the damage and require greater
contributions to benefit society.(1)
Environment is always damaged by individuals and
industries. Hence to get a rating of even 1, a
company is expected to engage in reducing the
environmental degradation and restoring the
environmental damage done. When the processes
and products of companies lead to harmful effects
such as pollution, waste generation and
environmental degradation, the CSR rating is
normally low. Companies engaged in mining,
aviation, cement production, thermal power
generation, manufacture of automobiles, iron and
steel production, and manufacture of paper and
forestry - based products cause serious damage
to the environment. These companies, therefore,
are not given high rating.
The Karmayog rating of the largest 500 companies
in India for 2009 shows that 26 per cent have the
lowest rating of 0, while no company has secured
the highest rating of 5. Twenty nine per cent have
scored 2. Only 13 per cent of the companies have

secured 3, while only 3 per cent could score 4.
CSR rating by Karmayog is an innovative initiative.
But it is ideologically loaded. For instance, cement,
steel and automobiles have become essential
elements for families and communities, but the
companies manufacturing these would not get high
rating even if they are engaged in very good CSR
activity. Social development needs rapid economic
growth, which definitely will have negative impact
on the environment and people. The harmful sideeffects of development projects should be
minimized and mitigated in a humane manner.
Without undermining the significance of the CSR
rating by Karmayog, there is further research
needed to develop a comprehensive rating
framework to measure the sustainable impact of
CSR initiatives.
CSR credits, akin to carbon credits, are suggested
by Union Minister Salman Khursheed. The
proposed system comprises certification of
companies for their CSR activities by a
government agency, earning CSR credits, and
trading credits in a CSR credit exchange. A
company which does not want to do any CSR

activity will have to purchase CSR credit from
companies that have already earned them. Salman
Khursheeds proposal has merit, but it is not fully
feasible. CSR is a combination of corporate
obligation and corporate discretion. Protection of
environment, prevention of pollution, safe
processes and ethical practices are obligatory on
the part of the corporates. But CSR activities for
the well- being of communities are voluntary and
are left to the corporate conscience. This
component of CSR may be traded through CSR
credits. Anyhow, CSR has to be brought under
the domain of social scrutiny. The government of
India has made CSR mandatory for public sector
oil companies ONGC, IOC, BPCL and HPCL.
These companies are to utilize 2 per cent of their
net profit for CSR. The Department of Public
Enterprises(DPE) has prepared guidelines for
central public sector companies to undertake
important CSR projects by spending 2 to 5 per
cent of the net profits of the companies depending
on the quantum of the net profit. A proposal
submitted recently by the Corporate Affairs
Ministry to the standing parliamentary committee
preferred provisions to be included in the

Companies Bill, 2009 making CSR spending in
the private sector on the lines of the public sector
companies. Companies having a net worth over
Rs 500 crores or a turnover of 1000 crores or a
net profit of over Rs.5 crores in a year are expected
to conform to the CSR spending norms. The
private sector is justifiably opposed to the
proposal of making CSR spending mandatory.
The government may facilitate CSR spending to
a desirable level by the companies instead of
resorting to coercion like a predatory state. The
government, however, is likely to make CSR
spending mandatory when the Bill is to be
presented in the Parliament in the budget session
of 2011.
EPILOGUE
Corporate affluence can be sustained only when
social development takes place along with
economic development. Corporate social
responsibility activities are not merely acts of
benevolence to the deprived, the disadvantaged
and the disabled. These are not to be viewed as
acts of charity. Society has the right in the fruits

of business. CSR is an investment, which would
yield multiple returns to business and society.
Prime Minister Manmohan Singh, while
inaugurating the India Corporate Week in
December, 2010 said as follows:
Sustainability of business includes not merely
economic sustainability in the narrow sense of
the term, but social and environmental
sustainability as well. Market activity that
concentrates wealth without empowering the
poor and the deprived is also unacceptable
ethically.
Business is expected to exist in equilibrium with

the social and ecological environment. Corporate
planning, therefore, needs to integrate social
development planning also. The term corporate
social responsibility was considered an oxymoron
till the middle of the twentieth century. But now
sustainable CSR activity is considered an
affirmation of the commitment of the business
organizations towards society. Industrialist
Deveshwar (2010) recommends encouraging
business models that would enable companies
to co-create, with local communities, opportunities
for sustainable livelihoods as well as enrichment
of national capital. He wants the civil society to

be made more aware of the tremendous change
they can bring about by encouraging a preference
for responsible companies.
Joholin (2004) predicts that in the times to come
companies will be judged more by their social
policies than on their delivery of products and
services. A new paradigm of corporate social
responsibility is needed. People expect a just social
order, and it is the responsibility of the government,
corporate organizations, and civil society to work
jointly towards that goal. CSR policy and projects
should be transparent and subject to social audit.
The concept of CSR needs to be widened as
corporate sustainable social responsibility
(CSSR).
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Corporates & Social Responsibility

suffering that accompanied it in occupied

General Smedley Butler (1881-1940) of the US

War is Racket (1935), in a speech in 1933,

Sadly, very little has changed to this day. In recent

Corporations were also charted by states, for a

Corporations are amoral legal entities. Their

viewed in traditional terms of providing education

The rise of politically destabilizing Naxals in rural

are consuming ourselves out of existence, a

shelter and quality of life for all or else we will be

has the effect of generating both inefficiency and

helped me acquire values, skills and attitude

and I am deeply touched by his support.

Corporate Social Responsibility

The Setting and the Methodology

Corporate Executives and

SOCIETY AND BUSINESS

2 / Corporates & Social Responsibility

improvement of a communitys quality of life will

Better Quality of Life

Business and society, taken together, consist of

Corporates & Social Responsibility / 3

often into business. Business is involved with

4 / Corporates & Social Responsibility

orphanages for the indigent. The Birlas, for

Corporates & Social Responsibility / 5

academic institutions like the Indian Institute of

Gandhijis influence prompted various Indian

6 / Corporates & Social Responsibility

that are recognized as precursors of the modern

Corporates & Social Responsibility / 7

Ford Company. Henry Ford and his son

8 / Corporates & Social Responsibility

themselves rather than by the owners alone. The

Corporates & Social Responsibility / 9

for the stockholders alone, but also for the society

10 / Corporates & Social Responsibility

CSR through the pyramid of social responsibility

Corporates & Social Responsibility / 11

as of the local community and society at large.

12 / Corporates & Social Responsibility

public, it has adopted an interactive strategy. An

Corporates & Social Responsibility / 13

CSR: PROS AND CONS

14 / Corporates & Social Responsibility

institutions*. Nobel laureate Milton Friedman

The unbridled market forces of the capitalist

Corporates & Social Responsibility / 15

Keynesian economics influenced the fiscal policies

16 / Corporates & Social Responsibility

Business uses economic resources, and if these

Corporates & Social Responsibility / 17

is an increasing recognition that the bottom - line

18 / Corporates & Social Responsibility

Social Responsibility of the Businessman, was

Corporates & Social Responsibility / 19

broader cross-section of opinion. Five major

20 / Corporates & Social Responsibility

Indian business perceptions of, and attitude

Corporates & Social Responsibility / 21

30 companies. Areas in which large proportions

22 / Corporates & Social Responsibility