Corporate Social Responsibility: by Selected Multinational Companies in Gujarat

Corporate Social Responsibility
By Selected Multinational Companies in Gujarat.

(A study of 105 Employees’ perceptions of 18 Multinational
Companies’ Social Responsibility Undertakings).
By
Shailaja S.Raijada
Faculty of Social Work

Maharaja Sayajirao University of Baroda
Vadodara.
Gujarat. India
August-2008
ProQuest Number: 3740808
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Corporate Social Responsibility
By Selected Multinational Companies in Gujarat.
A Summary of Thesis submitted to

The Faculty of Social Work
For the Degree of
Doctor of Philosophy
in Social work
Ph.D. Guide : Researcher:

Prof. (Dr.) Aruna Khasgiwala Shailaja S.Raijada

Vadodara. Gujarat, India
August-2008
By Selected Multinational Companies inîjj

PH.D. Thesis
By
Shailaja S.Raijada
Ph.D. Guide
Prof. (Dr.) Aruna Khasgiwala

August-2008
ft <"V .
Corporate Social Responsipil

By Selected Multinational Companies iif^ârat*^
A Thesis submitted to
The Faculty of Social Work
For the Degree of
Doctor of Philosophy
in Social work
Ph.D. Guide : Researcher :

Prof. (Dr.) Aruna Khasgiwala Shailaja S.Raijada

August-2008
C<E<RFI<FICAT<E
‘This is to certify that the thesis submitted By Smt.
ShaiCaja Sarvadaman Rgijada on ‘Corporate SociaC
ResponsiSiCity (By Selected (MuCtinationaC Companies in
(jujarat(A study of 105 UmpCoyees’ perceptions of 18
MuCtinationaC Companies’ SociaC ResponsibiCity "Undertakings)
contains originaCdata. The thesis is the originaf worhând
incorporates the resuCts of independent investigations
carried out By Smt. ShaiCaja S. Raijada.
She has worked under my direct guidance andsupervision.
The content of this worh^ is not submitted anywhere in
India and outside of India to any other universityfor the
awardofother degree or diploma.
Vadodara (Prof. Dr. JLruna KjiasgiwaCd
Date: August2008 Dh.D. ()uide

ytf'A '
PREFACE
Globalization, economic liberalization, political transition and
technological transformation have created fundamental and rapid changes in
society. These have changed the expectations of business behaviour in terms of
influencing changes that will eliminate economic inequality, environmental
degradation, and social injustice - issues that affect our development parameters.
On the International scenario, governments and their international arms including
the agencies grouped under the umbrella of the United Nations, have not been
able to get rid of underdevelopment and poverty from this world. And whether
they like it or not, corporations have to be involved in development and should
be seen as agents of development. Large corporations, with their power and
economic strength, have taken a dominant position in society and influence what
happens in society for years to come. With this power comes monumental
responsibility and need to recognise their obligations.
The concept of Corporate Social Responsibility (CSR) as a postulate for
ethical behaviour of business and as a basis for good corporate citizenship has
been discussed within all the segments of civil society. Though, there is no
universally agreed statement of just what CSR means and implies, and ideas on
the subject are still evolving, a common body of doctrine has now taken shape
and won general approval among those who favours the approach. Over and
above business world, Corporate Social Responsibility (CSR) has been taken up
by academics and commentators, including faculty members in business schools
where it is increasingly struggling to find an honoured place in the curriculum.

Outside the business milieu also, CSR is typically favoured, and often demanded,
by ‘public interest’ non-governmental organisations (NGOs), many of which are
leading and forceful critics of businesses in general and multinational
corporations (MNCs) in particular.
It is the highly centralized nature of multinational corporations that is
often the cause of international concern. Although they have the ability to
stimulate the flow of investment, technology, profits, etc, they do not tend to
experience a sense of loyalty to, or responsibility for, the citizens of the countries
in which their subsidiaries reside. Hence, they are often more likely to close
branch/plants abroad in times of economic downturn than to close plants at
home. Logically, they tend to establish subsidiaries in countries where conditions
are most favourable to their business operations. In their negotiations with the
government of the host country, their ability to pick up and leave provides them
with a great deal of leverage over states dependent on the jobs they provide. Host
governments do have some bargaining power, but, particularly in developing
nations, where economies are often weak, the concerns of the host government is
more of investment than over how the MNC operates in their country. Therein
lays the risk of exploitation. After all, some of these large corporations are more
important economic actors in global affairs than are many states.
At the same time, any business including MNCs is not development
agencies. They are profit-seeking organizations which have particularly made
them object of great controversy. Over the evidences of large-scale corporate
irresponsibility and fraud across the globe, there is insistence that business can
II
Introduction
The challenges of globalisation is to find the rules and institutions for stronger
governance to preserve the advantages of the global market and competition but also to
provide enough space for human development which includes social development and
environmental protection to ensure that globalisation works for people and not against them.
Gone are the days when clear distinction between the role of government and other economic
institutions could be made. There is a need for strong and sustained partnership between
public and private sectors to ensure well being of people. Because corporate intervene in so
many areas of social life, they must be responsible towards society and its development.
Business being one of the major economic institutions depends for its success on the health,
stability and prosperity of the society and communities in which it operates. Community
focused business like banks; retailers, housing finance companies etc. cannot prosper in
declining localities. So the problems of poverty and unemployment, education and health,
etc. dramatically affect business. While business has traditionally considered these to be
exclusive domain of government, today more and more corporations are accepting part of the
responsibility to improve the communities in which they do business since society at large
looks to them for answers to contemporary social and economic issues. In India as in the rest
of the world there is a growing realisation that capital markets and corporations are, after all,
created by society and must therefore serve it, not merely profit from it.
Today we live in an age in which corporations, equivalent in wealth to countries
call the shots and control much of the earth’s resources. The modem day large
corporations are often larger than nation states. Rich individuals own and
command resources that are so large, often larger as compared to smaller/poorer
nations and the fundamental principle of social responsibility is that, ‘with great
power (and size), comes great responsibility.
The second important development in the late 20* century has been the
rolling back of the State. It is increasingly being realised that the State cannot and
should not perform all functions it was performing in the earlier periods. In many
countries, national and local governments have taken a “hands off’ approach to
regulating business in response to liberalisation and globalisation of trade and
commerce. Moreover, globalization has also weakened regulation at the national
level, through a combination of investor pressure, new international trade rules and
weakened government tax bases. Many countries have set up special investment
zones that are not only tax free but also free of virtually all regulations. Budget
cuts have resulted in the non-enforcement of existing regulations.
In addition, increasing focus is being placed on the growth of corporate
power and the need for greater accountability and transparency to society, for
example through reportage and stakeholder dialogue. This captures the whole set
of values, issues, and processes that companies must address to minimize any harm
2
resulting from their activities and to create economic, social, and environmental
value.
At the same time, internationally, different societies have become more
demanding in terms of expecting ‘right behaviour’ from the corporations.
Integrating interests of host country’s development issues and local communities
into a company’s business operations has become essential. Revenues and profits
can no longer remain the only topics of conversation among corporate leaders;
instead, they have to talk about the profound impact that their business relations
with society and communities might have to their competitive advantages and
operating revenues. In addition to higher revenues, environmental protection and
sustainable growth also have to be accounted for the long-term development of the
business and society. Corporate Social Responsibility has been demanded by
various stakeholders as one response to these challenges, that refers to business
activities guided by codes of conduct that exceed legal and ethical standards
relating to labour conditions, environmental impacts, human rights compliance etc.
resulting in to better quality of life for all of its stakeholders.
3
Conceptual Framework
Corporate Social Responsibility Undertakings
by Multinational Companies.
4
Review of Literature
The rule of business has been debated in economic literature for a long time. By
the term ‘Corporate social Responsibility’ (CSR), what is generally understood is
that business has an obligation to society that extends beyond its narrow obligation
to its owners or shareholders. This idea has been discussed throughout the 20th
century, but it was Howard R Bowen’s (1953) book on “Social Responsibilities of
Businessman”, which is said to be the origin of the modem debate on the subject.
Carroll takes Howard R. Bowen to be the “father of Corporate Responsibility”
(1999: 270). Others soon followed suit, and by the seventies of the twentieth
century the intuition that business had some form of social responsibility over and
above its responsibility to perform economically had already been cashed out in a
number of publications (Frederick, 1960; Davis & Blomstrom, 1966; Walton,
1967). Although these publications often provided crude definitions or descriptions
of what CSR was, the predominant concern was to drive home the argument that
CSR is desirable, either in its own right ( Frederick, 1960; McGuire, 1963) or
because it is in the long-term economic interest of corporations and other business
organizations to engage in CSR (cf. Davis, 1960; Johnson, 1971).
Even back in the 1930s, the now classic book on the modem corporation by A.
Berle and G.Means, The Modem Corporation and Private Property (1933) was
5
arguing that ‘the modem corporation should be transforming itself into a social,
rather than an economic institution intent on profit maximisation alone’.
Leading sociologist Daniel Bell, writing in 1974 said, 'to think of the business
corporation simply as an economic instrument is to fail totally to understand the
meaning of the social changes of the last half century.’(Bell, 1974 cited in Beesley
& Evans, 1978: 16). Thirty years on many people are saying similar things within
the corporate social responsibility debates. Much of this had already been said
many years before, of course, by Peter F Drucker in his now classic 1946 book,
‘The Concept of the Corporation’ referred Management as ‘ industrial society’ and
as such have great responsibilities to their own profession, to the enterprise and to
the people they manage, and to their economy and society.’ (Drucker, 1964). This
view is now central to corporate social responsibility discussions.
During 1960s, the western Industrialized countries began assessing, the impact of
modem economic activity on the quality of human and social life. Among them,
the prominent one, that concerned India is by ‘McGurie and Parish (1971) who
surveyed executives of large corporations and found substantial evidence to
support the contention that the corporate executives pursue social as well as profit
goals. They found that, there is little evidence of the Indian business’ involvement
in social responsibility. The efforts have been few and far between barring Tatas,
Birlas, Lalbhai Group of companies etc.
6
On international level, the crucial one is a comparative study, undertaken by the
‘International centre for Research in Accounting, University of Laneester U.K. to
make an inquiry into social consequences of the corporates’ decisions and actions
in 3 countries - Germany, France and Canada between 1974 to 1976.
The data revealed significant differences in corporate social policy and
performance associated with firm size and sphere of economic activity. Although
the Canadian data clearly revealed - and all other studies strongly suggested - a
general tendency for larger firms to place greater emphasis on social policy and
performance, the differences associated with size by no means were all in one
direction.
An empirical study was undertaken by Singh. Maggu and Klauier (1978) with an
objective to generate empirical evidence regarding the present state of corporate
actions and their orientations in the Indian context and the major findings of the
study was perceived as, pure profit maximizing is the most dominant corporate
behaviour, followed by calculative and socially responsible corporate actions.
A recent surge in media and academic interest in CSR may suggest that theory of
the corporation-society interface is a recent phenomenon. The reality is that a long
list of authors since Adam Smith, and beyond, has exercised their minds on the
subject. Nevertheless there are numerous unresolved theoretical and empirical
issues in CSR and historically, academics have drawn on several existing theories
to explain, critique and study the area. Theories drawn on include: agency theory
7
(Friedman, 1970); stakeholder theory (Freeman, 1984; Donaldson and Preston,
1995); institutional theory and classical economic theory (Jones, 1995); a resource-
based-view-of-the-firm (Penrose, 1959; Barney, 1991; Wemerfelt, 1984; Hart,
1995); economic models of CSR (Baron, 2001; Feddersen and Gilligan, 2001) and;
systems theory (Preston and Post, 1975) and may be many more according to the
need for establishing relevance with one’s own work.
Research Setting
India has witnessed large number of Foreign Direct Investments in the form
of multinational corporations in the last twenty years. Globalisation and
liberalisation have provided a great opportunity for Multinational corporations to
be globally competitive by expanding their production-base and market share. As
corporate globalization continues to expand, MNCs play a key role in defining
markets and throw multiple challenges to national and global business
environment.
Among these the first and foremost is to challenge the traditional view that
‘business exist solely to make profits for their shareholders; all that matters is a
profitable bottom line’. This has led to the controversies that Multinational
companies (MNCs) might be pursuing profit at the expense of vulnerable
workforces, exploiting local resources, destroying environment and so on.
8
Secondly, doing business globally opens the arena for conflicts in norms.
Many multinational companies have codes of ethics, mission statements and
integrity policies guiding their practices. However, when operating outside of their
boundaries they confront different sets of norms which sometimes conflict with
their home based ones. In developed countries, the moral expectations of the host
country are as stringent as of any other developed country. With third world host
countries, though, the moral expectations often seem to be sloppier, multinationals
are tempted to lower their standards and indulge in unethical practices when
situations permit.
Thirdly, the globalization of production networks means that corporations
increasingly source their products and services from overseas, making it more
difficult to regulate corporate activities through a single country’s national legal
and regulatory mechanisms. This leads to discriminatory standards of practices by
a single company at its different operational locations. According to Human Rights
Watch, companies such as General Motors, Sunbeam Oster, and Zenith engage in
gender discrimination and mistreatment of pregnant workers in factories in
Mexico. In India, Coca Cola causes shortage and immense pollution to local water
supplies. Articles published in The Economist (March 2005) estimate that in
Burma, where the American oil company Unocal has operations, the government
used 800,000 forced labourers in their army. Verite, a social auditing firm, found
that workers are commonly penalised or dismissed for joining unions in Vietnam.
Just last year the Washington Post reported that of eleven U.S. toy manufacturers
9
in China, the average wage paid to workers was $0.12/hour even though the
minimum wage in China is $0.30/hour. The examples of irresponsibility and
injustice are abundant.
Marian Miller (2005) was concerned with the power of multinational
corporations, in particular their ability to influence policies and environmental
outcomes in the developing countries. She saw this power of corporate actors as
draining sovereignty away from Third World countries, and exhausting their
resources and so, according to Miller, they are in need of being closely watched.
Research Methodolog
Significance of the Study
The rules of corporate governance have changed. And there has been a
range of reactions to this change. On the one hand governments and local
businesses welcome the trans-national players for furthering economic growth; on
the other hand, there is an emerging social discontent against multinational
corporations in different parts of the world. Labourers, marginalised consumers,
environmental activists and social activists have protested against the
unprecedented predominance of multinational corporations. To them, MNCs
overall impact on the host countries’ social and environmental sectors is largely
10
negative compared to its negligible contribution in the countries’ economic
development in spite of MNCs dossier claims of CSR.
Secondly, critics of MNCs business practices and skeptics of CSR reporting
continue to question whether or not the information reported by multinational
corporations accurately reflects their actual business practices, how effective the
sustainable development programs of corporations are in addressing important
social and environmental problems of the host country and how committed senior
executives in MNCs are to implementing development policies beyond mere
compliance with legal and regulatory mandates as the critics also contend that
these corporate social responsibility reports may be misleading, incomplete, and
self-serving”. (Dennis A. Rondinelli -2006)
Recently, international organizations and nongovernmental rating and
monitoring organizations have claimed an increase in corporate attention around
the world to sustainable development and undertaking social responsibility in the
host countries, but, the serious questions remain about how significant the growing
number of corporate citizenship is, compared to the large number of enterprises
doing business globally.
To conclude, the liberalized economic and industrial processes have the potential
to disturb social fabric through widening the gap between poor and rich and human
right abuse. It can have negative environmental impacts, causing climate change,
loss of natural resources, air and water pollution and extinction of species. At the
9
same time, it has been repeatedly observed that industries are most effective as
11
social volunteers when they are doing things that are close to their shareholders
interests. These interests clearly differ with sectors and industries in which the
companies operate: as oil companies world over clearly emphasise building local
infrastructure; Avon, which sells products largely to women, is one of the world’s
biggest supporters of breast cancer research, Wipro, supporting innovative rural
literacy campaign through computers. So the overriding policy challenge is, to
promote the positive impacts of globalize business development while limiting or
eliminating its negative impacts throughout the world. While reviewing the
literature, the information about MNCs business practices and the value attached to
CSR while operating in the developing countries is found to be more prescriptive
and lacking empirical evidences at large. The researcher having worked in the field
of social development and getting exposed to corporate world from close quarter
time and often strongly feels that,
> CSR activities, in fact, need predominantly, to be driven by the development
needs of the communities in which any national or global businesses exist.
Deteriorating environment, employment conditions, corruption etc. at macro
level along with poverty, poor infrastructure and living conditions, lack of
education, inadequate health care facilities, and inadequate sources of
livelihood in the surrounding communities at micro level have to be the prime
concern to any industry having its business operations in India;
> Corporations and MNCs in particular, need to carry forward and institutionalize
CSR initiatives as one of the core function of its management system, and,
12
\
> Indian educational institutions, the corporate sector, the social sector, and the
government need working together on the very important question of how to
integrate CSR into the curriculum of business schools and into corporate
business strategies.
With this conviction, the researcher found it necessary and interesting to study
CSR practices and processes presently being followed by MNCs present in Gujarat
and the employees’ perspective on international CSR issues.
Hence the title of the present study is:
‘Corporate Social Responsibility by selected Multinational Companies in Gujarat’.
(A study of 105 Employees’ perceptions of 18 multinational companies’ social
responsibility undertakings).
Goals of the study
1. To understand the state of ‘Social Responsibility Undertakings’ of
Multinational Companies of Gujarat through their employees’ perception.
2. To devise a tool to adapt from, for designing company specific CSR
business model for MNCs in particular.
13
Objectives of the Study
1. To study the Corporate Social Responsibility (CSR) profile of the
Multinational Companies’ of Gujarat.
2. To study factors affecting Corporate Social Responsibility (CSR)
Undertakings among the Multinational Companies of Gujarat.
3. To study the perceptions of employees about the performance of CSR
processes undertaken at their companies in Gujarat.
4. To examine employees’ perceptions about their companies’ level of
adherence to Corporate Social Responsibility Regulations mentioned under
Global Social Responsibility Guidelines given for Multinational
Companies.
5. To study the opinion of employees about ‘International Social
Responsibility’ with special reference to Multinational Companies.
6. To examine relationship between organisations’ ‘Corporate Social
Responsibility Profile’ with location, size, age, mode of entry and nature of
business of the Multinational Companies.
7. To explore relationship between the perception of the employees about
‘Corporate Social Responsibility Practice’, ‘Corporate Social Responsibility
Process Performance’, ‘Adherence of their companies to CSR Regulations’
and the employees’ opinion on ‘International Corporate Social
Responsibility’ with location, size, age, mode of entry and nature of
business of the Multinational Companies of Gujarat.
14
8. To explore relationship between the perception of the employees on
‘Corporate Social Responsibility Practice’, ‘Corporate Social Responsibility
Process Performance’, ‘Adherence of their companies to CSR Regulations’
and the employees’ opinion on ‘International Corporate Social
Responsibility’ with their age, education, years of experience, function and
past experience of CSR related work.
9. To explore relationship between type of the organization with the
employees’ perception on ‘Corporate Social Responsibility Practice’,
‘Corporate Social Responsibility Process Performance’, ‘Adherence to CSR
Regulations’ and the employees’ opinion on ‘International Corporate Social
Responsibility.’
10. To explore relationship between employees’ perception on ‘Corporate
Social Responsibility Practice’, ‘Corporate Social Responsibility Process
Performance’, their companies’ Adherence to CSR Regulations’ and the
employees’ opinion on International Corporate Social Responsibility’.
11. To measure intensity of commitments to various Corporate Social
Responsibility processes and Corporate Social Responsibility Regulations
by Multinational Companies of Gujarat.
15
Operational Definitions:
Corporate social responsibility (CSR) (as defined in Wikipedia, the free encyclopedia)
‘Corporate social responsibility (CSR, also called corporate responsibility,,
corporate citizenship, and responsible business) is a concept whereby organizations
consider the interests of society by taking responsibility for the impact of their
activities on customers, suppliers, employees, shareholders, communities and other
stakeholders, as well as the environment. This obligation is seen to extend beyond
the statutory obligation to comply with legislation and sees organizations
voluntarily taking further steps to improve the quality of life for employees and
their families as well as for the local community and society at large’.
For the present study, Corporate Social Responsibility (CSR) is used as an
umbrella term for corporate citizenship, corporate accountability, corporate social
performance, corporate responsibility etc. as appear in CSR literature including
various CSR Standards and Guidelines for multinational companies..
Social Responsibility Undertakings
Business has many operative as well as management functions. During the
operationalisation of these functions, if a company is able to reflect following
aspects in its conduct Social Responsibility seems to be undertaken .........
> When business outcomes are not strictly measured in terms of ‘Profitability’
only.
16
> When business ethics synchronizes with host country’s economic, social and
culture aspects and generate ‘common good’ for all the stakeholders and,
> When a company’s activities build human and social capital within the host
country where they operate.
For the present study keeping these aspects of business as focal point, the researcher
has made an attempt to incorporate them in organisation’s Corporate Social
Responsibility Profile, Corporate Social Responsibility Practices, Corporate Social
Responsibility Processes and Adherence to Corporate Social Responsibility
Regulations. These four components together help to study ‘Social Responsibility
Undertakings’ of MNCs for this study.
Multinational Companies (MNC) (as defined in Wikipedia, the free encyclopedia)
“Multinational corporation (or trans-national corporation mnc/tnc) is a corporation
or enterprise that manages production establishments or delivers services in at least
two countries. A Multinational Corporation is a business concern with operations
in more than one country. These operations outside the company’s home country
may be linked to the parent by merger, operated as subsidiaries, or have
considerable autonomy.”
The term Multinational corporations (MNCs) through out the study, except
in quotations, is used to cover both Multinational corporations and Trans-national
corporations (TNCs) without further definition, as • they often are used
interchangeably in the context of CSR for large corporations operating in other
17
1. CSR Philosophy 2. Business Ethics 3, Corporate Citizenship 4. CSR
Communications 5. CSR Knowledge 6. Stakeholders’ Dialogue
7. Corporate’s gain 8. Stakeholders’gain 9. Conflict Management 10, CSR
Decision Making 11. CSR Review 12. CSR Audit and 13. CSR Reporting.
CSR Regulations
Under CSR Regulations twelve variables/parameters are taken for the study. They
help to measure adherence level of MNCs to Corporate Social Responsibility
Global Guidelines given for MNCs. They are: 1. General Policy 2. Quality of
Work Life 3. Employment 4. Industrial Relations 5. Human Rights
6.Environment 7. Consumer Interest 8. Direct Contribution to Local
Communities. 9. Training 10. Disclosure 11. Corruption. 12. Corporate
Governance.
Corporate Social Responsibility Profile
The aspects regarding structure and functioning that facilitates a company’s CSR
Undertakings are considered for profiling CSR of the company.
Corporate Social Responsibility Practice
The company’s present systems operative for CSR and ideology with which CSR
is viewed and carried out comprises of CSR Practices for the present study.
CSR Drivers
19
These are the factors that enable the corporations to adopt relevant CSR strategies
and activities. They are the reasons for, or a rationale to actually undertake social
responsibility.
CSR Barriers
Constraints that the company face to get involved in social, ethical and
environmental issues of the society and key communities where they operate.
CSR Outcomes These are the expected results on overall business a company is
expecting after undertaking CSR activities.
Research Design:
The study is descriptive and exploratory in nature as the researcher has
made an attempt to study and narrate the characteristics of the organizations’
Corporate Social Responsibility (CSR) Undertakings on the basis of their
employees’ perception. The researcher has also made an attempt to explore
whether any relationship exists between the employees’ perception and various
variables taken to study the Corporate Social Responsibility (CSR) Undertakings
of the organizations under this study.
Universe and Sample
The researcher has chosen to conduct this study within MNC’s, since in a
developing economy like India, the MNC’s are considered as very strong and
20
critical actors of financial growth having its large impact on
environmental milieu of the host country.
Universe of the industries is all 25 MNCs presently operating in Gujarat
and their top and middle management employees.
To draw sample, within the broader category of probability sampling,
multi-stage sampling technique is used.
Firstly, to select from, a list of Multinational companies of Gujarat was
prepared with the help of...
> a list provided by Industries’ commissioner’s Office, Gandhinagar and
confirmed with official website of Ministry of Finance, Government of India.
> a list of member industries of Federation of Gujarat Industries and Gujarat
Employers’ Association.
In the first stage Census method of sampling is used since there were
twenty five industries. All of them were approached for data collection.
In the second stage, purposive sampling is used as the researcher is aware
that in most of the industries CSR is handled by Human Resource Department, a
top management employee of Human Resource Department was contacted and
requested for cooperation. Once convinced, he acted as a ‘key informant’ and
provided the basic information about the company and it’s Corporate Social
Responsibility Profile.
21
In the third stage ‘quota sampling’ method was used. With the help of this
HR employee and ‘key informant’, minimum three top and middle management
employees from each major departments were identified who had some primary
understanding in the area of enquiry and their willingness to spare time on filling
up the questionnaire. The questionnaires were handed over to the ‘key informant’
of all 25 MNCs after explaining it in detail and their responses were awaited.
Sample Size
Out of twenty five companies approached, eighteen industries and 105
respondents have responded satisfactorily and that is how the sample size is of 105
respondents from 18 MNCs of Gujarat.
Pre-Testing
The researcher personally administered the questionnaire to 10
professionals having varied educational background and working in different
departments of corporate sector. The questionnaire was modified after
understanding the difficulties faced by the respondents either in responding or
categorizing responses in the questionnaire. Most of the subjective questions were
omitted as the respondents were not ready to provide detailed information. Few
questions were omitted as the responses to them were likely to be inaccurate.
Reference period - The data was collected from August 2006 to February 2007.
22
Source of data:
1. Employees’ responses for their respective companies.
2. Records, annual reports, information on Website.
Method of data collection
A structured questionnaire along with a detailed note,(stating the purpose a
of the research and seeking cooperation)was prepared. The questionnaire had
following sections.
I. Organisation profile.- This section besides name and other general
information of the organization includes information on organization
variables like location, age, size and nature of business of the organisation
and their mode of entry in to Indian market.
II. Respondent’s profile - Includes background information on the
respondents that includes their personal and work related information. Here
the variables taken are age, education, qualifications, their total years of
experience and past experience of CSR related work.
III. Corporate social responsibility profile- This section includes information
regarding each MNC’s structure and functioning of CSR, major CSR
programmes undertaken at original and host country, CSR drivers, barriers
23
and expected outcomes etc and information regarding their adaptation to
CSR Regulation Guidelines. On the basis if this information CSR Profile
Index is prepared.
IV. Corporate social responsibility practice profile- In this section
statements indicating intentions, beliefs and responsible factors for CSR
Undertakings are prepared. And the organisatiions’s CSR Practice Index is
prepared on the basis of employees’ perception on them.
V. Corporate social responsibility processes- Socially Responsible
behaviour of any company is reflected through the processes involved in its
overall business operation. In this research enquiry,
Various processes that can promote CSR are grouped in to thirteen Process
Variables and they are,
1. CSR Policy 2. Business Ethics 3. Corporate Citizenship 4. CSR
Communications 5. CSR Knowledge 6. Stakeholder Dialogue 7. CSR
Decision making 8. Conflict Management 9. Corporate’s Gain
10. Stakeholders’ Gain 11. CSR Audit 12. CSR Review 13. CSR Reporting.
Corporate Social Responsibility Process Performance Index is derived from
the respondents’ perception on these variables.
VI. Adherence to CSR regulations as mentioned in CSR global guidelines.

24
There are many CSR Standards/Regulation Guidelines declared by
various international and regional organisations and also governmental
guidelines (as given in chapter-3).The regulations addressed in most of the
Standards cover issues pertaining to various stakeholders. These regulations
are put in to twelve groups and they are taken as CSR Regulation
Adherence Variables. They are,
1. General Policy 2. Quality of work life 3. Employment conditions
4. Industrial Relations 5. Human Rights 6. Environment. 7. Consumer
Interests 8. Training 9. Direct Contribution to local communities
10. Disclosure 11. Corruption 12. Corporate Governance
CSR Regulations Adherence Index is prepared on the basis of the
respondents’ perception on these variables.
VIL International social responsibility with special reference to MNCs.
This section has twenty one statements grouped in to three major variables.
They are
1. Meaning of CSR 2. Preconditions of CSR 3. MNCs’ CSR Operations.
The Opinion Index on International Social Responsibility is prepared on the
basis of the respondents opinion on these three variables.
Nature of Data: The present study is largely based on empirical data /
information collected from MNCs and its employees through questionnaire. The
open ended questions were categorised and coded.
25
Data Analysis
The entire data were pre-coded and meaningfully analysed using
1. Percentage Analysis
2. Chi-square test
3. t- Test.
Data were presented in tabular forms using single and bi-variant tables.
Scheme of Chapterisation.
Chapter-1 Introduction.
The chapter includes an overview of business environment in India, need for
business to address development issues through Corporate Social Responsibility,
historical overview of Corporate Social Responsibility, importance of Corporate
Social Responsibility for Multinational Companies and its outcomes.
Chapter-2 Review of Literature
In this chapter, a review of interpretations and submissions of Corporate Social
Responsibility as a theoretical concept by prominent scholars and its contribution
to the field of business ethics is presented. Also a brief review of some of the
relevant researches carried out in various fields throwing light on Corporate Social
Responsibility as an essential approach of overall business operations is presented.
26
Chapter-3 Research Methodology
Along with significance of the study, the procedural details with objectives,
research design, operational definitions of the terms used, chapterisation etc. are
included here.
Chapter-4 Research Setting
This chapter helps developing an overall understanding of Multinational
companies, their historical development, their entry in to Indian market, their
corporate image most often reported and international efforts to set minimum
standards to regulate their corporate conduct.
Chapter-5 Corporate Social Responsibility-Theories and Models
An overview of some of the CSR Theories and Models is given in this chapter.
This helps understanding Corporate Social Responsibility through various theories
and concepts from where it is originated and then developed as a full fledged
theoretical concept by itself. Models of Corporate Social Responsibility developed
by few scholars are given that can help to operationalise CSR in practice.
Chapter-6 Analysis and Interpretation of Data
Data is analysed and presented using Descriptive Statistics, and applying
parametric(t-Test) and non parametric(Chi-Square) tests.
Chapter-7 Findings, Conclusions, Suggestions and Action Plan
27
Limitations of the study
1. It takes longer and proves difficult to approach personnel from the
industries and receive feedback from them in the stipulated time. Despite
close, rigorous follow-up, spread for more than six months, through
personal visits, e-mail, telephone calls and even through personal and
professional references, responses were received from only eighteen
companies. Some of the companies had shown unwillingness to share
information formally on the pretext of ‘Company Policy’ even though the
researcher showed readiness to give in writing the assurance that the data
would be consolidated and the companies names would not be revealed in
the report. For the information on CSR Profile, some of the companies
asked to use information that is officially published in annual reports and on
websites in place of filling questionnaires after going through it.
28
Conclusions
In the CSR literature CSR overlaps with other concepts such as corporate
citizenship, business ethics and sustainable development etc. These concepts are
also continuously undergoing change at practice level by the companies. They are
interpreted differently with convenient meanings attached to all of them. Corporate
philanthropy and environment policies most often represent CSR. This lack of
consistency in the use of the term CSR has made companies name any form of
‘tokenism’ as CSR.
Under the Company Code of Conduct, there are well written policy
frameworks that take care of Business Ethics, CSR Philosophy and its principles.
Still, the common understanding about CSR is prevailing more often in its most
traditional form of ‘charity’, in other words, occasional contributions to
community and community level involvement by the industries. There are
indication of new waves, such as attention to socially responsibly products,
protecting consumer interest, human rights, environment compliances and
occasional socially responsible employee and industrial relations under CSR. In
spite of wide acceptance of CSR Reporting in these MNCs, knowledge about
existence of International Voluntary Corporate Social Responsibility Standards for
MNCs is limited even among the top management officials.
Corporate Social Responsibility Profile and Practices
29
CSR Structure and Functioning.
MNCs operating in Gujarat do not have any separate CSR structure in terms
of a Board or a Committee that especially take care of companies’ CSR related
activities. Holding periodical discussion on the issues pertaining to CSR is not a
regular feature at these MNCs. There is absolute absence of separate functional
department for CSR hence Human Resource Departments of the companies, in
most of the cases are made responsible to carry out CSR and related activities. The
HR department functionaries having more of social science educational
background are given CSR related responsibilities over and above their regular
work. On the job training to equip these employees to undertake CSR and carry it
out effectively, is negligible at the MNCs under this study.
CSR Planning
Employees and Shareholders are the most often identified groups as
stakeholders, followed by Customers, Suppliers, Community and Government
Most of the industries claim to have their CSR Undertakings based on their
stakeholders’ needs but planning of CSR is done at the parent company’s top
management level indicating process of decision making is from top to bottom.
This makes involvement of local stakeholders of the host country minimal or rather
nil in decision making and makes it indicative that MNCs undertake CSR that goes
with the company’s global image with available extra deployable resources, and
not to meet development requirements of the host country and local/immediate
stakeholders.
30
Investment in Social Sector
The CSR Undertakings for the benefits of local community and society at
large seem very limited as these MNCs have not involved themselves much for
various developmental activities required for the cause of Social/Human
Development. These MNCs are most often consistent in undertaking
responsibilities within the internal orbit that is, in the forms of paying fair wages,
taking utmost measures for the employees’ safety at work place and better returns
on shareholders’ investment etc. compared to being consistently responsible for
developing and implementing social/human development measures on the outside,
for the local communities or society at large. This is seen as these MNCs do not
show any such perceptible efforts or investment that has contributed to improve the
social conditions of the locals. In Gujarat MNCs’ contributions to strengthen the
social parameters of the host country’s local communities seem to be superficial
and insignificant.
Majority of the MNCs in Gujarat are joint ventures and Mergers.
Historically, these are the two business conditions where downsizing is a reality of
the entire reengineering process. Now in the global business conditions Voluntary
Retirement Scheme (VRS) is a business reality which most often turn out to be a
Compulsory Retirement Scheme (CRS). The company supports the outgoing
employees through financial VRS Package only. In most of the cases, relevant
non-financial help in its various forms may prove to be very crucial in stabilising
31
exiting employees and their families in a long run. This approach indicates MNCs’
concern, dignity and respect for the employees against harsh business decisions.
CSR Linkages
The results/outcomes of CSR are linked more often with company’s
reputation and generating goodwill among various stakeholders that improves
business conditions. For most of these MNCs, CSR for better business
performance heavily outweighs its linkages with either receiving community
support or customer loyalty. CSR helps in employee retention is not observed at
all. This suggests two things. One is that MNCs do not face problems in retaining
customers and employees so that they need to use CSR as a retention tool.
Secondly, the customers, while buying products are more concerned with the brand
name and, the employees, when working with MNCs are more concerned with
comparatively higher packages and benefits, better working facilities etc. and do
not bother to judge them on their social responsibility conduct. This may be a
typical feature of developing country.
The ‘Social Obligation’ approach is the most observed approach across
these MNCs. This approach is based on business having primarily economic
concern and so statutory and legal compliances are the only priorities. The case
with these MNCs is long gestation period and lack of visible results emerges as the
strongest barriers to undertake CSR. This fact, contradicts as ‘a deep sense of
32
social responsibility’ emerges as the most considered driver of CSR. It is also a
matter of concern that in the liberalized economy, MNCs’ Social Responsibility is
still restricted to its first stage of empowerment of identified individuals and
groups rather than working towards broader social responsibility objectives.
> In each of these areas the stronger relationship between CSR and mainstream
business activity is suggestive of CSR for better business. MNCs, as business
organisations possess resources and expertise and at times due to its sheer size
enjoy social power; which comes from this very society where it operates. As
per the Social Contract Theory, “legal constraints alone are insufficient to
ensure a minimum acceptable level of socially responsible behaviour by
firms. They must be supplemented by constraint on corporate behaviour that
is built into the implicit “contract” between the firm and society” and so
should be held responsible for helping society to solve its problems. In light
of the above discussion, CSR Undertakings of MNCs makes more of a
Business case of CSR than a Moral case as it has been discussed in the
introduction chapter of this study.
Corporate Social Responsibility Process Performance
> MNCs’ are in agreement to CSR Principles and that is captured in their Social
Policy framework. The policy view industries, as a social change agent and
CSR beyond administrative and legal compliance to internal rules and
33
regulations. They incorporate business ethics wherein respect and dignity of
their shareholders and employees are paramount to them.
> At MNCs, communication in reference to CSR is a two way process that
contradicts with CSR in principle. The company does share relevant
information with those groups of stakeholders who have the legitimate right
to access it. At the same time, as ‘business’ is their priority, the company
seeks necessary information for accelerating their business by all means.
> Most of the MNCs in Gujarat as a good corporate citizen, render
environmental concerns, consider employment of differently able and, try to
keep away from corruption and unnecessary litigations High standards of
working conditions with fair employment practices and willingness to act
ethically in negotiations help to avoid and manage conflict with stakeholders.
> There is an effort to generate common knowledge among various stakeholders
regarding companies efforts directed towards CSR. It is also seen that these
MNCs employ scientific measures to gather knowledge about needs of the
local communities, share this knowledge, and educate and train managers to
cater these needs of communities. At the same time it is revealed that the CSR
strategies are formed more at the top management level where the scope of
interaction with local stakeholders is minimal. Planning and decision making
of CSR at MNCs seem less likely to incorporate social objectives of the host
34
country. The decisions about socially responsible undertakings for the local
communities are most often taken by corporate board members. These
decisions depend largely on the available extra, deployable resources with the
company. This indicates ‘top to bottom’ approach to CSR, more to suit
corporate needs rather than generating ‘common good’ by meeting peoples’
needs. More number of expatriates in the governing body for India Operation
of these MNCs might be an important factor affecting CSR decision making.
> In the array of CSR undertakings, whose gain is intended, society or
corporate? In answer to this, it is largely felt that, CSR processes through
which corporate gains in terms of alleviating brand equity, image and profits
for the business in the long run, are more often observed compared to CSR
processes that improves quality of life of common people, and benefits the
society at large. Whatever socially benefiting processes visualised they help to
restore people’s faith in industrialisation processes and liberalisation of the
economic boundaries but more so it helps companies to gain public
acceptance and support of the local communities.
> Most often CSR Reviewing, Auditing and Reporting are used as a corporate
tool as it helps enhancing image of accountability of the company in the
public eye and avoids media speculation on the business intentions. CSR
Reviewing also helps companies assess the impact of CSR on the financial
35
results of the company and rarely used for enlarging the scope of social
benefits through these corporate processes.
> When we talk about the intensity of commitment with which these processes
are carried out at MNCs, out of total thirteen CSR processes, seven processes’
performance is lower than the average expected performance. These seven
CSR processes are Decision Making, Stakeholders Dialogue, Stakeholders’
Gain, Corporate Citizenship, CSR Knowledge, Review and Audit. MNCs’
CSR performances on these processes reflect weaker commitments and need
further rectification.
Adherence to Corporate Social Responsibility Regulations
> The MNCs show very high adherence to CSR Principles at the policy level.
Within the issues under general policy framework, the statutory and legal
compliances are taken utmost care of, followed by the issues concerning
direct stakeholders’ interests and adherence to purely voluntary development
issues seem to take the backseat. MNCs’ show higher adherence to the issues
of consumers than to the local communities’ development issues. Under
various Training regulations, statuary training is more often adhered to than
purely voluntary training that can contribute in the development of
indirect/extemal stakeholders.
36
> The MNCs highly adhere to high standards of safety at work place and fair
employment practices that are appropriate to the laws of the host country.
MNCs provide equal employment opportunities to many and strongly believe
in harmonious, co-existence of trade union and management but seem to hold
back when there is a question of conceding ‘freedom’ in collective behaviour.
> High adherence to practice of using human right language and spirit is
observed at these MNCs. Their approach to environmental concerns is more
reactive as they are more in to monitoring and controlling ‘environment
safety’ arising out of their business operations rather than proactively meeting
environmental challenges.
> The MNCs keep away from indulging in to local politics, makes employees
aware about the company’s anti-corruption policy, but it seems that
controlling flow of bribe for retaining business and fostering a culture of
ethics in the company do not come easily.
> At these MNCs financial outcomes are accurately disclosed with transparency
compared to the disclosure or communication of activities influencing
sustainable development outcomes. Accountability in non-financial issues,
overall business ethics and all other issues related to CSR Governance are
observed to be adhered more at moderate level at these MNCs.
37
> When we see in totality these MNCs’ intensity of adherence to the twelve
regulations commonly mentioned under international guidelines on CSR, their
adherence to seven regulations seem below the average expected level. These
regulations are Quality of Work Life, Industrial Relations, Disclosure,
Training, Corruption, CSR Governance and Direct Contribution to Local
Communities.
International Social Responsibility and MNCs
There is a debate going on ‘WHY and WHAT’ of CSR in all the
economies, be it developed or developing or not so developing. As the businesses
have become global in its true sense, CSR becomes a critical and vital approach to
equate development of economy for meeting social objectives.
> It is largely accepted that for MNCs, CSR should be an effective strategy to
address business as well as social goals. It is also true that CSR is not to be
viewed merely as legal and statutory compliances but is to be considered as a
core business activity that helps business to payback to the society in a
benefiting way.
> It is strongly believed that for the MNCs while operating in the host country,
profit should not be the only important condition for business, accountability
38
and transparency on non-financial matters, managerial ethics in all the
business operations and professionalism in undertaking CSR and its training
to various actors are equally important factors of CSR.
> The more realistic image of MNCs is emerging as abuser of human rights as
their foremost interest lies in financial returns and CSR remains a forced
activity by the critics of LPG policy.
Relationship among CSR Indices and other variables
> There is a significant relationship exists between the nature of business and
CSR Practices of the MNCs. This suggests that engineering companies’ sheer
size, heavy operations and their prominence since long in Gujarat have driven
them to adapt more conducive CSR ideology that is reflecting in to their
practices.
> Age of the organization that is presence in India, shares significant
relationship with MNCs’ performance on CSR Processes and Adherence to
CSR Regulations. MNCs entering the state after year 2000 are comparatively
newer and smaller and show higher commitments and adherence to CSR
processes and CSR regulations.
39
> Mode of entry has significant relationship with CSR Practices of MNCs. The
companies that entered as joint ventures seem to take up social responsibility
undertakings better may be due to existing platform to continue and develop
social responsibility undertaking of the old companies.
> Size of the organization and mode of entry share significant relationship with
employees’ opinions on International Social Responsibility issues. Employees
from bigger and acquired/green field MNCs, give more affirmative and
realistic opinions about all the International Social Responsibility issues with
special reference to MNCs.
> Age, Education and Total years of work experience of the respondents have
no significant relation with Multinational companies’ CSR Practices,
commitment to CSR Processes, Adherence to CSR Regulations and their
opinions on International Social Responsibility. In other words, the
respondents’ perceptions on CSR Undertakings by MNCs of Gujarat have not
varied according to their age, education and years of work experience.
> There is a significant relationship between the respondents’ Function and past
experience of working on CSR with International Social Responsibility
issues. Employees of HR departments and employees who are presently
handling CSR in their companies share and reflect more clarity about the
40
International Social Responsibility issues with reference to MNCs. It is the
same with the employees who have not worked on CSR in the past.
> The respondents who had past experience of working on CSR show
significant relationship with their companies’ CSR practices and their
commitments to CSR Processes. This suggests that actual working on the
issue generate better knowledge and exposure to various facet of CSR. And
this helped the respondents to identify and understand their companies’ CSR
practices and performance on process better.
> CSR Practices of these MNCs can be seen through CSR Profile of the
organization. The relationship between Type of Organisation and CSR
Practices is positive as the Multinational companies with low CSR Profile are
low on CSR Practices’ index and the companies with higher CSR Profile
show higher CSR Practices on its index.
> Among thirteen CSR Processes considered for the present study, Type of
organization has significant relationship with Corporate Gain, CSR Review
and Auditing. The low CSR profiled Multinational companies seek to gain
more from CSR and CSR reviewing and auditing without third party
verification done is used more as a management tool to enhance corporate
image.
41
> In general, there is a positive relationship among Multinational companies’
commitments to CSR Processes, their level of adherence to CSR Regulations
of Global Guidelines and International Social Responsibility issues. The
positive relationship among these three indices suggests that when
commitment to CSR is higher, adherence to CSR Regulations is also higher
among the Multinational Companies. At the same time, broad understanding
of International Social Responsibility issues that need to be handled by
MNCs’ also reflect better among the employees of these MNCs.
Summary
> MNCs operating in Gujarat are strong at framing pro CSR Policy, more
concerned with compliances where legality is involved, and they reflect
weaker commitments on purely voluntary issues. This leads to conclude that
though, Corporate Social Responsibility has gained acceptance as both a
principle and a practice, but its implementation for Multinational corporations
has remained inconsistent. The ability to achieve real results lies in bringing
more accountability in CSR undertakings and working closely not only with
immediate stakeholder groups but extending it to civil society groups and
governments together.
42
> MNCs’ present corporate profile is weak to support CSR Undertakings and
their practices till date amounts to mere ‘tokenism’. There is no such evidence
in their practice that echoes that CSR Undertaking is a serious activity and
through which they contribute to the holistic development of the host country.
> Commitments towards Corporate Social Responsibility that is reflected
through these Multinational Companies’ performance on CSR Processes
thoroughly gives a mix picture. Looking closely to it suggests that, CSR is
more of a business case than a moral case for these MNCs.
> Though, from the researcher’s view, MNCs’ CSR undertaking in developing
countries is a jumble of legal compliances. It is driven by charity and
minimum of social responsibility so that it keeps them away from major
controversies that can harm their global business image. Higher commitments
and better performance on CSR is expected from the MNCs when
corporations of developed countries operate in a developing country as they
are well versed with higher standards of CSR in their country of origin. The
major challenges to Multinational Companies in this respect are:
> Limited understanding about facets of Corporate Social Responsibility and its
inherent value to business.
> Weak Corporate Structure(CSR) at international and national level -
43
> Lack of sustained commitments resulting into stakeholders’ engagement and
poor decision making process.
> Lack of vision and support to CSR by senior management •
> Difficulties in measuring economic outcomes of social inputs.
> It is evident that the MNCs are better in capturing and revealing the spirit of
CSR more at policy level and they reflect minimum of ‘Social
Responsiveness’. These Multinational companies’ partnership with host
country to contribute for improving quality of life of the local communities
through humanitarian relief and sustainable development approaches is
minimal. Their accountability in non-financial matters raises serious
questions. Their intentions to share responsibility in the host country to
generate ‘common good’ are open to discussion. This leads to conclude:
1. Multinational companies of Gujarat need to look beyond financial objectives
of their business operations to become a responsible corporate citizen of the
host country.
2. There is an urgent need to find out measures that would gear up MNCs to act
more as a ‘Contributor’ and less as an ‘Exploiter’ in the host country.
44
Implications
> Corporate Social Responsibility(CSR) has moved, in the past twenty years,
from a theory to a more common practice. This is attributed to two factors.
1. A growing awareness among businesses that corporate responsibility is
good for business. Business leaders understand that "practicing" corporate
responsibility affects their corporate reputation, brand image and profit.
2. The growing influence of stakeholders and civil society actors like NGOs,
Media etc. Human rights and labour campaigns have turned the spotlight on
corporate practices in recent years. The questions raised were, whether and
how far a corporate is responsible for the social consequences of its
business operations. In response many companies have developed
successful corporate responsibility programs or participated in efforts to
meet humanitarian needs.
As CSR tends to be voluntary in nature, most often is approached from top-down:
a company decides what issues it wishes to address. It may be, contributing to
community education, healthcare or the wildlife, or donating to disaster relief, or to
encourage staff diversity or reduce pollution. These voluntary initiatives should be
welcomed. But accountability to CSR approach is different. It is not top-down, but
bottom-up, with the stakeholders at the centre, and not the corporation. Setting
higher CSR accountability standards Corporations world wide will be able to......
45
> Identify and prioritize the stakeholders’ interests at an international and
national level.
> Identify critical issues of CSR within the commercial framework, i.e.
achieving business goals, through adapting corporate codes of conduct,
monitoring and compliance, training and capacity building and many other
stakeholder engagement processes.
> Measure implications of CSR for corporate governance as well as for human
resources in a highly competitive and complex business environment
> Evaluate the results of legal versus voluntary measures from the perspectives
of a range of stakeholders, and its impact on the business.
This is vital for any corporate existence as globalisation does not simply means
economics, but the cultural, social, and political equation are equally important.
Corporate social responsibility touches on each of these facets of civil society.
Where CSR is integrated within the core business strategy, it is likely to remain
strong, whereas, CSR as a philanthropic add-on is vulnerable to cost cutting.
Ultimately, the long-term success of CSR will be based on its ability to be
positioned within the core of business strategy and development, thereby becoming
part of ‘business as usual’.
> The global market demands appropriate guidelines and policies on the
responsibilities of corporations. There is an ongoing debate on CSR to be left
as self-regulated or be regulated by law. Media is always ready with stories of
46
corporations and its social responsibilities if one wish to go by that only, but it
would be more responsible to judge today’s corporations and their business
implications through information backed by substantial data on the same.
As, all most all the CSR Definitions suggest that Corporate social responsibility
(CSR) encourages organisations to be accountable for their social and
environmental impact beyond profit or legal obligations, many organizations have
responded with defensive CSR initiatives, often disconnected from everyday
business reality. The issues that often need to be judged internationally are,
whether, CSR is just a bandwagon response for public relations; or an extra
curricular activity for staff; or a glossy ‘feel good’ sustainability brochure for
shareholders; or just a politically correct stick for activists to flog ‘non-believers’.
If so, the most pertinent question is, ‘Are CSR regulations required for MNCs
while operating abroad?
It is true that, when regulation by law ensures minimal standards, in the
process ‘conviction’ gets lost to ‘compliance’ and that spoils the value behind
Social Responsibilty. At the same time, no one should have doubts that, there is a
need for demonstrated consistency between CSR claims and actual behaviour in all
the developing countries where the MNC operates. The stakeholders here have
different characteristics and resultant bearings. The demographic realities are
peculiar and Governments also play very limited role to protect adequate and long
term social security of people. In light of these realities, if, CSR is regulated
47
through supportive legislative measures that are apt for the country specific
conditions can confer sustained CSR Outcomes.
> Globalisation is associated with massive increases in cross-national flows of
capital, labour, technological know-how, goods and services, and it has
correspondingly important effects on employment, economic development,
political institutions, and social Development.. Secondly, Corporations are
key agents of globalization as they are laboratories of innovation and
repositories of resources and talent. They are like people; each has a unique
personality and character. Just as people recognise each of us by the way we
communicate and the way we behave, so a company also reflects its own
unique character to the world. Hence, globalization presents major challenges
to social scientists and policy makers at many different levels of scale.
Academics and research provide significant paraphernalia to cultivate a
holistic and intellectually flexible understanding and approach in future
business leaders towards critical multi-sector social dilemmas facing today’s
world. CSR is one approach that can ensure that, future managers become
responsible decision makers. It prepares them to analyse business impact,
means recognising the business benefits and the wider social impact of
business policies. When the curriculum at business schools does not cover
only the traditional areas of recruitment, remuneration, training etc. but also
covers the growing global concerns like social and environmental impact of
business and opportunities of issues such as cultural diversity, equal
opportunities, social investments etc. it offers a framework that helps future
48
leaders and through them, organisations move toward responsible business
practices. It is important for today’s students and tomorrow’s leaders
to understand the role of each player in society -government, business, trade
unions, non-governmental organisations and civil society etc for building
capacity and getting prepared for creating strategic networks and alliances. In
this direction, the education and corporate sectors partnerships is necessary
for restructuring social and sustainable goals in local and global communities.
Suggestions
1. Identify performance measures and set measurable targets.
The first and foremost issue in CSR Undertaking among MNCs is to make
them accountable in some way to its stakeholders, and responsible to provide
corporeal mechanisms to ensure that the CSR yields measurable results.
CSR is a long and complicated process that influences overall business
decisions and so old patterns of working and taking decisions on it become
obsolete and insufficient to have measurable outcomes. As seen in the study, all of
the CSR instruments are voluntary, adherence to them rarely requires verification
and by definition also CSR is away from the enforceable by law. Voluntary
approaches, by design or default, serve to by-pass or undermine some of the key
forces that promote corporate responsibility, namely government or international
regulation, trade unionism, and more confrontational forms of NGO activism. As a
result, whatever initiatives undertaken, build on the self-interest of companies and
proves more to be a business case. To enable companies initiate CSR more for
addressing stakeholders’ issues, effective management of CSR demands
monitoring, measuring and reporting of performance against socially accepted
indicators. In light of this, CSR processes deserve good and professional
facilitation as it requires a transition from a 'routine and occasional' activity to a
sustainable and ethically important activity, if not through voluntary than through
statutory measures.
50
On the basis of the researcher’s observations and
X:
study, the researcher has listed certain areas of social responsibmPptmlt are
important and possible to measure from stakeholders’ perspective. For the purpose,
the researcher has developed a ’Corporate Social Responsibility Matrix’ with Key
Performance Indicators of CSR. The companies can adopt 360 degree Performance
Analysis approach and get feedback of their actual performance on various aspects
of CSR by the respective stakeholders. This analysis and feedback from it only,
should allow the companies to document, measure, and report on their social
responsibility-performance. The same approach can be adapted to measure each of
the Social Responsibility Undertakings and projects, bearing in mind that financial
and social objectives are complementary, rather than mutually exclusive.
Managers can use this CSR Matrix as a means to articulate strategy,
communicate its details, motivate people to execute plans, and enable executives to
monitor results. Perhaps the prime advantage is that a broad array of indicators can
improve the decision making that contributes to strategic success. Non-financial
measures enable managers to consider more factors critical to long-term
performance.
51
I
Here the ranking suggests achievements against the commitments made/no
commitments in particular area on the scale of 1 to 10 wherein, 1 suggests 10%
and 10 suggests 100% achievement. CSR Processes involved are listed by the
company and the judgment left to the stakeholders.
The other Important suggestions are:
2. MNCs should develop an integrated CSR decision-making structure. All the
MNCs’ CSR can go to higher graph if the companies constitute a CSR committee
comprising a member of the Board, senior management, representatives from each
of the stakeholders group, an expert from outside the company, instead of attaching
CSR activities to the HR departments only. Given that CSR is fundamentally
concerned with transparency, accountability and performance, it is important for
the CSR decision-making structure to be an integral component of the firm's
governance activities and remain visible. Assigning CSR responsibilities to board
members ensures that CSR issues will receive the attention they deserve, and as a
result forms a strong basis for an effective chain of CSR accountability within the
organization — all of which supports the board's corporate governance function. A
senior official or committee responsible for overall CSR implementation within the
firm should be identified and given the resources to do the job. CSR
responsibilities should be built into employees' job descriptions and performance
evaluations.
52
3. Design CSR Training. A comprehensive approach to training will ensure
employees have information on the firm's CSR commitments, programs and
implementation. Studies suggest that the most successful training addresses
knowledge, skills and attitudes. In order to strengthen MNCs’ corporate social
responsibility practices, the most important step to be taken is the raising of
awareness of various facets of CSR itself. As most of the time CSR is perceived
only as either charity for good cause or community development projects. Regular
discussions between companies and its stakeholders, as well as among the
stakeholders allow to create socially and culturally relevant understanding and
undertakings of corporate responsibility.
4. The overall success of CSR depends on the leaders within the organization.
The right mix of motivation and technical knowledge of CSR among the leaders is
of prime importance to raise the standards of CSR as, the how’s and why’s of
corporate responsibility affect the policies undertaken, its implementation and
success.
5. The MNCs should be encouraged to initiate volunteer schemes or
partnerships with civil society groups, who can provide policy guidance,
procedural support and technical advice. MNCs need to work more closely with
civil society, national and international organisations and governments to gain
momentum for more responsible business practice and the best framework in
which this can happen.

53
6. Reforming labour legislation at the national level is just one area that would
improve corporate social responsibility Undertakings. Similarly, improved
adherence to national and international guidelines can be achieved through
legislative measures. The introduction of tax benefits is another way in which to
promote corporate responsibility. Corporate Social responsibility if in a frame of
Statutory measures, requires companies to mainstream labour related and human
rights issues throughout their operations in a meaningful manner. Governments
worldwide should support meaningful corporate social responsibility and genuine
accountability for any violations. To encourage initiatives such as to expose abuses
and provide guidelines to protect the rights of stakeholder groups, country specific
recommendation and measures need to be welcomed.
7. Introduction of CSR as an action programme in management curriculum in
business schools and operationalising it at the industry level can change the
scenario of CSR in coming years.
8. The researcher also suggests that during the course of business, as a part of
business ethics, the companies continuously need to seek answers of few
questions.
> As business is primarily an economic activity, the first question is: How does
the company contribute in the economic well-being of not only their
shareholder but all other stakeholders?
54
> The second question that needs to be asked is: How to get rid of constraints in
achieving higher standards of social responsibility undertakings?
> The third question that can be raised is: Where, there is a scope to improve
people’s quality of life within ethical business framework?
> The fourth question is: What measures will be more suitable for meeting
larger development objectives of the local land? Where and at what level
interventions would be more appropriate?
> The fifth and the last question is: How does the company meet the local and
global goal of Sustainable Development?
55
and should act in a manner that respects the legitimate goals and demands of all
stakeholders. Business must realize their potential and accept their role to create
lasting social change. In many cases, the endorsement of CSR by companies can
be seen, in part at least, as a response to well publicised attacks on them as
greedy, secretive, exploitative and concerned only with making money for their
owners and managers. This is necessary also as the emergence of present largely
pluralistic society demands more in terms of getting deeply involved in the
solution of society’s major problems as every aspect of business has a social
dimension. Millennium Development Goals, setting the sustainable development
framework have helped to carve out a distinct path to undertake some of the
social responsibilities directly or indirectly. These MDGs have emphasized the
need for business organizations to become more ‘caring! While earning profit
from that host country, a mindful and well thought-out effort by MNCs to
contribute towards holistic development cause can go a long way.
It remains to be seen whether these MNCs can be persuaded to be good
citizens of the host country or they remain indifferent to their impact outside the
business. It is pertinent to examine whether they prove to be contributors of
development or exploiters of resources. Answers to this and many such questions
are crucial for any society’s development agenda. The researcher believes that,
while criticism/apprehension is welcome and often essential, it is meaningless
without assessment of the present conditions of MNCs’ operations with reference
to CSR in the global context and suggestions for improvement. So, this study is
an attempt to seek answers to such apprehensions through assessing Social
Responsibility undertakings of MNCs as perceived by the respective companies’
III
employees. The ‘employees’ is the only group of the stakeholder having direct
and concurrent observation of the company’s policies and practices. The
researcher is looking for developing a CSR contrivance on the basis of these
observations that may help the corporations in delivering measurable results and
filling up the lacunas existing in the present day CSR Undertakings. It can be
readily adapted and incorporated as one of the core management approach to
meet social obligations by any business as it seems more than likely that
corporations, in future may get evaluated on their contribution in constructing a
good society and to provide good quality of life to citizens all over the world.
IV
ACKNOWLEDGEMENT
I am indebted to all who encouraged me and provided long time support
to undertake and complete my thesis but first, I pray to God and thank him for
his blessings that enabled me to complete this work,
I thank Prof. Dr. Arana Khasgiwala, Dean and Head, Faculty of Social
Work, Maharaja Sayajirao University of Baroda, whose guidance and support
encouraged me to complete my work. Her understanding, support and personal
guidance have helped and resulted into present thesis.
My sincere thanks are to the experts from the field for their detailed
review, constructive criticism and excellent advice at several stages, during the
preparation of this thesis.
I warmly thank my professional colleagues and friends for their valuable
advice and friendly help. Extensive discussions around my work with them and
their valuable suggestions have been very helpful for this study.
I thank all the Industries whom I approached and the respondents who
have contributed and provided data. Without their cooperation this study would
not have completed.
I thank the authorities and library personnel of IEM-A, IRMA-Anand,
TISS-Mumbai, ICFAI-Vadodara and Smt. Hansa Mehta and Faculty of Social
V
Work Libraries of M.S.University for extending cooperation during review of
literature phase.
I thank Mr. Ashutosh Biswal for his guidance in the Statistical Analysis of
the data.
I owe my loving thanks to my Husband, Daughter and my Mother for
their unconditional support, endless patience and sympathetic help when it was
most required.
VI
CONTENTS
Sr.
Contents Page No.
No.
1 Preface I
2 Acknowledgement V
3 List Of Tables VIII
4 List Of Figures XIII
5 List Of Graphs XIV
6 Introduction 1-54
7 Review of Literature 55-109
8 Research Methodology 110-133
9 Research Setting 134-181
10 Corporate Social Responsibility- Theories and Models 182-215
11 Data Analysis and Interpretation 216-357
12 Findings, Conclusions, Suggestions and Action Plan 358-415
13 References 416-428
14 Annexure-I Questionnaire 429-450
15 Annexure-II Global Guidelines for MNCs 451-474
VII
List of Tables
Table Page
Title
Number No.
Organisation Profile
Table-1 Distribution of the Industries by their Location 218
Table-2 Distribution of the Industries by their Presence in India 218
Table-3 Distribution of the Industries by their Investment Pattern 219
Table-4 Distribution of the Industries by their mode of entry in India 219
Table-5 Distribution of the Industries on their size. 220
Table-6 Distribution of the Industries by their Nature of Business 220
Table-7 Distribution of the Industries by their Composition of the 221
Board of Governance
Corporate Social Responsibility Profile of the MNCs
Table-8 Distribution of the Industries by their CSR Management 222
Structure
Table-9 Distribution of the Industries by Frequency of CSR 223
Discussions
Table-10 Distribution of the Industries by Employment on CSR 223
Table-11 Distribution of the Industries by their CSR Co-ordination 224
Table-12 Distribution of the Industries by their Patterns of 225
Employees’ involvement in CSR
Table-13 Distribution of the Industries by CSR Training of 226
Employees
Table-14 Distribution of the Industries by Assistance on Employees’ 226
Exit
Table-15 Distribution of the Industries by Stakeholders Identified by 227
them
Table-16 Distribution of the Industries on their CSR Benchmarks 228
Table-17 Distribution of the Industries on Basis for Designing CSR. 228
Table-18 Distribution of the Industries by Adaptation of Code for 229
CSR Conduct
Table-19 Distribution of the Industries by Adaptation of CSR 230
Regulation Guidelines
Table-20 Distribution of the Industries by CSR linkages 231
CSR Undetaking through Social Sector Investment.

Table-21 Distribution of the Industries by their CSR Undertakings in 232
Economic Function Area
Table-22 Distribution of the Industries by their Investment on 233
Education
Table-23 Distribution of the Industries by their Investment on Health 234
VIII
Table Page
Title
Number No.
Infrastructure
Constructive Leisure Time
Table-26 Distribution of the Industries by their Investment on Polity 237
Table-27 Distribution of the Industries by their Investment in the 238
Problem Solving Area
Table-28 Distribution of the Industries by their Investment in Quality 239
of Life Area
Respondents’ Profile
Table-29 Distribution of the Respondents by their Age 240
Table-30 Distribution of the Respondents by their Education 240
Background
Table-31 Distribution of the Respondents by their Years of Work 241
Experience.
Table-32 Distribution of the Respondents by their Management 241
Levels.
Table-33 Distribution of the Respondents by their areas of Function. 242
Table-34 Distribution of the Respondents by their Past Experience on 242
CSR
Table-35 Distribution of the Respondents by their Present association 243
with CSR
Table-36 Distribution of the Respondents by their Strategic 243
Position/Status.
Table-37 Distribution of the Respondents by their Perception of CSR 244
incentive
Distribution of Resnondents bv their perception on CSR Practices.
Table-38 Distribution of the Respondents by their Perception on CSR 245
Management
Table-39 Distribution of the Respondents by their Perception on 246
Methods involved for CSR Undertaking.
Drivers of CSR
Barriers to CSR
Outcome of CSR policy
and Corporate Governance
Stages of CSR
and Stages of Social Responsibility.
Present state of CSR in their Companies
IX
Table Page
Title
Number No.
Table-47 Distribution of Respondents by their Perception on CSR 254-
Philosophy/Social Policy 255
Table-48 Distribution of Respondents by their Perception on Business 256-
Ethics 257
Table-49 Distribution of Respondents by their Perception on 258
Corporate Citizenship
Table-50 Distribution of Respondents by their Perception on CSR 259
Communications
Knowledge 261
Stakeholder Dialogue
Corporate’s Gains
Stakeholders’ Gains
Table-55 Distribution of Respondents by their Perception on Conflict 266-
management 267
Decision Making
Review
Audit
Reporting 273
Adherence to CSR Regulations
Table-60 Distribution of Respondents by their Perception on 274-
Adherence to General Policy Regulations 275
Adherence to Regulations on Quality of work life 277
Adherence to Regulations on Employment Conditions 279
Adherence to Regulations on Industrial Relations 281
Adherence to Regulations on Human Rights
Adherence to Environment Regulations 284
Adherence to Regulations on Consumer Interest
Adherence to Regulations on Direct Contribution to local
Communities
X
Table Page
Title
Number No.
Adherence to Regulations on Training
Adherence to Regulations on Disclosure
(N
0©
as
Table-70 Distribution of Respondents by their Perception on
1
Adherence to Regulations on Corruption 290
Adherence to Regulations on CSR Governance 292
Opinion on International Social ResDonsibilitv
Table-72 Distribution of Respondents by their Opinion on CSR 293-
Meaning 294
Table-73 Distribution of Respondents by their Opinion on conditions 295
for CSR
Table-74 Distribution of Respondents by their Opinion on MNCs and 296-
CSR 297
Chi-Square Test aeainst Eaualitv Hypothesis
Table-75 Index of CSR Profile of Organisation & Location of the 298
Organisation. f
Table-76 Index of CSR Profile of Organisation & Age of the 299
Organisation
Table-77 Index of CSR Profile of Organisation & Mode of 300
MNCs’Entry
Table-78 Index of CSR Profile of Organisation & Size of the 301
Organisation
Table-79 Index of CSR Profile of Organisation & Nature of Business 302
Organisation Variables and Perception Indices.
Table-80 Profile Indices of Variables 303-
304
Table-81 Location of Organisation and CSR Practice Index 305
Table-82 Location of Organisation and CSR Process Performance 306
Index
Table-83 Location of Organisation and CSR Regulations Adherence 307
Index
Table-84 Location of Organisation and International Social 308
Responsibility Opinion Index
Table-85 Nature of Business and CSR Practice Index 309
Table-86 Nature of Business and CSR Process Performance Index 310
Table-87 Nature of Business and CSR Regulations Adherence Index 311
Table-88 Nature of Business and International Social Responsibility 312
Opinion Index
Table-89 Age of Organisation and CSR Practice Index 313
Table-90 Age of Organisation and CSR Process Performance Index 314
XI
Table Page
Title
Number No.
Table-91 Age of Organisation and CSR Regulations Adherence Index 315
Table-92 Age of Organisation and International Social Responsibility 316
Opinion Index
Table-93 Mode of Entry and CSR Practice Index 317
Table-94 Mode of Entry and CSR Process Performance Index 318
Table- 95 Mode of Entry and CSR Regulations Adherence Index 319
Table-96 Mode of Entry and International Social Responsibility 320
Opinion Index
Table-97 Size of Organisation and CSR Practice Index 321
Table-98 Size of Organisation and CSR Process Performance Index 322
Table-99 Size of Organisation and CSR Regulations Adherence Index 323
Table-100 Size of Organisation and International Social Responsibility 324
Opinion Index
Respondents’ Profile and Perception Indices
Table-101 Education of Respondents and CSR Practice Index 325
Table-102 Education of Respondents and CSR Process Index 326
Table-103 Education of Respondents and CSR Regulations Adherence 327
Index
Table-104 Education of Respondents and International Social 328
Table-105 Age of Respondents and CSR Practice Index 329
Table-106 Age of Respondents and CSR Process Index 330
Table-107 Age of Respondents and CSR Regulations Adherence Index 331
Table-108 Age of Respondents and International Social Responsibility 332
Opinion Index
Table-109 Total Years of Work Experience and CSR Practice Index 333
Table-110 Total Years of Work Experience and CSR Process Index 334
Table-111 Total Years of Work Experience and CSR Regulations 335
Adherence Index
Table-112 Total Years of Work Experience and International Social 336
Table-113 Respondents’ Function and CSR Practice Index 337
Table-114 Respondents’ Function and CSR Process Index 338
Table-115 Respondents’ Function and CSR Regulations Adherence 339
Index
Table-116 Respondents’ Function and International Social 340
Table-117 Past CSR Experience and CSR Practice Index 341
XII
Table Page
Title
Number No.
Table-118 Past CSR Experience and CSR Process Index 342
Table-119 Past CSR Experience and CSR Regulations Adherence 343
Index
Table-120 Past CSR Experience and International Social 344
Table-121 Type of Organisation and CSR Practice Index 345
Table-122 Type of Organisation and CSR Process Index 346
Table-123 Type of Organisation and CSR Regulations Adherence 347
Index
Table-124 Type of Organisation and International Social 348
Responsibility CSR Opinion Index
Table-125 Type of Organisation with CSR Process Parameter 349
( A Comprehensive Table of t-values)
Table-126 CSR Process Performance Intensity Index (CSRPPII) 350-
351
Table-127 CSR Regulations Adherence Intensity Index (CSRRAII) 352-
353
Table-128 International Social Responsibility Opinion Intensity 354
Index(ISROII)
Product Moment Coefficient of Correlations between 355-
the Respondents’ Perception Indices 357
XIII
List of Figures
Sr. No. Title Page

No.
1. Social Sector Development Input 8
2. Groups of Stakeholders 17
3 Outcomes of CSR Initiatives 46
4 Conceptual Framework 53
5 Multinational Companies in Gujarat. 133
6 Development of CSR 183
7 Caroll’s Social Responsibility Models- 7.1 & 7.2 201-
202
8. CSR Matrix
List of Graphs
Sr. No. Title Page

No.
1. Organisation Profile 221
2. Respondents’ Profile 244
3. Perception of Respondents on CSR affecting Factors of 250
Corporate Governance.
4. Stages of Social Responsibility 252
5. Perception of Respondents on their companies’ 273
commitments to CSR Processes.
6. Perception of Respondents on their companies’ Adherence 292
to CSR Regulations
7. Performance of CSR Processes on Intensity Index 351
8. Adherence to CSR Regulations on Intensity Index 353
9. International Social Responsibility on Intensity Index 354
XIV
CHAPTER -1
INTRODUCTION
India, the world’s largest democracy has been one of the best performers in the
world economy in recent years. A dynamic economy with a vibrant electorate,
active judiciary and civil society groups, and a fiercely independent media has
projected a consistent 8-9% growth rate that has been supported by a number of
favorable economic indicators including a huge inflow of foreign funds and
growing reserves in the foreign exchange sector. All of these positive changes
have resulted in establishing the Indian economy as one of the largest and fastest
growing in the world. The Government of India had proclaimed the new decade
(2001-2010) as a Decade of Development, during which India will meet bold
targets for economic growth and social development. During his address to the
nation from the ramparts of the Red Fort, the Prime Minister announced on
August 15, 2000 that the government had set a target of doubling India’s per
capita income by the year 2010. This seemed an ambitious target at that time, but
we believe, is certainly made achievable in past seven years of reported
economic growth. For four years running, excluding 2005, the Indian economy
has produced annual growth rate of 8.8%. The growth rate of 2006 was
phenomenal, when the country achieved a record 9.6%, the highest rate attained
in the last 18 years. The Indian economy has been stable and reliable in recent
times, consistently posting robust growth numbers in all sectors leading to
impressive growth in Indian GDP.
1
As a march towards this first target, economic reforms started in the country in
the last decade at the backdrop of major fiscal and balance of payment crisis. The
reform measures included a greater private sector role in India’s development by
improving the investment and tax regimes, dismantling industrial licensing, and
opening infrastructure to private investment, reforming public enterprises and the
financial sector, and reducing price controls. The package also initiated the
liberalisation of foreign trade and exchange regimes. As a result, Indian
Economy grew consistently and recorded an annual average growth of 7.6 per
cent during the Tenth Plan and has set a target of 9 per cent for the Eleventh Five
Year Plan. One of the landmark structural changes achieved by Indian economy
is that today services sector contributes more than 50% of India’s GDP, which is
a general characteristic of any developed economy. The growth rate of the
service sector was 11.18% in 2007 and now contributes 53% of GDP. The
industrial sector grew 10.63% in the same period and is now 29% of GDP.
Agriculture is 17% of the Indian economy (WDR 2007).
Today, the economy is diverse and encompasses agriculture, handicrafts,
textile, manufacturing, and a multitude of services. Although two-thirds of the
Indian workforce still earns their livelihood directly or indirectly through
agriculture, services are a growing sector and are playing an increasingly
important role of in the economy. The advent of the digital age, and the large
number of young and educated populace fluent in English, is gradually
transforming India as an important ‘back office’ destination for global companies
for the outsourcing of their customer services and technical support. At the same
time new liberalised economic policy, coupled with large market and cheaper
labour has helped widening opportunities for shifting manufacturing base either
2
through Mergers and Acquisition or Green Field Projects for big corporate from
the world over. In the context of the globalization, it is our common aim to have
an economic structure in place so that-India can become a leading developing
country, economically, in the World in the coming years. Towards the realization
of this, an analysis of the progress of implementation of plan programmes during
the first four Annual Plans, 2002 - 2003 to 2005 - 2006 has indicated a very
satisfactory realization of physical and financial targets in most of the core,
major and priority sectors.
Despite its many noteworthy achievements, India presents a paradox. On the one
hand it shows 8.8% averaging GDP growth and rising incomes for four years in a
row. On the other hand the social sector development is in a mess. As Amartya
Sen puts it, “economics is not the only yardstick with which one evaluates a
nation’s performance. And, on the political and social front there is much
concern about India’s recent experience even though its economic prospects look
encouraging”. (Amartya Sen 1995). The economy is decelerating, the incidence
of unemployment on current daily basis is high, there is widespread under
nourishment, the infant mortality rate has been stagnating, electricity is not
available to 40% of rural and 20% of urban households, the environment has
been deteriorating and gender inequality persists. India has performed poorly in
the United Nation’s Human Development Index for 2006. It stands 126 in the
ranking of 177 countries. The UN’s annual Human Development Report
examines parameters such as life expectancy, school enrolment, and access to
health, literacy, gender parity and sanitation levels. It shows that improvements
in child and infant mortality in India are slowing, that gender disparities persist
3
and that India is off-target for achieving the Millennium Development
Goals. Infant and child mortality rates, a key indicator, are particularly
disturbing. One child in every 11 dies during the first five years of life. The
number of child deaths annually is 2.5 million. Bihar, Madhya Pradesh,
Rajasthan and Uttar Pradesh account for over half of all child deaths. Life
expectancy at birth in India is 63.3 years; adi iteracy rate, 61%; and gross
enrolment ratio in schools 60%.

r
Other findings:
> Half the country’s children are malnourished.
> 1 in 4 girls and 1 in 10 boys do not attend primary school.
> Girls aged 1 -5 are 50% more likely to die than boys.
> One-year-olds fully immunised against TB — 80%; measles — 67%
> Births attended by skilled health personnel — 43%
> Amount of GDP spent on public health --1.3%; private health — 4.8%.
(Source: HDR - 2005)
To achieve the second target of social development, commitments of
sustained, efforts and investment of economic resources not only by the
government but other economic sectors is very much required. The targets can be
achieved only if India is able to achieve:
1 A decline of infant mortality rates from around 80 per 1000 live births to
below 30 per 1000 live births by 2010. This should be combined with explicit
targets for halting the AIDS epidemic, and treating key diseases such as
malaria, tuberculosis, and other major killers.
4
2 A reduction of adult illiteracy from around 45 percent to less than 20 percent
by 2010.
3 Universal primary education for ages 5-14 for girls and boys by 2010, with a
school for all within 5 kilometres of home.
4 all villages possessing electricity, a trunk road, telephone and internet
connectivity, a school, clean water and sanitation, and effective village health
worker and local self-government by 2010 (Bajpai, Sachs 2000).
To bridge this gap between economic and human developments, the 10th
plan took a more comprehensive view on the human development aspects. Some
of the focus area of the 10th plan were employment creation, institutional reform
to facilitate a greater private sector role in industrial and infrastructure
development, greater emphasis by Government on social sector development,
overhaul of the existing healthcare system, increase in gross domestic savings
and investment ratio, fiscal health, civil service reform, improved capacity and
funding for major institutions of decentralization, and measures to ensure
equitable gains from globalization.
This shows that two basic pillars of holistic development are human
development and economic growth. Human development signifies the ability of
every individual to reach their full potential as healthy and educated citizens.
This in turn requires major commitments to health, education, and political
participation of all citizens in the country - with equal opportunity for all, and
without discrimination by gender, caste, or region. No individual should be left
behind. This emphasizes Gandhiji’s concept of ‘ SARVODAYA’-welfare of all
5
which means, “ welfare of all at all aspects of life which includes material and
non-material things. It includes better schooling and education, proper nutrition,
health care services, safe drinking water, adequate shelter and secure livelihood
through productive and remunerative employment, easy and cheap availability of
transportation and communication modes, along with non-material aspects as
satisfaction of life, safe working condition, freedom of speech and movement,
equal opportunities, satisfying family life, adequate leisure time and a sense of
purpose in life.
No policy maker can guarantee the achievement of all, or even the
majority of these aspirations, but policies followed by sustainable programmes
can create the opportunities for its fulfilment. This requires action for preparing a
strategy of development which can be implemented effectively by the available
instruments of administration. It needs to be supported and supervised by an
organized voluntary movement of people at individual and group level
committed to the goals of social development. The Prime Minister of India
addressing the India Economic Summit in the year 2000 called on the corporate
sector to work towards making benefits of globalisation reach the people so that
it no longer is perceived as a ‘threat’ but an ‘opportunity’. Noting the enhanced
partnership between Government and Industry not only in the economic sector,
but also in the social sector, the Prime Minster said that Indian Industry must
deepen its involvement in the crucial social sector so that the ‘gains of income
will be more equitably shared’.
6
Economic growth signifies the broad-based and sustained increase in per
capita GNP. Sustained economic growth depends on favourable business
conditions, high levels of private-sector investment, technological upgrading, and
successful integration into global markets. There can be no sustained economic
development without strong successes in both social development and economic
growth. The declaration of social development Summit in March 1995
emphasizes that social development is a necessary foundation for sustainable
economic development and vise-a vise broad based and sustained economic
development is a perquisite for social development. Material prosperity is
necessary for social development, but is far from being sufficient. In a World
Bank document, Birdsall (1993) asserted that investment in social development
is good economics.
Development strategy therefore requires major commitments to social
sectors, and improvements in the patterns of expenditure in social sectors’
undertakings. Policy makers have made numerous lofty claims about economic
growth, but public expenditure for social development has decreased consistently
in the last decade as seen in the following Figure-1,
7
FIGURE -1
Social Sector Development Input
Composition of Social Sector Expenditure-INDIA
Year Capital Revenue
1990-1991 95.09 4.91
1991-1992 94.92 5.08
1992-1993 95.21 4.79
1993-1994 95.63 4.37
1994-1995 94.70 5.30
1995-1996 95.36 4.64
1996-1997 95.31 4.69
1997-1998 95.47 4.53
1998-1999 95.20 4.80
1999-2000 95.50 4.50
2000-2001 94.87 5.13
2001-2002 93.75 6.25
2002-2003 93.39 6.61
(Source-India Development Report 2005.)
8
One of the major problems in the development of Social Sector is the high
share of revenue expenditure (mainly salaries) is higher than Capital Expenditure
(physical infrastructure i.e. schools, hospitals medical technologies etc.) This
confirms a neglect of basic social sector infrastructure.
The lack of expenditure by the government in social sector development
like, availability, utility and accessibility of health care service, education,
communication and transportation facilities and also recreational services which
can be means of constructive leisure time, particularly in rural India are few areas
which need utmost attention. Notably in the past few years the cities in India
have undergone tremendous infrastructure up-gradation but the situation is not
similar in most part of rural India. Similarly in the realm of health and education
and other human development indicators India’s performance has been far from
satisfactory, showing a wide range of regional inequalities with urban areas
getting most of the benefits. Growth without development will deepen inequality
and have dangerous socio-economic consequences that could undermine the very
essence of growth and development. In order to attain the status that currently
only a few countries in the world enjoy and to provide a more egalitarian society
to its mounting population, appropriate measures need to be taken to improve our
ranking in world’s development reports.
Acknowledging the relative achievements of the stabilization and reform
programs during the 1990s, India’s future progress in reducing poverty and
improving social indicators critically depends on the country’s ability to
accelerate economic growth and maintaining a sustained development of its
9
social sector through adequate investments. It is the related hypothesis inherent
in the human development paradigm put to the centre stage of the development
debate by UNDP in collaboration with eminent thinkers such as the late Dr.
Mehbubul Haq and the Nobel Laureate Amartya Sen. This Paradigm advocates
that human beings are not the means to development but its very purpose. Thus
any activity, public or private which detracts from this ultimate goal will not be
sustainable in the long run. At the time of launching the new economic policy,
Dr. Manmohan Singh, the pioneer of economic reforms in India had observed,
‘This programme is for a self-reliant India; an India that in few years time can
boast of having eliminated poverty; an India that provides dignity and skills to its
children; an India that emerges as a vigorous participant in the global economy
and plays a role of leadership in the comity of nations; an India that has an
economy commensurate with the size, human resources and its potential(Times
of India,Augl991)”,
The economic reform facilitated growth of the private sector
phenomenally, both in size and capability. Private sector was expected to play a
pivotal role in India’s economic development by mobilizing investments in the
form of FDIs to execute projects, in infrastructure and core sectors. With a
mandate to contribute to the realization of national growth targets by the private
sector, the government’s role shrunk in business. One of the key components of
this new policy was a significant widening of the range of activities in which
foreign firms could enter as well as an easing of the conditions under which they
came in. Restriction on entry, diversification and expansion of multinational
10
corporations had been recklessly lifted. Direct foreign investment up to 100 per
cent equity in a business venture is being allowed on a wide-ranging basis.
Globally, in the last 20 years, multinational corporations have played a
key role in defining markets and influencing the behaviour of a large number of
consumers. Increasing number of Multinational Corporations in India is the
outcome of this liberalized economy of 1991. It is assumed that Multinational
corporations (MNCs) can spur economic activities in developing countries and
provide an opportunity to improve the qualities of life, economic growth, and
regional and global commons. At the same time, they are often also accused of
destructive activities such as damaging the environment, complicity in human
rights abuses, and involvement in corruption. Whether these accusations are fair
or not, many MNCs are now attempting to manage these complex set of issues in
the host countries by implementing corporate social responsibility (CSR)
strategies because such issues may risk the success of their operations. However,
CSR can be an ambiguous tactic because it is often unclear what a corporation
can and cannot be held responsible for, particularly when weak governance and
institutions are involved.
The past three decades have also seen a tremendous growth in both the
number and diversity of non-governmental organizations and community-based
organizations, and in the scope of their contribution to the development of our
social and environmental sectors. Our State Governments have a wealth of
experience of planning and executing developmental activities on their own.
More than Fifteen years ago, we amended our Constitution to empower our
11
Panchayati Raj Institutions to function as effective agents of decentralized
development. But one can observe the wide gap between India’s developmental
potential and her actual performance due to the lacunas in the planning process,
in monitoring various developing sectors’ activities and developmental
programmes and also in insufficient appreciation of resources mobilized for these
programmes. The answer to this lies in the need for a partnership between all the
five drivers of national development. India needs a strong partnership between its
five agents of development — the Union Government, State Governments, Local
Self Government, the private sector and non-governmental and community-based
organizations — to achieve all-round development. Among these five agents,
other than the governments, the role of the most organized and resource rich
sector of the society i.e. private sector / corporate in business is very crucial. The
challenges of globalisation is to find the rules and institutions for stronger
governance to preserve the advantages of the global market and competition but
also to provide enough space for human and social development which includes
environmental protection to ensure that globalisation works for people and not
against them. Gone are the days when clear distinction between the role of
government and other economic institutions could be made. There is a need for
strong and sustained partnership between public and private sectors to ensure
well being of people. It’s a fact that Business Entity is a creation of the society.
We live in an age in which corporations, equivalent in wealth to countries call
the shots and control much of the earth’s resources. Because corporate intervene
in so many areas of social life, they must be responsible towards society and the
environment. Business being one of the major economic institutions depends for
its success on the health, stability and prosperity of the society and communities
12
in which it operates. Community focused business like banks; retailers, housing
finance companies etc. cannot prosper in declining localities. So the problems of
poverty and unemployment, education and health, etc. dramatically affect
business. While business has traditionally considered these to be exclusive
domain of government, today more and more corporations are accepting part of
the responsibility to improve the communities in which they do business since
society at large looks to them for answers to contemporary social and economic
issues. In India as in the rest of the world there is a growing realisation that
capital markets and corporations are, after all, created by society and must
therefore serve it, not merely profit from it.
Today the reality is, corporate are as powerful as states. The hundred
largest corporations in the world have a turnover more than the GDP of half the
world put together. It is to be kept in mind that, like any other organization,
business also operates in society via a social contract expressed or implied,
whereby its survival and growth are based on:
1. Its capacity and willingness to deliver some socially desirable ends to the
society in general and >
2. The distribution of economic, social and political benefits to groups from
which it derives its resources and power.
Secondly, in a dynamic society sources of institutional power and the
needs for its services are never constant. This has resulted in a complex
13
relationship of corporate sector to the society and these complexities are
becoming more recognized. Corporate activities are increasingly regarded as a
necessary part of the network of organizations involved in creating social
infrastructure or addressing social issues. A corporation in its attitude towards
risk taking, in its efforts to develop and market a new product, in its decision to
diversify in certain areas, and in the culture it develops as a work organization
forms and expands the opportunities available to the society. It has a power to
change society by creating social fixture of that society in which it operates, as
the organizations are expressions of human aspirations, sources of status and
security in which people devote huge proportion of their emotions and
intellectual commitments. Perhaps for the same reason ‘Robert Dahl’s expression
that ‘every large corporation should be thought of as a social enterprise; that is as
an entity whose existence and decisions can be justified in so far as they serve
public or social purpose’(1972) should be at the core of corporations policy
making. Social impact of corporate policies is direct or indirect on the society.
For example, a government’s decision to make investments in developing social
infrastructure or transport in a particular area is based on the level of economic
activity in that area, which in turn influence corporate decision to expand their
business activity there and in turn it has multiplied impact on the surrounding
communities.
There is no doubt that companies can contribute greatly to the “evolution
of equitable and sustainable communities and societies”. The key question is,
how to channel their energy and resources for this purpose. This question of
HOW have two dimensions:
14
1. How can society induce companies to accept their social responsibility and
act accordingly?
2. How can companies who accept this challenge effectively translate a vision
into policy, and then into consistent practice?
This may not be difficult when the corporations make shift from corporate
‘philanthropy’ to ‘social responsibility’ as business corporations are discharging
their social responsibility in three broad areas: Corporate Philanthropy, Corporate
Social Responsibility and Ethical Business. Where, Corporate Social
Responsibility (CSR) has only recently been evolved as a concept, there is a long
history in both the East and West of a commitment to social philanthropy, in the
belief that the creation of wealth is primarily geared for social good. The
corporate houses such as Tata, Birla, Arvind, Godrej, Bajaj and others have been
involved with this “giving back” ideology and practices in their own ways, long
before “corporate social responsibility” was talked of and considered necessary.
The Tata Group pioneered labour welfare measures such as the eight hour
working day (in 1915), establishment of welfare department (1917) and ensuring
maternity benefits (1928) to name just a few, even before these were enforced by
law. Mahatma Gandhi talking of “Trusteeship” also emphasized this aspect of
Social Responsibilities. After independence, our age old values and wisdom on
social responsibility were imbibed while drafting the Constitution of India.
15
But in the present day environment of Human Right perspective,
Corporate Social Responsibility (CSR) is qualitatively different from the
traditional concept of corporate philanthropy. Corporate Social Responsibility
(CSR) acknowledges the debt that the corporation owes to the community within
which it operates, as a stakeholder in corporate activity. It also defines the
business corporation’s partnership with social action groups in providing
financial and other resources to support development plans, especially among
disadvantaged communities. The emerging perspective on corporate social
responsibility focuses on responsibility towards diverse sets of stakeholders
(Figure-2) - shareholders, employees, management, consumers and community
and also government, environment, suppliers, business associates etc. rather than
on maximisation of profit for shareholders.
16
FIGURE - 2
Business Associates Groups of Stakeholders
Custom ers
It is pertinent here to mention that the stakeholder concept was developed
and championed by R. Edward Freeman in the 1980s. Since then it has gained
wide acceptance in business practice and in theorising relating to strategic
management, corporate governance, business purpose and corporate social
responsibility(CSR) -
17
There is also more stress on long-term sustainability of business and environment
and the distribution of well-being.
The best business leaders in India take a broader view of the business of
business than do many economists and business analysts as their businesses work
amidst an environment of very poor people whose basic needs are not yet met by
institutions in their country. According to a recent international survey India is
one of the very few countries in the world where business corporations are
admired. The reason behind this can be found in the expressions of Mr. Jamshetji
Tata “ In an enterprise, the community is not just another stakeholder in business
but is in fact the very purpose of its existence. No success or achievement in
material terms is worthwhile unless it serves the needs or interests of the country
and its people.” The Indian Express — March 16, 2005 At the National Seminar
on “Business Volunteering: Corporate in Community”, jointly organised by the
United Nations Development Programme (UNDP) and Business and Youth
Starting Together (BYST), the corporate volunteering arm in 2000,.it was stated
the UNDP Deputy Resident Representative, Ms. Dorothy Gordon that
“...business volunteering in India had emerged as a pivotal strategy for
sustainable corporate social responsibility in the post-liberalisation era. With the
emergence of the private sector as an important agent of economic and social
development and a growing influential player at the global level, charity and
philanthropy were giving way to a much broader strategy focusing on mobilising
the commitment of business leaders for larger social investment....”. The
Chairman and Managing Director of Bajaj Auto Limited, and Vice Chairman,
Board of Trustees of BYST, Mr Rahul Bajaj had said “...., while creating wealth
18
and making profits was necessary, there is growing recognition among
companies of their responsibility in complementing the efforts of the
Government in the field of social infrastructure, notably, education and health as
well as in sustainable human development (BYST 2000).”
Since recent past, ‘Ethical business’ is the more fundamental, emerging
trend on the international scene. Corporate Social Responsibility when integrated
with ethics in over all business operations strengthen the feeling of symbiotic
relationship between business and society and helps them to enter into a mutually
rewarding relationship. Besides, CSR is not just a purely altruistic affair, it
makes good business proposition too as it lends credibility to the organization,
seen as an entity, sensitive to the societal and environmental concerns. These
concerns of business are recognised as triple-bottom-line: People, Planet and
Profit. The triple-bottom-line stresses the following:
1. The stakeholders in a business are not just the company’s shareholders.
2. Sustainable development and economic sustainability.
3. Corporate profits to be analysed in conjunction with social prosperity.
In an ethical business the essential thrust is on social values and business
is conducted in consonance with broader social values and the stakeholders’
long-term interests. The concept of business ethics has come to mean various
things to various people, but generally it’s coming to know what is right or
wrong in the workplace and doing what’s right — this is in regard to effects of
products/services and in relationships with stakeholders. Attention to business
19
ethics is critical during times of fundamental change -- times much like those
faced now by business. In times of fundamental change, values that were
previously taken for granted are now strongly questioned. Many of these values
are no longer followed. Philosophers have been discussing ethics for at least
2500 years, since the time of Socrates and Plato. Many ethicists consider
emerging ethical beliefs to be “state of the art” legal matters, i.e., what becomes
an ethical guideline today is often translated to a law, regulation or rule
tomorrow. Today, many philosophers consider ethics to be the “science of
conduct.” The emergence of business ethics is similar to other management
disciplines. For example, organizations realized that they needed to manage a
more positive image to the public and so in the past, the discipline of public
relations was bom. Organizations realized they needed to better manage their
human resources and so the recent discipline of human resources was bom. As
commerce became more complicated and dynamic, social dimensions of work
place were addressed through human rights and equality perspectives,
organizations realized they needed more guidance to ensure their dealings
supported the common good and did not harm others -- and so social
responsibility and business ethics was bom.
To understand Corporate Social Responsibility (CSR) in its true spirit, it
is necessary to review the integration of various social concerns in entire
business operations. For the purpose, CSR as defined at different parts of the
world provides apt basis.
20
Corporate Social Responsibility: A Concept
There is no unanimity in the definition of what constitutes CSR. Mc>$t'•/
definitions of corporate social responsibility describe it as a concept "whereby
companies integrate social and environmental concerns in their business
operations and in their interaction with their stakeholders on a voluntary basis.
Different organisations have framed different definitions - although there is
considerable common ground between them. Below are some examples of CSR
definitions espoused by international organizations.
Business for Social Responsibility (BSR), a leading non-profit organisation
promoting integration of CSR with business operations, defines CSR as
“achieving commercial success in ways that honour ethical values and respect
people, communities, and the natural environment.” It further says that CSR
means addressing the “legal, ethical, commercial and other expectations society
has for business and making decisions that fairly balance the claims of all key
stakeholders.”(BSR-2005) The stakeholders include customers, employees,
communities, owners/investors, government, suppliers and competitors.
In more precise words “operating a business in a manner that meets or
exceeds the ethical, legal, commercial and public expectations that society has of
business”. Elements of CSR include investment in community outreach,
employee relations, creation and maintenance of employment, environmental
stewardship and financial performance.
21
Other Definitions:
> The World Business Council for Sustainable Development (WBCSD, 1998), a
group of 120 international companies in its publication “Making Good
Business Sense” by Lord Holme and Richard Watts, used the following
definition. “Corporate Social Responsibility is the continuing commitment by
business to behave ethically and contribute to economic development while
improving the quality of life of the workforce and their families as well as of
the local community and society at large.
“The same report gave some evidence of the different perceptions of what
this should mean from a number of different societies across the world.
> Definitions as different as “CSR is about capacity building for sustainable
livelihoods. It respects cultural differences and finds the business
opportunities in building the skills of employees, community and the
government” from Ghana, through to “CSR is about business giving back to
society” from the Phillipines.
> Traditionally in the United States, CSR has been defined much more in terms
of a philanthropic model. Companies make profits, unhindered except by
fulfilling their duty to pay taxes. Then they donate a certain share of the
profits to charitable causes. It is seen as tainting the act for the company to
receive any benefit from the giving.
> The European Commission defines corporate social responsibility (CSR) in a
Green Paper as “a concept whereby companies integrate social and
22
environmental concerns in their business operations and in their interaction
with their stakeholders on a voluntary basis”.
The European model is much more focused on operating the core
business in a socially responsible way, complemented by investment in
communities for solid business case reasons. This model can be more sustainable
because-,
1. Social responsibility becomes an integral part of the wealth creation process -
which if managed properly should enhance the competitiveness of business
and maximise the value of wealth creation to society.
2. When times get hard, there is the incentive to practice CSR more and better -
if it is a philanthropic exercise which is peripheral to the main business, it
will always be the first thing to go when push comes to shove.
> In Australia, Ernst & Young defines it as an organisation’s adaptability and
responsiveness to the needs and expectations of key stakeholders in relation
to ethical, social and environmental issues. Responsibility is seen to
encompass a spectrum- from the running of a profitable business to the
impact on the social and physical environment in which a company operates.
Ernst & Young views corporate social responsibility strategy as a
business approach to create long-term organizational value through the effective
management of risks and opportunities associated with ethical, social and
environmental factors.
23
> The United Nations Conference on Trade and Development (UNCTAD)
defines CSR as concerning essentially “how business enterprises relate to,
and impact upon, a society’s needs and goals”. Specifically, CSR touches
upon social responsibility standards and performance of multinational
corporations, and their roles in developing a stable, prosperous and just
global society.
> The International Organization of Employers (the “IOE”) defines CSR as
“initiatives by companies voluntarily integrating social and environmental
concerns in their business operations and in their interaction with their
stakeholders.” This definition recognizes, first, that CSR is voluntary
corporate action and goes beyond simple legal compliance with domestic
laws. Second, the definition views CSR as being a core aspect of business
activities throughout a company and recognizes CSR as a means of
engagement with stakeholders in the various markets in which a company
operates. CSR includes: (i) compliance with domestic laws, even if those
laws are poorly enforced; (ii) adherence to international standards; and (iii)
adoption of voluntary codes of conduct.
> The World Bank, on the other hand, uses the following definition “CSR is the
commitment of business to contribute to sustainable economic development,
working with employees, their families, the local community and society at
large to improve the quality of life in ways that are both good for business
and good for development” (Fox, 2004).
24
> According to Indian NGOs.com “Corporate Social Responsibility is a
Business Process wherein the Institution and the Individuals within, are
Sensitive and Careful, about the direct and indirect effect of their work on
Internal and External Communities, Nature and the Outside World”.
A Close look at this definition of CSR will indicate that this definition
does not limit CSR to just corporate. It is applicable, in equal measure, to the
Governments, the Media, the Research Laboratories and the weapons
machineries, the Non Governmental Organisations, the Education
Institutions...and just to any and every Institution.
> CSR as defined by Ethics in Action, “CSR is a term describing a company’s
obligation to be accountable to all of its stakeholders in all its operations and
activities. Socially responsible companies consider the full scope of their
impact on communities and the environment when making decisions,
balancing the needs of stakeholders with their need to make a
profit”(www.ethiesinaction.com).
> “CSR is concerned with treating the stakeholders of the firm ethically or in a
socially responsible manner. Stakeholders exist both within a firm and
outside. The aim of social responsibility is to create higher and higher
standards of living, while preserving the profitability of the corporation, for
its stakeholders both within and outside the corporation”. ( Michael Hopkins
A Planetary Bargain: CSR Comes of Age, Macmillan, UK, 1998),
25
This definition, of course, begs the question on what is meant by ‘ethical’
and what is meant by ‘stakeholder’. Without going into a long discourse on
ethics, ethical behaviour is clearly in the eye of the beholder and, like beauty, we
know it when we see it but find it difficult to define. Who the stakeholders of a
company are has also sparked intense debate but, at minimum they include those
both within the company: the board of directors, shareholders, investors,
managers and employees; and those outside the company: suppliers, customers,
the natural environment, Government, and local community. (September 2004
Michael Hopkins).
> A dedicated team of professionals Neela Bettridge ,Dr Paul Toyne Jane
Fiona, (2001)who have worked at senior levels nationally and internationally
in the corporate social responsibility, sustainable development, governance
and communications arenas say that: ‘Corporate social responsibility, or
CSR, generally refers to business decision-making linked to ethical values,
compliance with legal requirements, and respect for people, communities and
the environment’. CSR is seen by leadership companies as more than a
collection of discrete practices or occasional gestures, or initiatives motivated
by marketing, public relations or other business benefits. Rather, it is viewed
as a comprehensive set of policies, practices and programs that are integrated
throughout business operations, and decision-making processes that are
supported and rewarded by top management.
This approach is derived from principles of sustainable development.
26
> Canadian Business for social Responsibility-a consultancy firm, believes that
the definitions of CSR range from business ethics, to sustainability, to
corporate citizenship. Some companies simply see CSR as “the right thing to
do”; while others see it as a strategic differentiator for their company and a
means to achieving greater business value and defines CSR as ‘a company’s
commitment to operating in an economically, socially and environmentally
sustainable manner, while recognizing the interests of its stakeholders,
including investors, customers, employees, business partners, local
communities, the environment and society at large’ (www.cbsr.ca).
> According to Carroll (1983) “corporate social responsibility involves the
conduct of a business so that it is economically profitable, law abiding,
ethical and socially supportive. To be socially responsible then means that
profitability and obedience to the law are foremost conditions when
discussing the firm’s ethics and the extent to which it supports the society in
which it exists with contributions of money, time and talent” ; V’ . By
Carroll’s (1999) own admission, this is only one of countless definitions
which have proliferated in the literature since the 1950s.
This diversity of conception is testimony to Moon’s (2002) observation
that CSR, similar to other important concepts like democracy and justice, is
“essentially contested”. Moon (2002) also makes the point that CSR “is only one
of several terms in currency designed to capture the practices and norms of new
business-society relations. There are contending names, concepts or appellations
for corporate social responsibility”. This is confirmed by a survey of CSR
27
education in Europe, which found 50 different labels for CSR modules, 40
different labels for CSR programmes and numerous CSR synonyms, the most
popular of which were: business ethics, corporate citizenship, sustainability or
sustainable development, corporate environmental management, business &
society, business & governance, business & globalization, and stakeholder
management. Reviews of CSR literature by Carroll (1994; 1999) and Garriga &
Mele (2003) reach similar conclusions regarding multiplicity of aligned terms.
Nevertheless, common ground between these nuanced concepts and CSR
is widely acknowledged (Madsen & Ulhoi, 2001; Moon, 2002; Van Marrewijk,
2003; Wheeler, Colbert, & Freeman, 2003). The definition of corporate
responsibility by Sustainability (2004) is a good illustration of this confluence
and interdependence of terms, describing it “an approach to business that
embodies transparency and ethical behaviour, respect for stakeholder groups and
a commitment to add economic, social and environmental value”
These different visions could be seen as different answers to these two
interrelated concepts. Looking closely and analyzing these definitions brings
clarity that:
> While the concept of CSR is widely accepted, there is no single, universally
accepted definition of CSR.
> It generally refers to business decision-making linked to ethical values,
compliance with legal instruments, and respect for people, communities and
the environment.
28
> A collection of policies and practices linked to relationship with key
stakeholders, ethics and values, and
> The commitment of business to contribute to sustainable development,
commonly understood as sustainable development, (that is the ability of the
current generation to meet its needs without compromising the ability of
future generations to meet theirs).
At the aftermath Corporate Social Responsibility can be concluded as
An approach by which a company:
> Recognises that there is a direct relationship between its activities which have
/
a wider impact on the society in which it operates; and that developments in
that society in turn impact on its ability to pursue its business successfully;
> pro-actively addresses the economic, social, environmental and human rights
impact of its activities across the world, basing these on principles which
reflect international values, reaping benefits both for its own operations and
reputation as well as for the communities in which it operates;
> seeks to achieve these benefits by working closely with other groups and
organisations - local communities, civil society, other businesses and home
and host governments.
Why Corporate Social Responsibility?
David Wheeler and Maria Sillanpa in “The Stakeholder Corporation”
state that by 1998, 51 out of the 100 largest economies were not nation states, but
corporations. According to Wheeler & Sillanpa, in 1998, General Motors was
bigger than Denmark; Toyota was bigger than South Africa. Yet at the beginning
of the 21 century, the gap between the world’s rich and poor is wider than ever
29
before. In 1999, The United Nations reported that the world’s then three richest
people - Bill Gates of Microsoft, the Sultan of Brunei and the Walton family of
the Wall Mart retail chain - were worth more than the combined gross domestic
product of the world’s 34 poorest nations. Thus, the modem day large
corporations are often larger than nation states. Rich individuals own and
command resources that are so large, often larger as compared to smaller/poorer
nations. With great power (and size), comes great responsibility.
The second important development in the late 20th century has been the
rolling back of the State. It is increasingly being realised that the State cannot
and should not perform all functions it was performing in the earlier periods. In
many countries, national and local governments have taken a “hands off’
approach to regulating business, both due to
a) Globalisation of trade & commerce - Most experts are averse to legal
interventions.
b) Internationally, self-regulation linked to openness, transparency &
accountability seems to generate by far, the maximum response.
c) In response to liberalisation, role of state is shrinking.
d) Shrinking of resources - Most of the governments at the national and local
levels are experiencing shortage of funds and a shrinking resource base.
Thirdly, today most business leaders are managing in times of turbulence
and accelerating change. Over the past decades, a growing number of companies
have recognised the business benefits of CSR policies and practices. Their
30
experiences have been bolstered by a growing body of empirical studies, which
demonstrate that CSR has a positive impact on business economic performance
and is not harmful to shareholder value. Companies have also been encouraged
to adopt and / or expand CSR efforts as a result of pressures from customers,
suppliers, employees, communities, investors, activist organisation and other
stakeholders. As a result CSR has grown dramatically in recent years with
companies of all sizes and sectors developing innovative strategies.
When India is poised to emerge as a strong economic power, the thrust on
CSR would go a long way in growth of business and also sustainable
development of the society and environment. Globalisation of market, increasing
intensity of competition , demographic changes and environmental challenges
combined with changing value systems expressing different life styles may be
affecting an organisation’s desirability for carrying out social responsibility. At
this time, the word “Corporate” in CSR may be misleading, as companies may
get an impression that CSR is only meant for large corporate houses, and that
small and medium enterprises or non-business entities need not bother. On the
contrary, social responsibility should be and is everyone’s business — especially
in a country like India, where small and medium enterprises contribute to a large
proportion of industrial output and employment.
History of ‘corporate social responsibility’
After having a holistic understanding about CSR, it is relevant to look
through the journey of CSR as it traversed business operations. This helps to
understand its roots and its context in present day globalization. A large number
31
of documentations have been referred for this purpose. Some of the conclusions
that emerge out of these documentations are -
1. Few companies have often willingly taken on social obligations, without the
prompting of governments.
2. Some have undertaken corporate social responsibility inspired by religion.
3. Fewer had proactively addressed social issues.
Company townships, such as Pullman in the US and Jamshedpur in India
were constructed, ,long before realisation of CSR as a concept -the argument
being that well housed workers would be more productive than their slum
dwelling contemporaries.
In the UK and the US, companies introduced pension and healthcare
benefits long before governments told them to do so. Proctor & Gamble
pioneered disability and retirement pensions (in 1915), the eight-hour day (in
1918) and most important of them all guaranteed work for at least 48 weeks a
year (in 1920). Henry Fowl became a cult figure by paying his workers $ 5 an
hour - twice the market rate. Henry Heinz paid for education in citizenship for
his employees, and Tom Watson’s IBM gave its workers everything from
subsidised education to country club membership. Critics tend to dismiss all this
as window dressing. But Richard Tedlow, a historian at Harvard Business
School, argues that we confuse the habit of capital markets with those of
companies. Capital markets may be ruthless in pursuing short-term results.
Corporations, according to him have always tended to be long termist. Most
32
companies do good because they genuinely believe that taking care of their
workers and others in society is in the long term interests of their shareholders.
The majority of the successful companies have eschewed short-termism in favour
of “building to last”.
The thrust on concept of CSR in today’s global perspective could be
traced back to 1972 with the Stockholm Conference. This brought out the public
awareness about the need for protecting the environment. Subsequently Rio
conference in 1992 focused on sustainable development, with emphasis on
corporate roles to meet the requirements of future generations.
Following this, the primary drive for ethical business and corporate social
responsibility came from the USA and Europe in the ‘80s and ‘90s, from
campaigns run by pressure groups such as Greenpeace and Friends of the Earth.
Consumer boycotts, direct action, shareholder action, ethical shopping guides,
ethical product labelling schemes, media campaigns and ethical competitors
became increasingly effective in changing corporate perspectives.
The mid-’90s were the watershed years for the new consciousness in
international corporate polity. This was the time when two prominent MNCs
were compelled by ‘ethical market forces’ to re-orient their business attitudes. In
1995, Shell dumped its Brent Spar oil platform in the North Sea. Public agitation
in Europe was so intense that in Germany sales fell by 70 per cent within a
fortnight. Similarly, Nike, the shoe and apparel giant, ran aground thanks to a
campaign against child labour and worker exploitation in many of the 700
33
factories across 40 countries where Nike worked with subcontractors. That
prompted the company to set up a foil-scale team under a Vice President,
Corporate Responsibility in 1997.
It was in the post-war period that the character and nature of business
began to change in the western world, with proprietary firms taking on corporate
structures. By 1998, there were 45 registered MNCs and the income of the top 10
MNCs was higher than the GDP of over 50 countries.
In the changing political paradigm world over, the market has begun to
play a crucial role in shaping the priorities and inclinations of the State and
society. As the world is now on the threshold of the second phase of the
globalised economy we observe that other value additions have intervened in the
world market. An opinion poll conducted on behalf of CSR Europe concluded
that:
1. Over half of those surveyed felt that businesses do not pay enough attention
to their social responsibilities.
2. Over one-quarter said that they had engaged in activities in the previous six
months that either introduced ethics into actual consumer purchase decisions
or else made such views known by other means.
A recent survey showed that 86 per cent of about 4,000 people aged 15 or
older in Europe, expressed preference for purchasing a product from a company
‘engaged in activities to improve society’ (Fleishman Hillard, ‘Consumers
Demand Companies with a Conscience’, London). In the UK, the Co-operative
34
Bank report on ethical consumerism recently found that consumers expect more,
as citizens, from business corporations.
CSR In Indian Context
Unlike the western world, in India, however, the concept of CSR is age
old, well embedded in Indian ethos and Indian scriptures, consumers’ awareness
in preferring/purchasing products of a more socially responsible company is yet
to be seen. We find references of Shreshtha dharma prescribing roles and
responsibilities of Kings & Shreshtha (Seth/the endowed ones) towards the
society. The first treatise on Economics, Arthshastra says, “Prajasukhe Sukham
Shreshthah” i.e. In the welfare of the society lies the happiness of endowed
people/privileged section. Similarly the Theory of “Rina” or Debt talks about
five types of Rin that we all have to discharge by returning debts to the society
that we draw from as we grow & prosper along in life (K.K.Sinha,2004).
But as social arrangements turned in to social evils in the form of staunch
casteism woven with selfish interpretation of ‘karma theory’ the ethos of the
Indian scriptures were shadowed. The concept of, , “Prajasukhe Sukham
Shreshthah” became limited to “insiders” - you looked after members of your
own immediate and perhaps your extended family, you might even extend some
minimum care to members of your clan, or at most to members of your caste.
Other “outsiders” had no relationship to you, so their welfare was not your
responsibility. If the system failed some people, that was simply a matter of fate
and you certainly did not interfere in that. This attitude had undergone
continuous change during the 300 years of British Rule under the influence of
35
Christian as well as Hindu religious preachers. The work of reformers, whether
Indian or from foreign land, was enormously facilitated by British rule which,
though initially little more than organised robbery, changed under the influence
of the British Evangelicals. As a result from as early as the 1850’s the founders
of many of the dynastic enterprises were active in social development in order to
develop the country. In the twentieth century, Indian reformers, such as Ram
Mohan Roy and Mahatma Gandhiji launched reform movements that slowly
began to change our values. We began to accept strange ideas such as the
equality of all humans, the value of work, the imperative to read and to think for
oneself and stand up for what one concludes is right, yet in a manner that
respects the right of others to reach different and even opposing conclusions.
Then, the industrial revolution of the 19th century broke up existing social
networks like family, neighborhood and community. The loss of social support
was partially compensated by associations of workers. In addition a few socially
responsible entrepreneurs organised welfare funds (illness, old-age, etc.) and
provided some form of welfare facilities for their workers, as well as education
for their children. Workers, however, had no say in the management of welfare
facilities and funds.
There were various motives for these early socially responsible
enterprises: fear of labour unrest and social radicalism, the desire to keep the
trade unions out of the factories and the entrepreneur’s sense of duty dictated by
liberal or religious convictions. There were also commercial motives, such as the
desire to attract better workers. To bind workers to the company, the regulation
36
of the various welfare schemes, particularly in large companies, ensured that the
employees would lose their rights to the amounts already saved if they left to
work at another company.
Socially responsible business was by no means universal during the 19th
century. Employers who provided welfare did so voluntarily, as there were
scarcely any legal obligations on them to do so. There were major social
problems and working conditions in many companies were often dreadful. This
led to recognising the need for further social legislation leading to the social
security system. Socially responsible employers, like other employers, objected
to social legislation not because they were opposed to a social security system
but because they objected to an obligation imposed by public authorities.
Another important factor was the arrival of trade unions and the
development of their ideas on social issues at the end of the 19th century. The
first trade unions concentrated oh representing the interests of their members,
especially over wages and working hours. They also established funds to provide
assistance during illness, in old age and in the event of death.
During the 1930s only, Gandhiji advocated that industry was the temple
of modem India and had a strong role to play in human progress. During the
Independence struggle, Indian companies, which began to proliferate and prosper
from the mid-nineteenth century, threw in their lot with Mahatma Gandhi in
straggle of Independence, and the resulting concern for the nation caused many
37
of them to be involved in providing education, health services, and even clean
water.
After independence in 1947, the involvement of business in society
continued. . In the 1960s and 1970s the issue of human rights and fundamental
labour standards arose. In 1965 the government held a seminar on ‘Social
Responsibilities of Business’ where it declared that, an enterprise is a corporate
citizen and is judged by its actions in relation to the community of which it is a
member, as well as by its economic performance. What followed has largely
been Indian businesses practicing corporate philanthropy by providing health
care, education and housing facilities. Then during the 1970s, came the concern
for the environment. There was a growing realisation that production,
distribution and consumption were having an increasingly negative impact on the
environment.
With the introduction of public social security the focus of socially
responsible business shifted from providing welfare services for the company’s
own employees to issues of concern beyond the walls of the company itself. So
the manifestation and content of CSR has changed over time, depending on time
and place. A common thread that runs through the changing manifestation is a
certain complementarities between government, business and social organisation
with respect to solving societal problems.
Recently at Asia Society’s 16th Asian Corporate Conference, March 18-
20, 2006 the UNDP chief said, “India, with its long tradition of high corporate
38
accountability to the social sector, presents a model example of a broad alliance
involving the government, the business community and the UN agencies working
together for the national development effort. “We want to take lessons of this
model partnership to the rest of the world”
The experience of the past decade has served to reinforce this viewpoint.
The modem Indian companies such as Wipro, Infosys, Reliance etc. are on the
same path as the traditional corporate houses, and are extensively working
shoulder to shoulder with government and development agencies to meet
national developmental challenges. With companies facing increasing scrutiny in
the global economy, the corporate responsibility agenda now encompasses a
wide range of issues including provision of quality, safe products at fair prices,
fair employment policies, environmental protection and ethical business
practices. The two related issues, which the researcher thinks, still need utmost
attention and where corporate India can play an influential role are the issues of
corruption and infrastructure development within rural India.
Recent Efforts \ Activities
Floodgates were opened and private sector role came up in a very big way
since liberalization of economy in 1991. The private sector has grown to become
an entity in itself and has been assigned role to partner developmental
responsibilities with the government. This laid firm foundation for CSR and the
need for its practice. These observations are corroborated well through the report
of TERI called ‘Altered Images: The 2001 State of CSR in India poll’ states 4
Models of CSR in India: The ‘Ethical model’ as suggested by Mahatama Gandhi,
39
the ‘Statist model5, by Jawaharlal Nehru, the ‘Liberal model5 by Milton
Friedman and the ‘Stakeholder model’ championed by R. Edward Freeman and
according to the report all the four models co-exist in India today (Prakash-Mani,
2002).
While a few companies and business groups have taken a lead in
promoting CSR in India, the role of the industry associations must be recognised
as significant. While the CII has various committees for social development
activities and have even developed a voluntary social code for its members,
chambers like FICCI, Progress, Harmony and Development Chamber of
Commerce and Industry (India) PHDCCI, Bharat Chamber of Commerce and so
on have set up foundations for this purpose. However, the overall approach still
seems to be driven by philanthropy rather than integrating it with business as has
been happening in the west.
A number of regional workshops/ consultations have been undertaken to
promote awareness about the Social Code and facilitate its implementation. This
includes joint UNDP-CH advocacy initiatives linked to the messages of the
Human Development Reports.
A step-by-step approach has been worked out for building capacity of
companies. A workshop with senior corporate managers held in Calcutta in
December 2002 focused on issues like the core constituents of CSR in a market
driven economy, possible framework for CSR, implementation mechanisms, and
the support needed for mainstreaming CSR. A consultation with CEOs at
40
Mumbai in December 2002 observed that CSR is beyond compliance with
regulatory and ethical requirements, and symbolizes reaching to the larger
community. There was a consensus that business needs to find its role in the
traditional development model. Dovetailing of small and medium enterprises
with large corporate in social development initiatives was advocated. Also the
need for suitable recognition for the best corporate practice in CSR was voiced.
A pioneering initiative towards mainstreaming CSR was undertaken by the Tata
Council for Community Initiatives (TCCI) with technical support from UNDP.
Combining the experience of UNDP in human development indexing and
reporting, and the Tata Business Excellence Model, TCCI has evolved its own
Index on Sustainable Human Development for Tata Industries. This experience
would be invaluable for a broader initiative in CSR indexing and monitoring.
Over the years, the corporate sector in India has made an effort to
participate more actively in developmental work. Currently institutions such as
the Federation of Indian Chambers of Commerce and Industry (FICCI),
Confederation of Indian Industry (CII) and the Association of Chambers of
Commerce (ASSOCHAM) represent the combined approach of the corporate
sector to contribute, along with the Government, to national development efforts.
The joint adoption for long-term rehabilitation scheme for the people of Gujarat,
ravaged by the recent earthquake, by CII, FICCI and ASSOCHAM, is indicative
of this new role.
At the international level, ‘The International Business Leaders Forum’ is
working with international business and entrepreneurs at all levels to promote a
41
visionary approach to business leadership, business standards and innovative
partnerships for development. IBLF has also brought business leaders and UN
and intergovernmental organisations together to define how business contributes
to development and achievement of the Millennium Development Goals.
While formalization of WTO and globalization at Seattle Meet in 1998, it
was raised that the big corporate do not adopt the same standards while working
in the developing countries as they do in the developed countries. This conflict
was considered as a major impediment to the process of globalization of
business. To clarify and bring focus to the very purpose of globalization,
Millennium Development Goals (MDGs) plays a major role. The involvement of
various countries under UN leadership in planning and setting of MDGs,
represent a global partnership that has grown from the commitments and targets
established at the world summits of the 1990s. Responding to the world’s main
development challenges and to the calls of civil society, the MDGs promote
poverty reduction, education, maternal health, gender equality, and aim at
combating child mortality, AIDS and other diseases.
Set for the year 2015, the MDGs are an agreed set of goals that can be
achieved if all actors work together and do their part. Poor countries have
pledged to govern better, and invest in their people through health care and
education. Rich countries have pledged to support them, through aid, debt relief,
and fairer trade.
42
As recently as a decade ago, many companies viewed business ethics and
corporate social responsibility only in terms of administrative compliance with
legal standards and adherence to internal rules and regulations. Today the
situation is different. The new CSR paradigm has become even more urgent in
the context of globalisation which provides increased opportunities for
development and growth, but also raises concerns about the danger of further
marginalizing the poor and vulnerable sections of society. Attention to social
responsibility of business is on the rise across the world and many companies
realize that in order to succeed, they must earn the respect and confidence of
their stakeholders. Moreover, consumers, investors, community members and
potential employees are all seeking and demanding information on a
corporation’s social performance; thereby asking corporate to be conscious of
their responsibilities towards society. Anu Aga (Khandwalla, 2004) voices
similar sentiments. She says that the fundamental idea embedded in CSR is that
business corporations can no longer act as isolated entities, detached from the
broader issues of society. Like never before, corporations are being asked,
encouraged and prodded to improve their business practices to emphasize legal
and ethical behaviour. Companies, professional firms and individuals alike are
being held increasingly accountable for their actions, as demand grows for higher
standards of corporate social responsibility. Companies are increasingly expected
to perform according to a ‘triple bottom line ‘of economic, social, and
environmental performance irrespective of their motive for being socially
responsible. The two complementary motives of the companies to undertake
CSR are said to be,
43
1. accepting the Moral Case for CSR - the companies ought to be socially
responsible
2. Considering that there is a Business Case for CSR - companies whose values
and activities reflect those of the society where they operate generally deliver
higher profits.
Moral case for CSR includes all philosophies, policies, procedures, and
actions intended to enhance society’s welfare and improve the quality of life, and
it involves linking core corporate competencies to societal and community needs
even at the cost of any business’s ultimate goal of profit maximization. Moral
CSR then, goes beyond ethics to somehow making the world a better place by
helping to solve social problems.(Lantos: 2001).This can be referred as a ‘moral
case’ for CSR, whereas the fulfilment of a firm’s “social welfare
responsibilities”—is, however, admirable since it creates a win-win situation in
which both the corporation and one or more stakeholder group benefit is a
‘business case’ of CSR.
There are several reasons for the correlation between social responsibility
and profitability. Companies who manage their social responsibility effectively
tend to be managed well in other areas too, and good management is the single
most important factor in corporate profitability.
In addition, increasing focus is being placed on the growth of corporate
power and the need for greater accountability and transparency to society, for
example through reportage and stakeholder dialogue. This captures the whole set
44
of values, issues, and processes that companies must address to minimize any
harm resulting from their activities and to create economic, social, and
environmental value.
Also, a company’s reputation is less likely to be damaged if it is perceived to be
socially responsible - a very important factor when recent studies suggest that
more than 70 per cent of the value of a company is attributable to intangible
assets such as ‘reputation’. There is well documented evidence that establishes
that CSR is not charity but the ‘right’ and ‘profitable’ way of doing business. A
BSR document ‘Overview of Corporate Social Responsibility’ shows numerous
examples of companies that have gained tangible benefits, as a result of CSR
initiatives:
45
Figure - 3
Outcomes of CSR Initiatives
Improved
financial
performance
Enhanced brand
image and
reputation
Increased
productivity and
attract and
quality
retain
Improved Keduced
access to regulatory
capital.- oversight
1. Improved financial performance : A recent longitudinal Harvard University
study has found that “stakeholder balanced” companies showed four times
the growth rate and eight times employment growth when compared to
companies that focused only on shareholders and profit maximisation.
2. Enhanced brand image and reputation.- A company considered socially
responsible can benefit - both by its enhanced reputation with the public, as
well as its reputation within the business community, increasing a company’s
ability to attract capital and trading partners. For example, a 1997 study by
two Boston College management professors found that excellent employee,
customer and community relations are more important than strong
46
shareholder returns in earning corporations a place an Fortune magazine’s
annual “Most Admired Companies” list.
3. Increased sales and customer loyaltyA number of studies have suggested a
large and growing market for the products and services of companies
perceived to be socially responsible. While businesses must first satisfy
customers’ key buying criteria - such as price, quality, appearance, taste,
availability, safety and convenience. Studies also show a growing desire to
buy based on other value-based criteria, such as “ sweat shop-free” and “child
labour-free” clothing, products with smaller environmental impact, and
absence of genetically modified materials or ingredients.
4. Increased ability to attract and retain employees.- Companies perceived to
have strong CSR commitments often find it easier to recruit employees,
particularly in tight labour markets. Retention levels may be higher too,
resulting in a reduction in turnover and associated recruitment and training
costs. Tight labour markets as well the trend toward multiple jobs for shorter
periods of time are challenging companies to develop ways to generate a
return on the consideration resources invested in recruiting, hiring, and
training.
5. Reduced regulatory oversight.- Companies that demonstrate that they are
engaging in practices that satisfy and go beyond regulatory compliance
requirements are being given less scrutiny and more free reign by both
national and local government entities. In many cases, such companies are
47
subject to fewer inspections and paperwork, and may be given preference or
“fast-track” treatment when applying for operating permits, zoning variances
or other forms of governmental permission.
6. Improved access to capital.- The social Investment Forum reports that,
companies addressing ethical, social, and environmental responsibilities have
rapidly growing access to capital that might not otherwise have been
available.
7. Increased productivity and quality resulting in reduced operating costs due
to the all above factors.
The experience with investment in environmentally responsible
technologies and socially responsible business practice suggests that going
beyond legal compliance can contribute to a company’s competitiveness. Going
beyond basic legal obligations in the social area, for example, training, working
conditions, management-employee relations, can also have a direct impact on
productivity. It opens a way of managing change and of reconciling social
development with improved competitiveness. However, CSR is not a
philanthropic activity, in which a company gives without expecting a return or a
benefit. To quote from UNCTAD’s 1999 report on The Social Responsibility of
Trans-national Corporations (UNCTAD, 1999), “an external programme of good
deeds will not protect a firm whose actual operations harm its surrounding
society.”
48
In the past quarter of a century, an era of rapid economic globalization,
there has been a remarkable growth in both the number of trans-national and
multinational corporations (TNCs & MNCs) and the quantity of foreign direct
investment (FDI). MNCs have grown in number from 7,000 MNC parent
companies in 1970 to over 65,000 in 2002. These parent companies are
associated with over 850,000 foreign affiliate companies. Together, these
globally linked corporations make up one-tenth of world GDP and one third of
world exports. Flows of FDI have grown considerably in recent decades. In
1985-95 the level of FDI inflows in India stood at US$ 455 million, and by 2003
it stood at US$4,269 millions. Given this weight of trans-national investment, it
is clear that MNCs are very important global actors. Because they tend to invest
in sectors that are environmentally sensitive, they are especially important
players in international environmental politics and policy. Though the developing
world receives less than 20 percent of global FDI, it is a key source of capital for
these countries and its impacts can be enormous on the economy, and the
environment^ Jennifer Clapp)*
Marian Miller was very interested in the role of corporations in global
environmental governance. Her concern laid with the power of transnational
corporations, in particular their ability to influence policies and environmental
outcomes in the developing countries. She saw this power of corporate actors as
draining sovereignty away from Third World countries, and exhausting their
resources. Though corporations have “greened” themselves in the course of the
past 10 years by claiming to be environmentally and socially responsible via a
number of voluntary corporate-based initiatives, and even by claiming to
49
promote sustainable development in the South, they were, according to Miller, in
need of being closely watched. ( Miller 1998, 174; and Miller 2001.Global
Environmental Politics 5:3, August 2005 2005 by the Massachusetts Institute of
Technology).
Corporations that adhere to regulations in their home countries often
abuse labor, human rights and the environment in other countries, especially poor
countries. Union Carbide’s gas leak in Bhopal, India that killed about 15,000
people and Shell Oil’s link with human rights abuses and pollution in Nigeria,
Nike’s involving child labor are the few examples from many, who have violated
the most basic standards of human rights and fair labour practices. Various
multinational corporations (MNCs) still maintain substantially lower
environmental and social standards in poor countries than in their home nations.
Companies such as Reebok, Nike, and Levi Strauss have exploited the human
labour in Indonesia. Workers live in deteriorating, leaky, mosquito - infested
apartments and only earn a mere $39 a month for producing thousands of
products worth well over $100 each. Indonesia’s economy is booming because of
massive direct foreign investment while the cheap labour is suffering from
inhumane living conditions and illegal wages.
Moreover, globalization has also weakened regulation at the national
level, through a combination of investor pressure, new international trade rules
and weakened government tax bases. Many countries have set up special
investment zones that are not only tax free but also free of virtually all
50
regulations. Budget cuts have resulted in the non-enforc
regulations. (Jennifer Clapp 2005)
Critics frequently accuse multinational corporations of exploiting the
resources and workers of third world countries. Agricultural businesses often
take the best land and use it for export crops, which diminish the amount of good
land that the locals can use for their own food needs. Drug companies and
hazardous chemical industries take advantage of more lax safety regulations,
which often results in disaster. Mining industries exploit the wealth of the
country for only a few rich landowners. Since many of these natural resources
are in finite supply, developing countries have little hope of relying on them for
future security once they are used up. Banks and financial institutions do not hire
the local people, yet these businesses benefit by bringing in local money.
Manufacturing and service industries introduce poverty to many areas by
attracting more people to a factory than they can employ. They typically pay
much less to third world employees than to nationals, which suggest a double
standard of labour value. If they pay wages to third world employees that are
higher than what indigenous businesses can pay, then they attract the best
workers, which hurt employers in surrounding businesses. Also, all of the above
types of businesses destroy the local culture by introducing a different climate.
So, if we grant that there is some commonality to moral values around the
world, then, to that extent, multinationals have moral responsibilities that cross
cultural boundaries. Philosopher Norman Bowie recommends three universal
moral standards that are appropriate to the activities of multinationals. First,
51
multinationals should follow the norms that constitute a moral minimum, which
are advocated in all societies. Second, multinationals should follow principles of
honesty and trust, which are moral norms of the market place. These are required
as foundational for any business operations, and the systematic violation of moral
norms of the marketplace would be self-defeating. Third, multinationals should
not violate human rights, such as basic liberty rights. Business depends on
economic liberty, which is part of political and civil liberty in general. So, if we
accept economic liberty, we must accept the whole liberty package.
52
Figure - 4
Conceptual Framework
Corporate Social Responsibility Undertakings
by Multinational Companies.
Weaker Social Responsibility Commitment to Social Responsibility
Parameters Undertakings
53
Philosopher Richard T. De George offers a more specific set of guidelines for the
MNCs operating in other than its homeland as following:
1. Do no intentional direct harm to the host country
2. Produce more good than bad for the host country
3. Contribute to the host country’s development
4. Respect the human rights of its employees
5. Pay one’s fair share of taxes
6. Respect the local culture and work with it
7. Cooperate when local governments reform social institutions, such as
;<■. Land and tax reform.
With this, Corporate Social Responsibility (CSR) as a concept and
Corporate Social Responsibility (CSR) with special reference to Multinational
Companies (MNCs) are introduced. The following work in the thesis is
intertwined around this centre thought that whether MNCs are exploiters or
contributors in the host country as reflected in the conceptual framework.
54
CHAPTER - 2
REVIEW OF LITERATURE
The previous chapter had discussion on how CSR is conceptualized by
theorists and practitioners and certain realities about Corporate Social
Responsibility (CSR) and its importance into present days global economy. It
also says that CSR has been undertaken by different organizations in their own
ways suiting to company’s social and business policy framework. This led to the
detailed literature review with a purpose:
> To determine the nature of existing documents and gain an overview of the
main arguments/themes on CSR and,
> To draw on the views of key commentators and practitioners and determine a
set of indices for understanding CSR Undertakings particularly at MNCs.
> To review some of the relevant studies that had been conducted so far to
build right perspective for the present study.
Literature History of Corporate Social Responsibility (CSR)
Basically there are two competing visions for the purpose of business. At
one end of the spectrum, there is liberalism which focuses on shareholders’
wealth maximization (the so called profit maximization model). At the other end,
the Communitarianism model that focuses on “business for the common good”.
Both these views are perceptible in the ideologies shared below by few of the top
executives of global companies and economic theorists.
55
> “Profits are like breathing. If you can’t breathe you can forget everything else
that you are doing because you are not going to be around much longer.”
(Robert Mercer. Chairman & CEO of Goodyear tyre and Rubber),
> “Profits, in the best sense of the word, are the reward for having efficiently
produced something useful, profits are the lifeblood of the Corporation and
without it corporations would not survive ” (Buccholz and Rosenthal),
> Profits are not the reason for the existence of a business. This is not to say
that profits are unimportant or can be neglected ((John Bryan, Jr. Chairman
& CEO of Sare Lee).
> “Profits are one effective way to measure past performances but they do not
drive the enterprise I think it’s a great way to keep score, but I don’t think it’s
the principal motivation”, (Phillip Lippincott, Chairman and CEO of Scott
paper).
> “It’s hard for me to even think about what we do that’s purely for profit
because the concept at J & J is so outmoded” (David Collins former vice
chairman of Johnson and Johnson).
> “Corporations’ foremost Social Responsibility is to create maximum
shareholder value working under the circumstances where it is fair to all its
stakeholders ” (N.R. Murthy, Chairman of Infosys Technologies),
> Despite positive effects of globalization, the creation of social capital has not
equaled that of economic wealth in our country. Indian corporates have
reaped the benefits of economic growth. Today, they have the moral duty to
provide the marginalized in India with opportunities for progress. After all,
no corporation can sustain its progress unless it makes a difference to its
56
context! (Nandan Nilekani Chief Executive Officer President and Managing
Director Infosys Technologies Limited.
> “Corporate social responsibility is a hard-edged business decision. Not
because it is a nice thing to do or because people are forcing us to do it...
because it is good for our business” ( Niall Fitzgerald, former CEO at
Unilever)
Thus the ‘rule of businesses’ has been quoted and debated in economic
and business literature for a long time. CSR has transacted from eighteenth-
century Scottish philosopher Adam Smith’s framework of profit maximisation to
Caroll’s stakeholders’ approach for modem business and its relationship to
society. Smith proposed that capitalism, by encouraging the pursuit of gain and
efficiency, works to create greater wealth than any other economic system, and
maximizes liberty by allowing individuals freedom of choice in employment,
purchases, and investments, thereby benefiting the common good. A manager
when competes ethically to earn the next promotion, works towards high
personal development and as a result, excellent use of one’s time and talents
strengthens firm’s economic condition. Thus the manager’s role is to act as a
fiduciary or trustee to a principal, the owners or shareholders, being their steward
in effectively and efficiently managing the organization’s assets. Today’s CSR,
has its roots in the thinking of early twentieth century theologians and religious
thinkers, who suggested that certain religious principles could be applied to
business activities. For example, Andrew Carnegie devised a classic twofold
statement of corporate social responsibility based on religious thinking. First was
the charity principle, which required more fortunate individuals to assist less
57
fortunate members of society. However, by the 1920’s community needs outgrew
the wealth of even the most generous wealthy individuals, with the result that
some people expected business organizations to contribute their resources to
charities aiding the unfortunate. Second, was the stewardship principle, a biblical
doctrine that requires businesses and wealthy individuals to see themselves as
stewards or caretakers, not just of shareholders’ financial resources, but also of
society’s economic resources, holding their property in trust for the benefit of
society as a whole? Thus, there was a concern for the macro-level outcome of
business decisions in ways that went beyond the loyal agent’s argument that a
manager’s duty is solely to loyally serve the employer by contributing to profit
maximization. Now, it was suggested that stewardship of the corporation’s
resources somehow be melded with a view of stewardship of society’s resources
to more broadly serve society. Business was said to have stewardship
responsibilities not just to shareholders, but also to so-called “stakeholders”
(a.k.a.constituencies or publics), notably employees, customers, competitors,
suppliers, distributors, the local community in which the enterprise operates, the
general public, and the natural environment. When corporations make business
decisions they have both short- and long-term effects on many sectors of society.
By now it was generally understood that, business has an obligation to
society that extends beyond its narrow obligation to its owners or shareholders.
This idea has been discussed throughout the 20th century, but it was Howard R
Bowen’s (1953) book on “Social Responsibilities of Businessman”, which is said
to be the origin of the modem debate on the subject. He was pioneering in
exploring the responsibilities of executives to pursue actions and policies that are
58
“desirable in terms of the objectives and values of our society” In the book
Bowen reasoned that there would be general, social and economic benefits that
would accrue to society, if business recognized broader social goals in its
decisions.
Prior to the 1960s, business ethics was not a major concern of business
people. Rather, it was left to theologians to discuss issues of fair wages, unfair
labour practices, and the morality of capitalism. The Protestant work ethic taught
people to work hard and be successful—this was the essence of business’ social
responsibility.
Beginning in the 1960s ethical issues in business were raised on an
unprecedented scale. There was a heightened realization that repressive labor
practices could be found at even some of the most admired corporations, unsafe
products were being sold, the business system was taking a toll on the natural
environment, society was not succeeding in elevating those most economically
deprived, bribery was occurring on an international scale, and morality was being
compromised in the pursuit of money and power. Liberal eonsumerist media
portrayed business as evil, implying that almost any business activity is morally
reprehensible. Consequently, we heard consumer outcries against insensitive and
immoral business practices. As a reaction to the negative publicity, by the mid-
1970s, the concept of raising corporate sector’s consciousness was in vogue in
both corporate boardrooms and college classrooms. The idea was that enterprises
should not single-mindedly pursue profit without regard to morality.
59
The Stanford Research Institute in 1963, in their internal memorandum
gave for the first time “stakeholder” as an expression. Then onwards the debate,
on whether responsibility of a business enterprise is only to its shareholders,
owner or to stakeholder including environment and society at large, is an
ongoing one and continues. As the word ‘stakeholder’ appeared in management
literature, discussion of the concept diverged in a number of directions: corporate
planning literature (Ansoff, 1965; Taylor, 1977); systems theory literature
(Churchman, 1968; Ackoff, 1970; Davis and Freeman, 1978); corporate social
responsibility literature (Post, 1981; Dill, 1975; Ackerman, 1975; Ackerman and
Bauer, 1976; Murray, 1976; Hargreaves and Dauman, 1975; Wheeler and
Sillampaa, 1997; Mahon and Warwick, 2003; Martin, 2004 and; Post, James,
Preston and Sachs, 2002) and organisational theory literature (Rhenman, 1968
and; Katz, Kahn and Adams, 1980).
Edward Freeman (1966) defined: “A stakeholder is any group or
individual who can effect or is affected by the activities and achievements of an
organisation”. The stakeholder theory originates from Freeman who argues that
“in a narrow sense, the stakeholders are all those identifiable groups or
individuals on which the organisation depends for its survival, sometimes
referred to as primary stakeholders...On a broader level, however, a stakeholder
is any identifiable group or individual who can affect or is affected by
organisational performance in terms of its products, policies and work processes.
The stakeholder theory suggests, ‘managers should tailor their policies to satisfy
numerous constituents, not just shareholders(Freeman,1984).
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At the same time i.e.between1965-66 the conferences and International
seminars were held at Delhi, Calcutta and Bombay on ‘The Social Responsibility
of Business. At the conclusion of those seminars it was concluded that “Social
Responsibilities of business is towards workers, shareholders, customers and
community. It also emphasized that in modem industrial society business
occupies a meaningful and significant place in national life. At the end of the
Calcutta seminar a study group” was formed. This study group was
representative cross Section of the people from economist, sociologist,
businessman, academicians, legislatures etc.
The terms of reference for the study group were:
1. to prepare a set of business norms
2. to examine the hurdles in implementation
3. to recommend remedial measures to eliminate those hurdles
As an outcome, various social responsibility where declared for each of
the stakeholders in detail in the form of recommendations.
Lester Thurow (1966) in his book “The future of capitalism” wrote
‘Paradoxically, at precisely the time when capitalism ends itself with no
competitors - its former competitors, socialism, or communism, having died - it
will have to undergo a profound metamorphosis”. Thurow talked all these years
ago that, capitalism arising out of globalization needs to be more sustainable -
more socially and environmentally aware and responsible. We are seeing
increased calls for what that metamorphosis might look like now, as more and
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more people, individuals and groups, call upon contemporary capitalism (as
expressed through business) to be environmentally and socially responsible; to be
accountable and transparent; to be inclusive; to be ethical and stable; to be more
equitable - to be sustainable. This is evidenced by the increasing calls by
government, civil society, business groups, global agencies (like the World
Council for Sustainable Development and the United Nations) and some
businesses themselves, upon the corporate sector, in the last few years
worldwide, to be engaged in Corporate social responsibility initiatives and
reporting in its various forms. As Thurow makes clear, ‘if capitalism is to work
in the long run, it must make investments that are not in any particular
individual’s immediate self interest but are in the human communities’ long run
self interest.’
By the seventies of the twentieth century the intuition that business had
some form of social responsibility over and above its responsibility to perform
economically had already been cashed out in a number of publications
(Frederick, 1960; Davis & Blomstrom, 1966; Walton, 1967). Although these
publications often provided crude definitions or descriptions of what CSR was,
the predominant concern was to drive home the argument that CSR is desirable,
either in its own right (cf. Frederick, 1960; McGuire, 1963) or because it is in the
long-term economic interest of corporations and other business Organizations to
engage in CSR (cf. Davis, 1960; Johnson, 1971).
But the problem, as expressed by Courtney Brown (1970), and indeed by
commentators today, is that the public perception of business is generally a
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negative one, seeing itself often as victim or exploited, rather than as beneficiary.
As a result since 1970s, society’s expectations of business ethics have been
climbing. Unlike yesteryear, productivity alone is no longer considered sufficient
to morally justify a business organization. Also important is how wealth
generation affects non-economic aspects of society, such as the welfare of
employees, customers, and other members of the business system, as well as
other outside groups and the natural environment. Others soon followed suit and,
John Kenneth (1971) in his paper “on the Economic image of corporate
Enterprise’ argued importantly, that “to recognize that the great corporation is
essentially a public entity is to accept that its acts have a profoundly public
effect”
Robert Dahl (1972) argued influentially (among academics), ‘that every
large corporation should be thought of as a social enterprise. It should be thought
of as an entity whose existence and decisions can be justified in so far as they
serve public or social purposes’ (Dahl, 1972 cited in Beesley & Evans, 1978:17;
see also McDermott, 1991). This is a position which recognised that ‘business
will benefit from a better society just as any citizen will benefit; therefore
business has a responsibility to recognise social problems and actively contribute
its talents to help solve them. Such involvement is expected of any citizen, and
business should fulfil a citizenship role. ’
Neil Jacoby (1973) in his book ‘ Corporate power and Social
Responsibility’ developed a social environment model to explain corporate
behaviour as a response to both market and non market forces that influences
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costs, revenues and profits. Jacoby sought to make boards more socially sensitive
by including on them ‘Sophisticated and Articulated shareowners’. He sees this
as a solution to ‘the negative perceptions of business as insensitive to social
issues.’ This can also be achieved, he argued, by employing staff expert in
organisational and public affairs, and setting up ‘sensory and feedback social
devices linking it with all sectors of society’. Communication is the key, with
business becoming expert in political as well as social issues. Business should
establish a social account, he argues, and be subjected to annual social audits.
Leading sociologist Daniel Bell, wrote in 1974 that, ‘to think of the
business corporation simply as an economic instrument is to fail totally to
understand the meaning of the social changes of the last half century.’(Bell, 1974
cited in Beesley & Evans, 1978: 16). Thirty years on many people are saying
similar things within the corporate social responsibility debates. Much of this had
already been said many years before, in 1946 by Peter F Drucker in his classic
book, ‘The Concept of the Corporation’ referred Management as ‘ industrial
society’ and as such have great responsibilities to their own profession, to the
enterprise and to the people they manage, and to their economy and society.’
This view is now central to corporate social responsibility discussions.
At the same time, Linowes (1974) in his book “The Corporate
Conscience” argued “society is dependent upon business, but more importantly,
business is a dependent on society. Reflecting many commentators of the time,
he argued, ‘socially constructive corporate action will in the long run benefit all
of society. Irresponsible action or inaction will boomerang to harm business as
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well as non business sector. And with this for one of the first times in the
literature concerning CSR, the phrase ‘Corporate Citizenship’ was used as a
reflection of socially constructive corporate action.
Keith Davis(1975) gave propositions for social Responsibility and argued
strongly for recognizing that social responsibility arises from social power. He
said that there is an iron law of responsibility, which states that in the long run
those who do not use power in a manner that society considers responsible will
tend to lose it. ®-
Archie Caroll in 1979 combined the philosophical ideas of social
responsibility and social responsiveness into single theory of corporate social
action called ‘Corporate social performance’ and Melvin Anshen (1980) in his
book ‘Corporate strategies for social performance’ argued that the concept of
Corporate social Performance is a better concept than Corporate social
responsibility because ‘Responsibility is outer directed; performance is inner
directed. Responsibility is under social control, performance is under
managements’ control.
Alvine Toffler (1980) in his book ‘The third wave’ wrote that, ‘the multi
purpose corporation that is emerging, demands among other things, smarter
executives as the corporation requires attention to multiple bottom lines - social,
environmental, informational, political and ethical bottom lines - all of them,
interconnected if it is to adequately and effectively produce better outcomes and
benefits for a sustainable future. This position on sustainability is increasingly
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recognised as a key issue emerging from the diverse views in the corporate social
responsibility debates, in recent years. Few companies would deny its importance
to the way they run their businesses, though many are still struggling with how
best to implement this and make it core business.
Bowie (1983), wrote that, the idea of the corporate social contract that
arose during the latter half of twentieth century elicited CSR as a concept. He
said that ‘Social Contract’ is based on a reciprocated relationship between the
society and industry. The notion of an implied corporate social contract was
conceived by social and economic theorists on the basis of effects of business
decision-making on society as well as corporate reliance upon society. This
contract spells out society’s expectations of business as well as (although much
less discussed) business’ expectations of society. The social contract theory of
business is widely held today by both business ethicists and business decision
makers.
According to Davis(1983), the idea that corporations as organizations
have “social responsibility” and obligations tying them to a wider society became
popular in the 1950s, and continued through the 1960s and 1970s, when
international businesses rapidly gained in size and power Several groups were
responsible for this heightened social consciousness, including the feminist
movement and those advocating for the mentally and physically challenged, for
native people, and for minorities. Much of the public embraced the concerns of
these groups because unfortunate events brought the realization that some
special-interest groups were worth listening to, such as environmentalists,
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consumer advocates, and human right activists. Thus, it was suggested that
business, as a social institution, should join with other social structures like the
family, educational system, and religious institutions, to help enhance life and
meet needs (Chewninget. al, 1990). Donaldson (1990) through “Stewardship
Theory” states, there is a moral imperative for managers to “do the right thing,
‘without regard to how such decisions affect firm performance. The Stewardship
principles reflect in the others writings also. Peter A French, Jeffrey Nesteruk
and David T Risser with John Abbamo, in their 1992 book Corporations in the
Moral Community, see corporations as moral. They see business providing the
environment where individuals, themselves as moral agents, ‘make choices and
take actions.’ This business environment, however, is not neutral, disinterested,
ground. It conditions many of the choices that are made there. As such, business
has a responsibility ‘for the kinds of environments they develop and maintain’
Furthermore, business needs to monitor these environments and change them if
necessary. Care for this environment therefore needs to be a major priority for
business. As such, care for the business culture and environment needs to be a
significant tenet of corporate social responsibility.
Miller and Ahrens(1993), writes whereas in Adam Smith’s model,
property was owned by individuals who directly decided how it was to be used,
the modem corporation is characterized by professional managers who make
decisions on behalf of the stockholder owners, and these decisions affect tens of
thousands of citizens Moreover, corporations need the resources of society if
they are to survive and thrive. Corporate taxes are supposedly not sufficient to
pay for these resources, and so the corporation should, out of a duty of gratitude,
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assist in solving social problems (Bowie, 1995). Will Hutton (1995,1999) states
that the need of the hour is, to recapitalize, a new language of stake holding as a
political economy emerges; social inclusion, membership, trust, cooperation,
long termism, equality of opportunity, participation, active citizenship, rights and
obligations.”
Jones (1995) confirming Stakeholder Theory states.® Firms involved in
repeated transactions with stakeholders on the basis of trust and cooperation have
an incentive to be honest and ethical, since such behaviour is beneficial to the
firm. The ethical behaviour of firms will enable them to achieve a competitive
advantage, because they will develop lasting, productive relationships with these
groups.®
Hart (1995) emphasising Resource-Based View of the Firm states,® For
certain companies, environmental social responsibility can constitute a resource
or capability that leads to a sustained competitive advantage”.
Jennings and Zandbergen (1995), cites the bases of Institutional Theory to
explain CSR and said, “Institutions play an important role in shaping the
consensus within a firm regarding the establishment of an “ecologically
sustainable” organization
Entine (1996) has put it that “There are two senses in which CSR could be
defined. The narrow sense is based on the broad principles of integrity and
fairness and focuses on internal stakeholders issues such as product quality,
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customer satisfaction, employee wages and benefits, fair treatment of suppliers
and shareholders, and local community and environment responsibilities, issues
that a company can actually influence.
Noel M Tichy, Andrew R McGill & Hynda St. Clair in their 1997
collection ‘Corporate Global Citizenship.: Doing Business in the Public Eye,’
addressed CSR as an international issue and wrote, “as we move into the 21st
century global business will find themselves increasingly intertwined with
global, political, social and environmental issues that will free them to redefine
their role as a potent force for world integration’. In other words there is a moral
dimension to corporate social responsibility and performance which involves
‘building systems of corporate ethics and values into the enterprise, tackling
questions of compliance and governance, meeting the needs of the economically
and socially disadvantaged, satisfying responsibilities to the environment’1.
(Fombrun, 1997).
Peter Schwartz, and Blair Gibb, in their 1999 book When Good
Companies Do Bad Things - Responsibility and Risk in an Age of Globalisation,
argue that many more people today consider themselves to be stakeholders in a
company. They argue that it is essential for companies to recognise this by
‘identifying and acting on opportunities to improve the societies in which they
operate’.
With these changing expectations from business Logsdon&Wood (1999)
writes that, the language of CSR was progressively being replaced by “corporate
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citizenship”, a shift in normative understandings of how business organizations
should act with respect to their stakeholders.
Thus, several analytical frameworks have been evolved and used to
understand CSR. Among those, Stakeholder theory, which has emerged as the
dominant paradigm in CSR, has evolved in several new and interesting ways.
Smith (2001), feels that, concern about CSR prevailed through the “kinder
and gentler” 1990s, due to the growing recognition that governments had failed
to solve many social problems as well as the diminished scope of governments in
globalised economy.
Moir 2001 identifies CSR as an ethical basis which should satisfy the
needs of the stakeholders. His definition of CSR is based on Business Impact,
2000 and he argues that a company which focus on CSR has to “treat employees
fairly and equitably, operate ethically and with integrity and to respect basic
human rights”.
Kok et al., 2001 define CSR as “the obligation of the firm to use its
resources in ways to benefit society, through committed participation as a
member of society, taking into account the society at large and improving
welfare of society at large independent of direct gains of the company.”
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Baron, Feddersen and Gilligan, and McWilliams and Siegel(2001)
underlining the ‘business case of CSR,’ through the Theory of the Firm
respectively argue,.. ‘
> The use of CSR to attract socially responsible consumers is referred to as
strategic CSR, in the sense that firms provide a public good in conjunction
with their marketing/business strategy,
> Activists and ngos can play an important role in reducing information
asymmetry with respect to CSR on the part of consumers.
> Firm presents a supply/demand perspective on CSR, which implies that the
firm’s ideal level of CSR can be determined by cost benefit analysis.
According to Davis (2001), the broad sense of CSR includes
stakeholders’ concerns for quality products and fair treatment of employees but
goes beyond it to environmental practices, human rights, anti-war pacifisms,
animal rights, women rights and sexual rights. The focus is on the society in
general. This construct definition of Corporate Social Responsibility very
broadly as “The set of standards of behaviour to which a company subscribes in
order to make its impact on society positive and productive.”
In the more recent past, Logsdon and Wood (2002) and Wood et al (2006)
defined the concept of the Global Business Citizen as “a business enterprise
(including its managers) that responsibly exercises its rights and implements its
duties to individuals, stakeholders, and societies within and across national and
cultural boarders”(2006:35). This definition illustrates two major transformations
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in the unit of analysis: from person to organization, and from local to global
arena.
Talking about the evaluation of CSR practices, Snider et al., 2003
mention that “stakeholder theory provides a useful framework to evaluate CSR
through social reporting activities.” C.B. Bhattacharya and Sankar Sen(2004) in
their article, ‘. Doing Better at Doing Good’ have shown their concern for the
need for better measurement models of Corporate social responsibility that
capture and estimate clearly the effects of a company’s actions on its
stakeholders.
Knox et al., 2005 focus their empirical study on CSR on stakeholder
aspects. Together with Maignan and Ferrell, 2004 they argue that CSR is a
concept of corporations to meet stakeholders’ interests effectively which has an
impact on the company’s success in the long run.
Hopkins(2005) states that “CSR is concerned with treating the
stakeholders of the firm ethically or in a socially responsible manner.
Stakeholders exist both within a firm and outside. The aim of Social
Responsibility is to create higher and higher standards of living, while preserving
the profitability of the corporation, for its stakeholders both within and outside
the corporation.” He develops a concept to measure CSR which consists of
principles of Social Responsibility, principles of social responsiveness and
outcomes of social responsibility. He also states that, there is no common
agreement on the question if CSR should be defined as a purely voluntarily
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concept or an approach which should be strictly regulated and to which
companies should be obliged.
To Welford(2005), CSR is a business concept and he presents twenty
elements such as internal and external aspects, accountability and citizenship
which should be fulfilled by CSR-companies. Due to these indicators, his
concept can be seen as a description of the social dimension of Sustainable
Development.
Waldman, Siegel, and Javidan (2005) use Theory of the Firm/ Strategic
Leadership Theory’ and write, ‘certain aspects of CEO leadership can affect the
propensity of firms to engage in CSR. Companies run by intellectually
stimulating CEOs do more strategic CSR than comparable firms.
financial Relevance Of Corporate Social Responsibility
“Milton Friedman (1972) stated that by obeying the law and applying all
resources, to making a better product at a lower cost, a business would fulfill its
social obligation” by this he conveys that socially responsible firms will be at
competitive disadvantage due to the added expenses of incurred by social
activities. There are hence, a number of studies that have tried to look at the
relationship between CSR and financial performance of a firm.”
Among them a positive view of financial relevance to CSR was supported
by Parker and Eilbirt (1975) and Browman and Haire (1975).
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Sturdivant and Ginter (1977) examined the relationship between social
responsiveness and growth in earnings per share from 1964 to 1974 of 28 firms.
They in their study concluded that “in general, the responsibly managed firms
will enjoy better economic performance. Thus this study indicates positive
relationship between CSR and economic performance of the firm.
Some of the other studies carried out in response to seek answer to the
question that, do socially responsible firms outperform or under perform other
companies that do not meet the same social criteria, the results have been very
mixed. A study by Waddock & Graves (1997), shows a positive relationship and
a negative relationship is indicated in the study undertaken by Wright &
Ferris(1997), whereas McWilliams & Siegel(2000), indicate no relationship. This
leaves managers without a clear direction regarding the desirability of investment
in CSR.
Focusing relevance of CSR with its financial output, few economists have
remarked on the lines that,
‘Corporate social responsibility (CSR) has become a key component of a
firm’s reputation. A strong reputation can afford the firm many advantages, and
is generally associated with higher levels of financial performance.’ The
pressures for CSR (and related vulnerabilities from a lack of CSR) are perhaps
greatest among multinational firms with business activities across countries and
cultures. For example, recent research demonstrates that consumers hold global
firms to a higher CSR standard than local firms, and that CSR explains a
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significant portion of brand preferences worldwide (Werbel and Wortnaan
(2000), Dowling, (2002). Orlitzky, Schmidt, and Rynes, (2003); Holt, Quelch,
and Taylor, 2004). Argenti and Druckenmiller, (2004); Fombrun, (2005);
Schnietz and Epstein, (2005);
Moskovitz (as cited in Kanika Bhal 2002) studied the relationship
between the market performance of a firm’s common stock and social
responsibility and said they are directly related. In order to validate this
empirically he selected 14 companies that possessed what he believed were good
social responsibility credentials and then calculated the rate of return on their
common stock for the first half of 1972. While the 14 stocks appreciated at an
average of 7.28%, major market indices had appreciated by much smaller
amounts. This indicates insignificant relationship between social responsibility
and financial performance.
These studies highlighted the business case of CSR.
Views Against Corporate Social Responsibility
Contrary to this literature which is supporting stakeholders ‘perspective,
some other views also came across while reviewing literature. The last words on
the case against CSR come from marketing guru Theodore Levitt (1958) who
argued that “sentiment is a debilitating influence in business that fosters leniency,
inefficiency and sluggishness. The governing rule should be that something is
good only if it pays. Otherwise it is alien and impermissible.”
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The foremost of them was Milton Freidman 1962, a Nobel laureate held
the view that the only responsibility of business is to maximize profits for
shareholders staying within the realm of law. Friedman (1970), through Agency
Theory states that, “CSR is indicative of self-serving behaviour on the part of
managers, and thus, reduces shareholder wealth”. Friedman is best known for
articulating the case against CSR and his famous quote that ‘the business of
business is business’ summarises his ideology.
Heilbroner(1969) and Hayek(1994) also expressed similar view.
“Businesses are owned by their shareholders - any money they spend on so-
called social responsibility is effectively theft from those shareholders who can,
after all, decide for themselves if they want to give to charity”.
Wang and Coffey(1998) held a similar view, that “business has no
democratic mandate, historic role or other basis for legitimacy in the area of
social responsibility.
This is the voice of the laisser-faire 1980s and 90s, still being given
powerful voice by advocates such as Elaine Sternberg (2000). Sternberg argues
that there is a human rights case against CSR, which is that a stakeholder
approach to management deprives shareholders of their property rights. She
states that the objectives sought by conventional views of social responsibility
are absurd. Not all aspects of CSR are guilty of this, however. Sternberg states
that ordinary decency, honesty and fairness should be expected of any
corporation.
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Kennedy (2000), Lantos (2001) and Henderson (2001) deny a significant
social role of business. They say, ‘both research and practice in CSR has not
clarified whether socially responsible corporations outperform or under perform
other companies’. Therefore Henderson (2001) is quick to contend that CSR is
‘just another development fad, like others, whose time will come and go’, ‘tends
to reduce profitability, inflate operational costs, reduces revenues, over-regulates
freedom of business to compete and limits choices of the poor (especially in
developing countries) to attain employment opportunities of their choices and
thereby leading to more impoverishment’, than alleviating poverty, as presumed.
While appraising CSR literature Lantose felt that ‘the field is fuzzy, has no clear
boundaries and its legitimacy still debatable’.
Former Chief Economist of the OECD, David Henderson(2001) arguing
against the current model of CSR said “the current widely-held doctrine of CSR
is deeply flawed, and its general adoption by business would reduce welfare and
undermine the market economy.”
Deborah Doane (2005), a leading skeptic, calls corporate social
responsibility a “myth,” arguing that market forces make it difficult or
impossible for companies to deliver both short-term financial returns and long
term social benefits. She argues that ethical consumerism is simply not strong or
widespread enough to drive change, that CSR is not a competitive advantage for
global corporations and that in a global economy, countries will simply not
compete to have the best ethical practices.
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Amongst this criticism, (Jensen, 2001; Crook, 2005;). have said, “if the
arguments against a socially responsible approach were widely accepted, nobody
would even be talking CSR because everyone would be doing it. Also despite the
barrage of criticism that the field appears to have, CSR benefits are seen as
outweighing disadvantages and the CSR movement appears to be growing from
strength to strength”.
Similaraly Juholin (2004) acknowledges this weakness, pointing out that
‘absolute CSR standards do not exist, and may change with generation, culture,
and whether the society is Nordic, USA, developing or transitional’. Despite this
weakness, based on emphasis and frequency, prominent themes that ubiquitously
recur on the landscape of reviewed literature include: ‘Profitability and Welfare’;
‘Stakeholder Theory’; ‘Ethics and Values’; ‘Communication and Disclosure’;
and ‘Strategic CSR’.
Cliver crook (Jan 2005) has said in his interview that “Over the past 10
years Corporate social responsibilities has blossomed as an idea, if not as a
coherent practical programme.” He firmly believes that “Today Corporate social
responsibility, if nothing else, is the tribute that capitalism everywhere pays to
virtue. Civil society advocates of Corporate Social Responsibility increasingly
accuse firms of merely paying lip service to the idea of good corporate
citizenship. Firms are still mainly interested in making money, though whatever
the CEO may say in the annual report. When commercial interests and broader
social welfare collide, profit comes first”.
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No matter how diverse the views may have been so far in these
discussions, one thing has become very clear that, business can no longer
function as if it is somehow separate from the social and cultural values of those
communities in which it seeks a licence to operate and, this recognition has
brought with it a keener awareness among global business communities to
engage in business with the issues of the ‘morality’ and responsibility of their
actions and positions in the 21st Century.
Review Of Empirical Studies.
During 1960s, the western Industrialized countries began assessing, the
impact of modem economic activity on the quality of human and social life.
> ‘McGurie and Parish (1971) surveyed executives of large corporations and
found substantial evidence to support the contention that the corporate
executives pursue social as well as profit goals. They found that, there is little
evidence of the Indian business’ involvement in social responsibility. The
efforts have been few and far between barring Tatas, Birlas, Lalbhai Group of
companies etc.
> A comparative study was undertaken by the ‘International centre for
Research in Accounting, University of Lancester U.K. to make an inquiry
into social consequences of the corporates’ decisions and actions in 3
countries - Germany, France and Canada between 1974 to 1976.
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In Germany (1974) , 260 large industrial companies and 100 smaller
companies were selected for the study focusing ‘Inquiry into social involvement
of German industry’.
In France (1974-75). 5o large and 47 small enterprises in all sectors (including
government) were contacted for collecting data on ‘The social examination”.
In Canada (1976) 1083, firms were covered under the study.
The data was collected through mailed questionnaires and occasionally
supported by case studies.
1. The data revealed significant differences in corporate social policy and
performance associated with firm size and sphere of economic activity.
Although the Canadian data clearly revealed - and all other studies strongly
suggested - a general tendency for larger firms to place greater emphasis on
social policy and performance, the differences associated with size by no
means were all in one direction.
2. In at least two significant areas, the relative importance of women in
management, and the magnitude of corporate philanthropy relative to firm
size indicated that smaller firms tend to outperform the giants.
3. Although a few sharp inter-country differences were shown by this
comparison of survey results, a close analysis revealed wide variations in
individual company policies and practices, both within and among countries,
and thus suggested that the scope for independent experimentation and social
policy initiative by individual firm continues.
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> In U.S. a pioneering study sponsored by the committee for economic
development (CED) (1974) in New York and the continuing surveys of
Annual reports conducted by Ernst and Ernst (1976) were conducted; on the
similar line of inquiry as Germany, France and Canada. The data was
/
/
collected through secondary sources with objectives to analyse! both corporate
/
posture and policies with respect to social issues, analysis arid policy making
and programmatic response, as well as activities in specific areas.
The findings were....
1. Over 76% of respondents indicated that they had made some efforts to assess
their impact and activity in one or more areas of social concerns similarly
75% of the firms reported that their activities involved “a number of areas” of
social concern.
2. 70% indicated that they had designated a ‘particular person, organisational
unit, or group, as having responsibility for monitoring “evolving demand on
your company for social action programmes”.
3. 40% respondent said that the assessments of social concerns and impact were
made public in some form.
> The Ernst and Ernst study’s major finding was “the number and percentage of
fortune 500 companies including some elements at” “Social Responsibility
disclosure” in their reports has almost doubled since 1971. i.e. 239 in 1971 to
425 in 1976.
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> An empirical study was undertaken by Singh. Maggu and Klauier (1978) with
an objective to generate empirical evidence regarding the present state of
corporate actions and their orientations in the Indian context. It aimed at
examining:
1. The perceived state of Corporate Social Responsibility
2. Expected corporate behaviour in the area of social responsibility: and
3. The gap between the present state of corporate responsibility and that
expected from the corporate community
The data were collected from 251 respondents having work experience
ranging from 0-7 years in the corporate world, through a structured instrument.
The major findings of the study are:
1. Pure profit maximizing is the most dominant corporate behaviour, follows by
calculative and socially responsible corporate actions.
2. That the level of weak experience influence the perception of corporate
actions significantly.
3. That perceived corporate actions are not associated with that of expected
corporate behaviour. They are poles apart from preferred corporate actions,
i.e. there are significant gap between perceived and expected corporate
actions.
When the results show that there is a significant gap between the two, the
question arises is what the possible implications at such gap are? How can the
action profile of the corporate community be changed ?
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> Cochran and wood (1984) in the their study took asset turnover and asset age
as the variables and concluded that within industry groups the financial
variable most strongly correlated with CSR is asset age and that omission of
this variable results in a spurious correlation of CSR and financial
performance. They also concluded that firms with older assets have lower
CSR ratings. The evidence relating CSR to financial performance is mixed,
though there seem to be quite a few studies that indicate a positive
relationship. Interestingly, there are hardly any (with very few exceptions)
studies that show a negative correlation.”.
It’s not that CSR is only gaining momentum in the western economies only.
> Srinivasan (1991) Conducted study on social responsibility and social work
practice in industry with major objective to explore the potential and scope
for social welfare practice - to be undertaken in private manufacturing
organization in Madras. This comparative study of 80 managers, 80
supervisors and 40 union representatives was undertaken to bring out the
difference in the knowledge, attitude and perception towards social
responsibility and social work. Variables such as the issue of social
responsibility, the concept of social work, employee welfare and welfare to
society were identified to judge the views and bring forth suggestions.
Findings were:
1. There was a distinct difference in the perceptions of managers, supervision
and union representatives towards the issue of social responsibility.
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2. Managers and supervision were more profit oriented emphasising on
economic concern while union representatives recommend greater social
responsibility with emphasis on values, commitment and inclination.
Consequently managers highlighted the importance of social costs while
union representatives were concerned about attitudinal changes.
3. There was general agreement on the need for social accountability by
industrial organisations although the awareness of the term social audit was
low.
4. It was perceived that management expected both tangible benefits as well as a
boosting of the corporate image for their socially productive actions. Union
representatives were concerned with their traditionally protective role, and
endorsed their actions towards helping employees. They admitted that their
major role was to support the company’s programmes and maintain harmony
in the factory.
> The social research Wing of IMRB (SRI) undertook a desk survey in 1995
(reported by Kishore Rao) of public limited companies which were profitable
and had made reference to their socially responsible activities either in their
chairman address or any published work in the past 750 companies were
approached with one to one questionnaire. The findings are as followed.
1. What do they support ?
73% wished rural community development , 71% Wanted to contribute to
upgrading infrastructural facilities for the under privileged and 60% had
community based rehabilitation of the disabled at heart.
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2. How do they support?........(The question examined that how many of these
companies could show actual examples of their wish to support).
71% through donation of equipment, vehicles etc, 65% by secondary
managerial talent to help projects.
47% thought of giving funds.
3. Why do they support ?
70% because they felt obligation to the community, 40% supported good
causes because of their concern for underprivileged, 24% Wanted to use such
activities to build up a good corporate image, 23% said they did so for tax
exemptions and other benefits, 21% because it is a family tradition, and 19 %
because it is a company traditions
4. When do they give?........(This was asked to determine whether ‘giving’ was
impulsive or carefully throughout)
76% said it was an ongoing nature, 17% said it was occasion specific
5. Who decides to give ?
60% decision by chairman or managing directors, 20% Board of Directors,
and 2% personnel related to social welfare.
> If a lot has already been written about the football industry, it is because of
child labour. Already in 1996, during the European Nations Cup, several
trade unions and NGOs drew attention to the forced labour of children
making footballs for the world market. Those children made footballs for
famous trade names such as Nike, Puma, Decathlon, Adidas or Reebok. A
study on the status of child labour in the Industry was done in 1998 by V.V.
Giri national labour Institute (India). (In June 2000 the India Committee of
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the Netherlands published the report, “The Dark side of football.) The study
was on ‘Child and adult labour in india’s football Industry and the Role of
FIFA. And the findings showed that:
1. The contractual agreements between FIFA and football manufacturing
companies violated all most all the labour rights that were an integral part of
those contracts.
> To re-examine the current status in the industry, Tata Consultancy Services, a
social section group was appointed. The study was conducted during Feb -
April 2002 in the football producing areas of Jalandhar and Batala 450
households were contacted.
The Findings suggested that...
1. Employment of children in football industries affected education among
children,
2. There were large differences between wages received by the male and
female workers, and workers of registered and unregistered units,
3. A number of adult stitchers complained of health problems and continues
mobility due to occupational health hazard had forced them to make away
from their only livelihood source.
This study is a black dot on the corporate sector and MNCs in particular,
which usually boast of their socially responsible practices in the global business
scenario.
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> A survey conducted in (1998-1999) by SRI / IMRAB on the status of CSR
reported the following (Hindustan Times, Jan 24,1999).
1. About 30% of the companies surveyed had some sort of a policy on
supporting social development
2. Only 7% of companies had a written policy on CSR.
3. Of those having written policy, 86% were actually supporting activities;
for the societal benefits.
4. The companies involved in development activities were old and large.
5. Only 16% of the companies were working with NGOs.
> An opinion as formed by India National Research Report on the basis of two
reports namely, ‘Enhancing Business-Community Relations’-and ‘The
Altered Images report suggested that Indian companies are leading the way
their multinational competitors in the corporate responsibility stakes. This
opinion is supported by Business World India Research. The 1999 poll of the
top twenty-five businesses in India according to scope and content of CSR
practice, named 68 per cent Indian companies, 28 per cent multinationals and
the remaining four per cent as public sector companies.
> Research corroborates this International reputation analysts at echo Research
tracked business and national media coverage during 2000 and interviewed
600 leading opinion formers in the U.K., USA France, Germany, Japan and
Australia to examine how Corporate Social Responsibility has progressed as
an influence on corporate behaviour and how the challenges it faces will
change in future.
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Findings were...
1. The results from the study rated companies on their Corporate Social
Responsibility performance Ford, BP IBM etc in that order.
2. Companies need to maintain business justification and social credentials and
involve middle management to make it happen.
3. Corporate Social Responsibility is rising in prominence - it is now perceived
as a top table issue, delivering real business benefits as well as giving back to
communities.
4. Over 8% Corporate CSR decision - makers were very confident in the ability
of good Corporate Social Responsibility practice to deliver branding and
employee benefits, despite some sceptism i.e. less than 100% thought that
Corporate Social Responsibility really helps the socially excluded to become
more “included.”
5. 76% of Corporate CSR decision makers spoke of the need for CSR to be
owned and seen as a key group to convince and engage with specific CSR
targets.
6. The study suggests that in order to stand its grand, Corporate Social
Responsibility must be measurable.
> International reputation analysts at echo Research tracked business and
national media coverage during 2000 and interviewed 600 leading opinion
formers in the U.K., USA France, Germany, Japan and Australia to examine
how Corporate Social Responsibility has progressed as an influence on
corporate behaviour and how the challenges it faces will change in future.
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Findings were:
1. The results from the study rated companies on their Corporate Social
Responsibility performance Ford, BP IBM etc that order.
2. Companies need to maintain business justification and social credentials
and involve middle management to make it happen.
3. Corporate Social Responsibility is rising in prominence - it is now
perceived as a top table issue, delivering real business benefits as well as
giving back to communities.
4. Over 8% Corporate CSR decision - makers were very confident in the
ability of good Corporate Social Responsibility practice to deliver
branding and employee benefits, despite some sceptic i.e. less than 100%
thought that Corporate Social Responsibility really helps the socially
excluded to become more “included.”
5. 76% of Corporate CSR decision makers spoke of the need for CSR to be
owned arid seen as a key group to convince and engage with specific CSR
targets.
6. The study’s findings throws light on a major current need and that is,
7. Corporate Social Responsibility must be measurable.
> The survey by Partners in Change (2000) showed that 85 per cent of the
companies surveyed mentioned that business has a role to play in social
development. The focus of most of these company activities is community
development. Three-fifths of the companies polled mentioned that their
activities were “purely philanthropic” and “no benefits were expected”.
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Others expected an improved image in the general public and the local areas
they operate in.
> A 2001 Hill and Knowlton /Harris Interactive poll reveals that “79% of
Americans take corporate citizenship into account when deciding whether to
buy a particular company’s product and 36% consider corporate citizenship
an important factor when making purchasing decisions t
> In India a survey by the Tata Energy Research Institute (TERI) titled ‘Altered
Images: The 2001 state of corporate responsibility in India poll’ surveyed
workers, company executives and the public in the four metropolitan cities.
Some of the main findings were:
1. Environmental pollution was regarded with great concern by all groups.
2. The main expectation of the companies by the public was that they provide
good quality products at low prices, treat employees well without
discrimination, protect the environment, help bridge the gap between the rich
and the poor, and help in social and economic development. Expectations
differed across regions.
3. Companies thought NGOs were the most trustworthy to work in the interest
of the country. Employees and the public believed in the media and religious
groups. The central government was not rated highly. Similarly, companies
were not trusted to report fairly on their performance. External verification
was. Hence, there is a great role that NGOs and the media can play in moving
the agenda forward.
4. Child labour was not seen as an issue by company executives and workers.
But the workers did consider gender discrimination as a cause for concern.
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5. So it can be said that the Indian consumer, small and large investors, NGOs,
society at large and the corporate bosses - all are getting more aware about
the importance of CSR.
> In between April 2001 to Dec 2002 a study conducted visiting 196 corporates
by one to one meeting which is reported by Indian NGO’s Com Research to
assess Awareness and sensitivity to CSR.
Some of the key findings of this study were...
1. In 58% of the Corporate the top management is involved in CSR decision
making like selection of the focus of work, budget directions, type of
NGO
2. In Multi-National Companies or large Indian corporates, top management
is involved or informed and many times they visit the partner NGOs or
the communities where the organisation work.
3. Departments involved in CSR activities of the corporates are:
Public Relation - 58% e.g. Birla, Citigroup Colgate, Wipro
Foundation staff -12% Ambuja, Infosys
CSR department / social initiative group:5% BILT, ICICI Bank, Tata
council
Some other Depts handling CSR - HR, Taj.
4. Usually CSR is handled by one or two professionals and in most cases
both have Corporate Social Responsibility as an additional responsibility.
5. Existence of Corporate Social Responsibility department
Over 15 years : 35%, Between 5-10 years : 29%,Below 5 years - 36%
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6. Issues Handled
Issues of disability. 7.2%., Disaster management - 28.8%
Environment - 24.8%, Hiv - 4.8% , Sexual Harassment - 24.8%
7. 85% of corporates work with NGos. And 15% work directly or have their
foundations.
8. Issues supported by Indian corporates
Health -53%, Education - 50%, Environment - 30%, Children - 27%
Rural development - 22%, Women -14%, Disability -13%,
9. 34% of the corporates work with local State, central government, but
some corporates strictly avoid working with the government, stating that
the politician unnecessarily ask them to work in their respective
constituencies.
> The findings of a survey jointly conducted by the Confederation of Indian
Industry, United Nations Development Programme, British Council and Price
Waterhouse Coopers in 2002 involving 102 companies from corporate India
The key findings were:
1. CSR is very much a part of the domain of corporate action and passive
philanthropy is no longer sufficient
2. A significant portion of respondents recognised CSR as the means to
enhance long term stakeholder value.
3. CSR creates a feel good factor about the company, increasingly
instrumental in retention of talent.
4. It creates distinct customer preference for companies with a social
conscience.
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5. CSR increases expectation of shareholders that their companies should be
sensitive to needs of society.
6. Good corporate citizenship and CSR initiatives are directly linked to
improved brand reputation.
7. CSR provides an opportunity to improve relationships with local
communities.
8. Most companies do not have a systematic approach to CSR
implementation.
9. The survey felt industry associates have a critical role to play in shaping
experiences and rewarding best practices.
10. It suggested inclusion of CSR as a subject in business schools. In fact the
AICTE, CII and UNDP are already working on developing 20 case
studies on CSR in India to be used for management education.
> World Economic Forum (2002) surveyed CEO attitudes towards corporate
citizenship from 16 countries in 18 industries. The Forum considers corporate
citizenship, which is similar to the term corporate social responsibility (CSR),
as a fundamental component of core business operations and not as an
optional “add on”. The report entitled Responding to the Leadership
Challenge: Findings of a CEO Survey on Global Corporate Citizenship, was
based on questionnaire responses by the CEOs of public, private, and state-
owned companies.
> The report found that many of the companies surveyed had specific corporate
Governance Structures in place to assess and promote corporate
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responsibility, mostly in form of board sub-committees and executive
committees on Corporate Social Responsibility and sustainability,
> Further the survey revealed that the CEO desire more sound empirical
evidence linking Corporate Social Responsibility performance to financial
and market performance.
> Although the report also cited the research conducted by sustainable Asset
Management (SAM) (2002) revealing that only 16% of the 1,336 companies
SAM assessed in 2002 have established specific board committees on
Corporate social responsibility and sustainability. A mere 29% of companies
assessed by SAM have taken formal responsibility for corporate social
responsibility or sustainability.
> The SAM Research found that only 9 % of the companies surveyed reported
that more than 3 % of their work force received variable remuneration and
compensation linked to Corporate Social Responsibilities performance.
> Earlier in year 2003, the UK-based International Centre for Corporate Social
Responsibility (ICCSR) carried out a survey of CSR activity in seven Asian
countries - India, South Korea, Thailand, Singapore, Malaysia, the
Philippines and Indonesia. The body trawled the websites of 50 large
corporates in each of these countries to see evidence of CSR reporting, which
in turn indicated levels of CSR activity. (China was left out because its legacy
of state-owned businesses meant CSR activity would be low, while Japan
wasn’t considered because its companies are well integrated into the Western
business model that has, for some time now, been laying stress on CSR.)
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1. India ranked at the top of the survey - 72% of the sample reported extensively
on the CSR work done by them. This percentage was much higher compared
to the Others. South Korea came second at 52%, followed by Thailand (42%),
Singapore (38%), Malaysia (32%), the Philippines (30%) and Indonesia
(24%). What also emerged in the study is that Asian businesses are
developing their own models of CSR, different from the ones practiced in the
West. Other studies also support this.
2. Developed by the World Economic Forum’s Global Corporate Citizenship
Initiative (GCCI) in partnership with the International Business Leaders
Forum (IBLF 2003) undertook a survey involving all their member
companies from all over the world. More than 1335 top executives were
contacted through structured questionnaire to explore-
1. Why Global Corporate Citizenship Matters for Shareholders
2. How chief executive officers (CEOs), chief financial officers (CFOs) and
investor relations officers (IROs) communicate the strategic importance of
the social and environmental aspects of their firm’s performance to investors.
3. To examines how these companies are articulating both the business case and
the “leadership” or “values” case for global corporate citizenship key
findings from this in-depth survey include:
1. Signs of change in the financial sector: In a limited, but interesting number of
cases, during 2003 some of the world’s major institutional investors started to
flex their muscles on issues related not only to improved corporate
governance and ethics, but also broader issues of corporate citizenship. At the
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same time, the Socially Responsible Investment (SRI) movement, while still
representing a tiny percentage of global funds under management, continues
to grow in terms of size, sophistication, geographic scope and influence.
2. Obstacles to overcome: The CEOs, CFOs and IROs surveyed identified five
interrelated types of obstacles to mainstream investors showing more interest
in how corporations address the risks and opportunities related to corporate
citizenship:
1. Problems of definition of corporate citizenship / corporate social
responsibility,
2. Problems of making and measuring the business case,
3. Problems with quality and quantity of information,
4. Problems of skills and competence in managing and measuring CSR ,
5. Problems of time horizon for measured impact on business performance ,
3. Four golden rules: The CEOs, CFOs and IROs identified four “rules” for
communicating the importance of corporate citizenship to investors, are:
1. Frame corporate purpose, principles and values with clarity - Even when
. speaking to investors, corporate citizenship needs to be about more than
simply “making a business case” that links it directly to bottom line benefits.
It should also be a statement about what the company stands for and would
stand by, even if this sometimes incurs costs or results in a lost business
opportunity.
2. Emphasize the social contribution of core business - At the same time,
business leaders need to be less defensive about their core role in society.
They need to be able to demonstrate the societal contribution made by their
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economic multipliers such as employment and income generation, technology
transfer, training, supply chain development, innovation and wealth creation.
3. Present a credible and measurable business case for corporate citizenship -
Each board of directors and executive team needs to be able to define, explain
and ultimately measure the ethical, social and environmental risks and
opportunities faced by its company and industry sector including both
intangibles and their impact on reputation as well as the measurable.
4. Ensure consistency and coherence of message - A major cause of distrust,
among investors as well as other stakeholders, is inconsistent messages and
incoherent policies from business. Corporate leaders need to apply a similar
rigour and analysis to their social and environmental reports as they do to
their annual report. They need to ensure that their social and environmental
commitments extend to all aspects of the company, from the boardroom to
the mailroom, from public policy positions to pension fund options, and from
headquarter functions to far-flung operations.
> A survey, entitled “Race to the Top: Attracting and Enabling Global
Sustainable Business commissioned by the World Bank Group, and
published in 2004 had interviewed executives of multinational enterprises
with an objective to examine the role of CSR when large corporations
consider new trade and investment ventures.
The Study found that...
1 61 per cent of respondents (executives of multinational enterprises) were
seeking strong laws on CSR when seeking partners, which are rigorously
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enforced to create a level playing field for business and discourage
corruption.
2 When looking for local partners, respondents reportedly take their own
company’s code of conduct as a guideline (51 per cent). Just over 30 per cent
of respondents, however, require adherence to an external code or standard.
3 Host countries and partners were most often required to adhere to ISO 1400
and the International Labour Organisation (ILO) conventions, among the
multi-sector codes. The most influential forums identified in this survey were
the Global Reporting Initiative (GRI) and the World Business Council for
Sustainable Development (WBCSD).
4 The survey has found that the influence of external standards shows regional
differences. The impact of ILO Core Conventions, the UN Global Compact
and the OECD Guidelines for MNEs appear to be high in Western Europe
and Japan (between 40 and 60 per cent of respondents). In developing
countries, the impact of ILO Core Conventions appears to be the strongest
among the three codes, while the UN Global Compact was perceived as the
most influential standard in the US, Canada and Australia.
> IndianNGOs.com Research on CSR involved meetings with Corporates who
have and who do not have CSR Programmes. The research revealed some
reasons why Corporate have some reservations about investing in Traditional
CSR Programmes.
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1 Financial Reasons - Budget Restrictions
Many Corporate cite this as the major reason why they do not have CSR
Programmes.
In this category, one can also include Companies in the Manufacturing Sector
/ Engineering Sector which invested in CSR earlier but do not have CSR
Programmes now, because of Economic pressures. .Notable among the later
category are Groups like the Mafatlal Group whose contribution to Society
needs to be acknowledged.
2 Lack of understanding that small budgets are enough,
Most of the companies feel that CSR is a costly exercise and one must have
huge budget outlays to make an impact..
3 Lack of understanding of non financial giving
Most of the corporate do not consider non-fmancial giving as an integral part
of CSR.
Corporate invariably think that CSR means money out flow.
Most of the Non CSR Companies or even the CSR Companies do not look at
Non Financial Giving like Giving Infrastructure, Giving Employee Time &
Expertise, Giving In Kind.. ..because many of them are not aware how simple
it is.
4 NGOs on the other hand, have also not made concerted efforts to seek Non
Financial contribution from the Corporate Sector.
5 Unnecessary diversion of attention,
Some Young and Entrepreneur driven Corporate think CSR unnecessarily
diverts the
attention of the employees.
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6 Suspicion about NGOs
Corporate are not sure how their funds will be utilised by the NGOs.
Some Corporate think that NGOs want only money and not involvement.
And they also want to take credit for the entire project.
7 Management of NGOs
Corporate at times feel that NGOs are family managed (husband/wife)
organisations.
The succession planning of the NGOs is a major worry for Social Investors.
There is a great need for NGOs to improve their Credibility and Visibility in
the Corporate Sector.
> GlobeScan Inc’s Corporate Social Responsibility (CSR) Monitor is an annual
survey about public opinion around the world concerning the changing role
of companies. The purpose with the survey is to cover issues concerning
corporate responsibility, and to provide global decision makers with
information to better understand the trends shaping their international
business and policy environment (GlobeScan, 2004). The 2004 CSR Monitor
focus on views, attitudes and behaviour of consumers around current CSR
issues and tries to reflect differences across social borders over the world.
The 2004 year’s survey include topics like: trust in companies and other
institutions, regulation of CSR, expectations of companies, communications
around CSR, company ratings, ethical consumerism etc.and the findings
were,
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1 One of the major findings from the survey was that <
understand the uniqueness of each market so they can
campaigns directed towards a special type of audience.
2 The survey highlights differences among people from different countries and
parts of the world. These differences concern how people prefer to receive
CSR information and corporate CSR activities that they find most interest in.
3 Globesean (2004) found a majority among countries with an increase in
public opinion, supporting regulation of CSR, compared to previous years
decrease. Two of the countries that showed a decrease of demand for CSR
regulations during 2004 were Great Britain and USA. Expectations of
companies to be socially involved are high in most countries and employees
have a high demand towards their employers to focus more on being socially
responsible.
4 People in developed and developing countries put different importance in
areas were they would like corporations to put their attention, when it comes
to CSR and involvement in the society. In both developed and developing
countries it is a general believe that companies should involve in education
and training. When it comes to the second place, of the result in the survey, it
is a difference between answers from the developed and developing
countries. Developed countries wish to see involvement in human health
while developing countries wish to see involvement in the fight against
poverty. As a compliment to this question people were asked in which area
they thought companies would be most effective in improving local
communities by their involvement. Overall the opinion showed that the
environment is the area that people think companies can have the largest
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impact. The survey also shows that preference for work around poverty is
particular high among Opinion Leaders.
The result from this should be that corporations should pay more attention
to Opinion Leaders because they have a prominent influence on the rest of the
public, who also are consumers. It is well known that Opinion Leaders often
have more impact on the general public views then formal leaders of a society
(GlobeScan, 2004).
> Aileen Nowlan (2005) spent six months in India where she researched
corporate responsibility and development, focusing on the ways in which
multinational firms try to establish the legitimacy of their enterprises in rural
villages in India. Foreign corporations in developing countries have, to
varying extents, recognized a responsibility for the social and environmental
impact of their operations. However, corporate responsibility’ is plagued by
the difficulty of understanding what would or should be considered ethical in
developing countries like India. For example, if communities are relocated to
build a mine, does the firm have to make plans for resettlement? Should it
insist that women be included in discussions about the location of a facility,
even if they are traditionally excluded from politics? Should an MNC build
schools, roads, health clinics etc. in the area where it operates? Current
theories of business ethics call on local norms and expectations of corporate
conduct to provide guidance on these difficult questions. Discussions with all
effected groups are supposed to ensure sustainable profitability and positive
impact on development. Aileen’s research demonstrates that participation’ in
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dialogues is insufficient due to social, political, and economic inequalities
that make marginalized groups unable to influence the outcomes of these
dialogue processes. This conclusion calls into question the reliance on
voluntary self-regulation by firms who try to articulate authentic norms for
ethical conduct in vulnerable communities in developing countries.
> The KPMG International Survey of Corporate Responsibility Reporting 2005
that included more than 1600 companies, including 250 companies of the
Fortune 500 (Global 250) and the top 100 companies in 16 countries
(National 100) found that corporate responsibility reporting has been steadily
increasing since 1993. KPMG found that in 2005}
1 “52 percent of the G250 companies and 33 percent of the N100 companies
issued separate corporate responsibility reports, compared to 45 percent and
23 percent, respectively, in 2002.”
2 The most dramatic change that KPMG found was that many of the companies
have moved from simply reporting environmental data to reporting
sustainability information on social, environmental and economic issues.
3 Although many of the companies in KPMG’s survey claim that they report
corporate responsibility for ethical reasons, 74 percent list “economic
considerations” as their primary motivation for issuing CSR reports
4 KPMG also found that although about 60 percent of the CSR reports they
reviewed addressed social issues such as labour standards, working
conditions and community involvement, “reporting performance remains
sketchy, possibly due to the lack of clear social indicators.”
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5 Public trust in CSR and sustainable development reports may also be
undermined by the fact that only about 30 percent of the 1,600 companies
surveyed by KPMG included formal independent “assurance” statements,
only one-third of the companies invite feedback on the reports from users,
and only 8 percent report on the feedback they receive.
> Anupama Mohan (2006), examines the management of CSR activities by
large multinational corporations (MNC). Using an embedded multiple case
study design, Mohan examines the management of CSR activities in eight
subsidiaries of two MNC. Although all the subsidiaries operate in India and
the two firms are UK-based, the subsidiaries are from diverse industries,
having diverse stakeholders. Mohan gathers and analyzes data for multiple
activities across four dimensions of CSR - employee, customer, environment,
and community. The data allow for comparisons across companies, across
sectors, across levels, and across dimensions.
1. Mohan concludes that MNC manage some activities globally, with standards
determined at headquarters and allow some activities to be managed locally,
with managers responding to local concerns.
2. Interestingly, she finds that there are differences across the four dimensions
as well as across levels and industries.
Conclusions drawn after reviewing the literature are:
1. The review of CSR and other related concepts highlight that most of the
social scientists consider CSR as a social issue and tends to focus on
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stakeholders. Often CSR is defined as the new stakeholder approach,
referring to the “evolution” of stakeholder management. Moreover, it is a
complex subject which lacks even a single broadly defined definition.
2. Others do not specify CSR as purely stakeholder focused. They define
CSR as a social issue that' companies have to take into account; for
sustainable development of the business and society due to changing
economic patterns globally.
3. The literature survey of CSR related material revealed a vast body of
information. As noted in the introduction, there is no strong consensus on
a definition for CSR. CSR has been used as a synonym for business
ethics, defined as tantamount to corporate philanthropy, and considered
strictly as relating to environmental issues also. The term CSR has also
been used as corporate social performance and corporate citizenship. The
lack of consistency in the use of the term CSR makes it difficult to be
peer reviewed and compare results across studies.
4. There are numerous unresolved theoretical and empirical issues relating
to the strategic implications of CSR. These include along with defining
CSR, identifying institutional differences in CSR across countries,
determining the motivations for CSR, describing CSR strategies,
modelling the effects of CSR on the firm and stakeholder groups,
determining the effects of leadership and corporate culture on CSR
activity, assessing the effect of CSR on the firm and stakeholder groups,
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measuring the demand for CSR, measuring the costs of CSR and
assessing the current knowledge base.
5. What emerges therefore from this debate is, business as both a social and
economic institution requires demonstrating its social responsibility.
6. Although a great deal of CSR is still in the traditional form of community
involvement, there are new waves, such as attention to socially
responsibly products and processes and socially responsible employee
relations, human rights and corruption issues etc. in developing countries.
7. The review also showed the extent to which the volume of the literature is
increasing over time, a rate of increase that appears to be rapid, especially
from the 1990s onwards, indicating the significance and timeliness of this
research.
8. The perception of social responsibility is providing a major means of
achieving long-term economic success, and a key vehicle for enhancing
corporate image in the social report, that too is not mandatory is, favoured
by a number of commentators, including Elkington (1997), Zadek et al
(1997), Wheeler and Sillanpaa (1997), The value of the social report is
perceived as enough in the creation of social transparency as well as in
institutionalizing image of creative thinking in management.
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9. In literature, there is no common agreement on the question if CSR
should be defined as purely a voluntary concept or an approach which
should be strictly regulated and to which companies should be obliged.
10. While research on CSR in the 1980s and 1990s mainly focused on the
link between Corporate Social Performance and financial performance,
some sound theoretical models were developed with regard to the
principles of CSR. (As seen in next chapter).
11. The literature on multinationals and CSR is the most embryonic. Partly,
this is because CSR is difficult to define, especially in the context of
MNEs. The International business research has been largely ‘looking into’
Multinational Enterprise, rather than ‘looking out’ from Multinational
Enterprises to the societies in which they are operating. Such firms
operate in diverse environments and cultures, and thus are more likely to
encounter numerous stakeholder groups and non-governmental
organizations (NGOs). Further it seems that though the international
business scholars are arguably the prime experts on Multinational
Enterprises, they have contributed relatively little to explaining and
evaluating ‘the role of Multinational Enterprises in society’.
12. Despite some notable exceptions that may have been inspired by the
purely ethical considerations, concept of corporate responsibility for most
companies was largely economic in the 19th century. This view has
modified with time under the influence of government and public
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pressure, with a resulting contemporary view of CSR that is still
economically oriented, though underpinned by the requirement to
consider social causes and the social consequences of an organization’s
economic activities.
13. Reading about the Global Corporate Responsibility it is clear that while
there is an increase in the international awareness of the importance of
responsible behaviour, there is also pressure for improved corporate
economic performance. There is the possibility that institutional investor
activism operates counter to social issues activism either nationally or
internationally. Even to the most innocent observer, plenty of CSR
policies smack of tokenism and political correctness more than a genuine
concern to “give back to the community.” Despite these facts in the
competitive landscape, the researcher is not aware of any empirical
research to examine the relationship between the degree of multinational
involvement in corporate social responsibilities felt and carried out
focusing social realities of the host country. An examination of the review
reveals that while there have been more than three dozen papers published
in the last two decades addressing multinationality and corporate social
responsibility/performance, most of them are prescriptive in nature. The
purpose of this study is to extend knowledge through generating empirical
evidence of multinational enterprises’ undertakings of social
responsibilities in India/Gujarat, their present status of adherence to
global CSR guidelines and their opinion about CSR in the global context.
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In the chapter of Research Setting a detailed review about the state of
Corporate Social Responsibility in Multinational companies is discussed.
The multinational corporation (MNC) has been increasingly used as a

\
context for conceptual and empirical work as they are the key players of
globalise world economy.
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CHAPTER - 3
RESEARCH METHODOLOGY
India has witnessed large number of Foreign Direct Investments in the
form of multinational coiporations in the last twenty years. As discussed in the
previous chapter, globalisation and liberalisation have provided a great
opportunity for Multinational corporations to be globally competitive by
expanding their production-base and market share. As corporate globalization
continues to expand, MNCs play a key role in defining markets and throw
multiple challenges to national and global business environment.
Among them the first and foremost of our concern is, new sense of a
wider corporate responsibility, not only to customers and clients, but also to the
communities and societies that is largely talked about on the progressive
paradigms of Human Rights, Environmental Concerns and Sustainable Growth.
This is challenging the traditional view that business exist solely to make profits
for their shareholders; all that matters is a profitable bottom line. This has led to
the controversies that Multinational companies (MNCs) might be pursuing profit
at the expense of vulnerable workforces, exploiting local resources, destroying
environment and so on.
Secondly, doing business globally opens the arena for conflicts in norms.
Many multinational companies have codes of ethics, mission statements and
integrity policies guiding their practices. However, when operating outside of
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their boundaries they confront different sets of norms which sometimes conflict
with their home based ones. In developed countries, the moral expectations of the
host country are as stringent as of any other developed country. With third world
host countries, though, the moral expectations often seem to be sloppier,
multinationals are tempted to lower their standards and indulge in unethical
practices when situations permit.
v Thirdly, the globalization of production networks means that corporations
increasingly source their products and services from overseas, making it more
difficult to regulate corporate activities through a single country’s national legal
and regulatory mechanisms. This leads to discriminatory standards of practices
by a single company at its different operational locations. According to Human
Rights Watch, companies such as General Motors, Sunbeam Oster, and Zenith
engage in gender discrimination and mistreatment of pregnant workers in
factories in Mexico. In India, Coca Cola causes shortage and immense pollution
to local water supplies. Articles published in The Economist (March 2005)
estimate that in Burma, where the American oil company Unocal has operations,
the government used 800,000 forced labourers in their army. Verite, a social
auditing firm, found that workers are commonly penalised or dismissed for
joining unions in Vietnam. Just last year the Washington Post reported that of
eleven U.S. toy manufacturers in China, the average wage paid to workers was
$0.12/hour even though the minimum wage in China is $0.30/hour. The
examples of irresponsibility and injustice are abundant.
Ill
On the other hand, internationally, different societies have become more
demanding in terms of expecting ‘right behaviour’ from the corporations.
Integrating interests of host country’s development issues and local communities
into a company’s business operations has become essential. Revenues and profits
can no longer remain the only topics of conversation among corporate leaders;
instead, they have to talk about the profound impact that their business relations
with society and communities might have to their competitive advantages and
operating revenues. In addition to higher revenues, environmental protection and
sustainable growth also have to be accounted for the long-term development of
the business and society. CSR has been demanded by various stakeholders as one
response to these challenges. The universal approach adapted by the corporations
to meet these demands is through ‘Corporate Social Responsibility’ (CSR),
approach, that refers to business activities guided by codes of conduct that
exceed legal and ethical standards relating to labour conditions, environmental
impacts, human rights compliance etc. resulting in to better quality of life for all
of its stakeholders.
Significance of The Study
The rules of corporate governance have changed. And there has been a
range of reactions to this change. On the one hand governments and local
businesses welcome the trans-national players for furthering economic growth;
on the other hand, there is an emerging social discontent against multinational
corporations in different parts of the world. Labourers, marginalised consumers,
environmental activists and social activists have protested against the
unprecedented predominance of multinational corporations. To them, MNCs
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overall impact on the host countries’ social and environmental sectors is largely
negative compared to its negligible contribution in the countries’ economic
development in spite of MNCs dossier claims of CSR. Exploitations and hman
rights abuses traditionally have been thought of as being propagated by capitalists
and governments against people or by one group of people against another; however,
today, the process of globalization is making the multinational corporation (MNC) a
prime player on the front of global human rights abuses. It is true that to earn
goodwill of the stakeholders, MNCs publicize their corporate citizenship through
reporting. These reports may prove to be, simply public relations tools that often
do not reflect what companies really do and how firms operate, especially when
faced with competitive or financial challenges. Many of the CSR reports of the
most globalize MNCs remain broad statements of intention but lack specifics that
would stimulate trust in their commitment to implement them. Sceptics argue
that multinational corporations often use their sustainability or corporate social
responsibility reports as “green wash,” to cover over or divert public attention
from business practices that continue to endanger the socio-environmental milieu
and create risks for the communities in which they operate. Some critics go to the
extent to argue that MNCs are “incompatible with sustainable development,”
because they have no long-term commitment to community or place, future
generations, democratic governance, equity and social justice, and that they
simply “seek to create greater wants, focusing on ‘excessities’ more than
necessities.” “Critics of MNCs business practices and sceptics of CSR reporting
continue to question whether or not the information reported by multinational
corporations accurately reflects their actual business practices, how effective the
sustainable development programs of corporations are in addressing important
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social and environmental problems of the host country and how committed
senior executives in MNCs are to implementing development policies beyond
mere compliance with legal and regulatory mandates as the critics also contend
that these corporate social responsibility reports may be misleading, incomplete,
and self-serving”. (Dennis A. Rondinelli -2006)
Recently, international organizations and nongovernmental rating and
monitoring organizations have claimed an increase in corporate attention around
the world to sustainable development and undertaking social responsibility in the
host countries, but, the serious questions remain about how significant the
growing number of corporate citizenship is, compared to the large number of
enterprises doing business globally.
In response to such concerns, MNCs have increasingly taken steps aimed
at demonstrating their social responsibility as business organisations. One
prominent development has been the elaboration and adoption of a Code of
Conduct concerning corporate social responsibility (CSR), but it was pointed out
that, for many Multinational companies in developing countries, corporate social
responsibility has been equated with philanthropy, often a matter for enhancing
companies’ self-image that results in least stakeholder engagement. Though
MNCs have an incentive to carry out corporate social responsibility (CSR) so as
to enhance their reputation for their long term benefit, they often overlook social
responsiilities since these tend to create extra costs. These companies with no
commitment to CSR in its broader sense have often little focus on issues such as
responsibility in the industrial relations, supply chain; employee training and
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development; women in the workforce; product / service quality and safety;
board transparency; employment regulation such as child labour, working hours,
minimum wages and worker safety. These practices strongly support the
predominant business ideology, which is that since profit is the “bottom line,” a
profitable business can do no wrong.
To conclude, the liberalized economic and industrial processes have the
potential to disturb social fabric through widening the gap between poor and rich
and human right abuse. It can have negative environmental impacts, causing
climate change, loss of natural resources, air and water pollution and extinction
of species. At the same time, it has been repeatedly observed that industries are
most effective as social volunteers when they are doing things that are close to
their shareholders interests. These interests clearly differ with sectors and
industries in which the companies operate: as oil companies world over clearly
emphasise building local infrastructure; Avon, which sells products largely to
women, is one of the world’s biggest supporters of breast cancer research,
Wipro, supporting innovative rural literacy campaign through computers.
So the overriding policy challenge is, to promote the positive impacts of
globalize business development while limiting or eliminating its negative
impacts throughout the world. While reviewing the literature, the information
about MNCs business practices and the value attached to CSR while operating in
the developing countries is found to be more prescriptive and lacking empirical
evidences at large. The researcher having worked in the field of social
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development and getting exposed to corporate world from close quarter time and
often strongly feels that,
> CSR activities, in fact, need predominantly, to be driven by the development
needs of the communities in which any national or global businesses exist.
Deteriorating environment, employment conditions, corruption etc. at macro
level along with poverty, poor infrastructure and living conditions, lack of
education, inadequate health care facilities, and inadequate sources of
livelihood in the surrounding communities at micro level have to be the prime
concern to any industry having its business operations in India;
> Corporations and MNCs in particular, need to carry forward and
institutionalize CSR initiatives as one of the core function of its management
system, and,
> Indian educational institutions, the corporate sector, the social sector, and the
government need working together on the very important question of how to
integrate CSR into the curriculum of business schools and into corporate
business strategies. The following example can be used as a benchmark for
such strategy:
While many hardware and software companies made a foray into e-
leaming by using their old computers and having a team of developers work on
the content, the biggest success story in this remains the e-choupal initiative of
the ITC Group. ITC has been able to penetrate/ reach remote villages through the
traditional choupals (village meeting places), by installing V-SAT, computers,
public address systems, and solar power. It uses E-choupal (the name of its
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\
agriculture portals) to market its products as well as procure raw material. The
system benefits the farmers, because they can sell directly to the company
without middlemen.
With this conviction, the researcher found it necessary and interesting to
study CSR practices and processes presently being followed by MNCs present in
Gujarat and the employees’ perspective on international CSR issues. Secondly,
as the concept of CSR originally implied the responsiveness to social or
stakeholder issues (Carroll and Buchholtz 2006; Morimoto 1994); the focus of
the study revolves around examining social and stakeholder issues.
Hence the title of the present study is:
‘Corporate Social Responsibility by selected Multinational Companies in Gujarat’.
(A study of 105 Employees’ perceptions of 18 multinational companies’ social
responsibility undertakings).
Note: In India, small and medium size MNCs are comparatively a newer
phenomenon than the other countries of Asia due to the government’s restrictive
trade practices till 1991. In Gujarat, barring a very few big MNCs, many small
and medium sized MNCs are still in its transitory forms in terms of
collaborations and takeovers. In this situation it is likely that these companies
had little time to establish rapport with outside community and society that is
‘external stakeholders’. This, in itself may be a limiting factor for creating an
‘image’ of their business operations to the outsiders. Thus, to generate an
unbiased and authentic information the researcher considered it right to approach
only one group of stakeholders, i.e. ‘employees’ of the respective companies to
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seek information of their companies’ CSR practices and their perception on the
CSR undertakings by the companies.
Goals of the study
1. To understand the state of ‘Social Responsibility Undertakings’ of
Multinational Companies of Gujarat through their employees’ perception.
2. To devise a tool to adapt from, for designing company specific CSR
business model for MNCs in particular.
Objectives of the Study
1. To study the Corporate Social Responsibility (CSR) profile of the
Multinational Companies’ of Gujarat.
2. To study factors affecting Corporate Social. Responsibility (CSR)
Undertakings among the Multinational Companies of Gujarat.
3. To study the perceptions of employees about the performance of CSR
processes undertaken at their companies in Gujarat.
4. To examine employees’ perceptions about their companies’ level of
adherence to Corporate Social Responsibility Regulations mentioned
under Global Social Responsibility Guidelines given for Multinational
Companies.
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5. To study the opinion of employees about ‘International Social
Responsibility’ with special reference to Multinational Companies.
6. To examine relationship between organisations’ ‘Corporate Social
Responsibility Profile’ with location, size, age, mode of entry and nature
of business of the Multinational Companies.
7. To explore relationship between the perception of the employees about
‘Corporate Social Responsibility Practice’, ‘Corporate Social
Responsibility Process Performance’, ‘Adherence of their companies to
CSR Regulations’ and the employees’ opinion on ‘International Corporate
Social Responsibility’ with location, size, age, mode of entry and nature
of business of the Multinational Companies of Gujarat.
8. To explore relationship between the perception of the employees on
‘Corporate Social Responsibility Practice’, ‘Corporate Social
Responsibility Process Performance’, ‘Adherence of their companies to
Social Responsibility’ with their age, education, yearn of experience,
function and past experience of CSR related work.
9. To explore relationship between type of the organization with the
employees’ perception on ‘Corporate Social Responsibility Practice’,
‘Corporate Social Responsibility Process Performance’, ‘Adherence to
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Social Responsibility’
10. To explore relationship between employees’ perception on ‘Corporate
Social Responsibility Practice’, ‘Corporate Social Responsibility Process
Performance’, their companies’ Adherence to CSR Regulations’ and the
employees’ opinion on International Corporate Social Responsibility’.
11. To measure intensity of commitments to various Corporate Social
Responsibility processes and Corporate Social Responsibility Regulations
by Multinational Companies of Gujarat.
Operation al Definitions:
Corporate social responsibility (CSR) (as defined in Wikipedia, the free encyclopedia)
‘Corporate social responsibility (CSR, also called corporate responsibility,
corporate citizenship, and responsible business) is a concept whereby
organizations consider the interests of society by taking responsibility for the
impact of their activities on customers, suppliers, employees, shareholders,
communities and other stakeholders, as well as the environment. This obligation
is seen to extend beyond the statutory obligation to comply with legislation and
sees organizations voluntarily taking further steps to improve the quality of life
for employees and their families as well as for the local community and society
at large’.
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For the present study, Corporate Social Responsibility (CSR) is used as an
umbrella term for corporate citizenship, corporate accountability, corporate
social performance, corporate responsibility etc. as appear in CSR literature
including various CSR Standards and Guidelines for multinational companies..
Social Responsibility Undertakings
Business has many operative as well as management functions. During the
operationalisation of these functions, if a company is able to reflect following
aspects in its conduct Social Responsibility seems to be undertaken.........
> When business outcomes are not strictly measured in terms of ‘Profitability’
only.
> When business ethics synchronizes with host country’s economic, social and
culture aspects and generate ‘common good’ for all the stakeholders and,
> When a company’s activities build human and social capital within the host
country where they operate.
For the present study keeping these aspects of business as focal point, the
researcher has made an attempt to incorporate them in organisation’s Corporate
Social Responsibility Profile, Corporate Social Responsibility Practices,
Corporate Social Responsibility Processes and Adherence to Corporate Social
Responsibility Regulations. These four components together help to study
‘Social Responsibility Undertakings’ of MNCs for this study.
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Multinational Companies (MNC) (as defined in Wikipedia, the free encyclopedia)
“Multinational corporation (or transnational corporation MNC/TNC) is a
corporation or enterprise that manages production establishments or delivers
services in at least two countries. A Multinational Corporation is a business
concern with operations in more than one country. These operations outside the
company’s home country may be linked to the parent by merger, operated as
subsidiaries, or have considerable autonomy.”
The term Multinational corporations (MNCs) through out the study,
except in quotations, is used to cover both Multinational corporations and
Transnational corporations (TNCs) without further definition, as they often are
used interchangeably in the context of CSR for large corporations operating in
other countries. For this study Multinationals companies are the ones that are
headquartered somewhere else and have a subsidiary/operation in India.
Perception (as defined in Wikipedia, the free encyclopedia),
“Perception is the process of attaining awareness or understanding of sensory
information. Perception is also a form of self-expression. What one perceives is a
result of interplays between past experiences, one’s culture and the interpretation
of the perceived”.
For the present study perceptions are information based on observations and
experiences the employees had while working in the present organization.
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Stakeholders (as defined in Wikipedia, the free encyclopedia)
“Stakeholder may refer to: Stakeholder (corporate), a person, group, organization,
or system who effects or can be affected by an organization's actions”.
In the study, the term stakeholders refers to persons, groups and environment that
are affected and likely to get affected by the organization’s objectives, activities
and outputs. '
CSR Processes
For the present study, under ‘CSR Processes’ total thirteen variables/parameters
are developed by the researcher. These thirteen variables will help to measure
commitments of MNCs to ‘Social Responsibility Undertakings’. They are:
1. CSR Philosophy 2. Business Ethics 3. Corporate Citizenship 4. CSR
Communications 5. CSR Knowledge 6. Stakeholders’ Dialogue
7. Corporate’s gain 8. Stakeholders’gain 9. Conflict Management 10. CSR
Decision Making 11. CSR Review 12. CSR Audit and 13. CSR Reporting.
CSR Regulations
Under CSR Regulations twelve variables/parameters are taken for the study.
They help to measure adherence level of MNCs to Corporate Social
Responsibility Global Guidelines given for MNCs. They are:
1. General Policy 2. Quality of Work Life 3. Employment 4. Industrial
Relations 5. Human Rights 6.Environment 7. Consumer Interest 8. Direct
Contribution to Local Communities. 9. Training 10. Disclosure 11. Corruption.
12. Corporate Governance.
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Corporate Social Responsibility Profile
The aspects regarding structure and functioning that facilitates a company’s CSR
Undertakings are considered for profiling CSR of the company.
Corporate Social Responsibility Practice
The company’s present systems operative for CSR and ideology with which CSR
is viewed and carried out comprises of CSR Practices for the present study.
CSR Drivers
These are the factors that enable the corporations to adopt relevant CSR
strategies and activities. They are the reasons for, or a rationale to actually
undertake social responsibility.
CSR Barriers
Constraints that the company face to get involved in social, ethical and
environmental issues of the society and key communities where they operate.
CSR Outcomes
These are the expected results on overall business a company is expecting after
undertaking CSR activities.
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Research Design
The study is descriptive and exploratory in nature as the researcher has
made an attempt to study and narrate the characteristics of the organizations’
Corporate Social Responsibility (CSR) Undertakings on the basis of their
employees’ perception. The researcher has also made an attempt to explore
whether any relationship exists between the employees’ perception and various
variables taken to study the Corporate Social Responsibility (CSR) Undertakings
of the organizations under this study.
Universe and Sample
The researcher has chosen to conduct this study within MNC’s, since in a
developing economy like India, the MNC’s are considered as very strong and
critical actors of financial growth having its large impact on social and
environmental milieu of the host country.
Universe of the industries is all 25 MNCs presently operating in Gujarat
and their top and middle management employees.
To draw sample, within the broader category of probability sampling,
multi-stage sampling technique is used.
Firstly, to select from, a list of Multinational companies of Gujarat was
prepared with the help of...
> a list provided by Industries’ commissioner’s Office, Gandhinagar and
confirmed with official website of Ministry of Finance, Government of India.
> a list of member industries of Federation of Gujarat Industries and Gujarat
Employers’ Association.
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In the first stage Census method of sampling is used since there were
twenty five industries. All of them were approached for data collection.
In the second stage, purposive sampling is used as the researcher is aware
that in most of the industries CSR is handled by Human Resource Department, a
top management employee of Human Resource Department was contacted and
requested for cooperation. Once convinced, he acted as a ‘key informant’ and
provided the basic information about the company and it’s Corporate Social
Responsibility Profile.
In the third stage ‘quota sampling’ method was used. With the help of this
HR employee and ‘key informant’, minimum three top and middle management
employees from each major departments were identified who had some primary
understanding in the area of enquiry and their willingness to spare time on filling
up the questionnaire. The questionnaires were handed over to the ‘key informant’
of all 25 MNCs after explaining it in detail and their responses were awaited.
Sample Size
Out of twenty five companies approached, eighteen industries and 105
respondents have responded satisfactorily and that is how the sample size is of
105 respondents from 18 MNCs of Gujarat.
Note:- On the ethical grounds and ‘key informant’s request the names of the
company from which data were received or not received will remain anonymous.
The list of the MNCs that were approached for data collection is given at the end
of this chapter.
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Pre-Testing
The researcher personally administered the questionnaire to 10
professionals having varied educational background and working in different
departments of corporate sector. The questionnaire was modified after
understanding the difficulties faced by the respondents either in responding or
categorizing responses in the questionnaire. Most of the subjective questions
were omitted as the respondents were not ready to provide detailed information.
Few questions were omitted as the responses to them were likely to be
inaccurate.
Reference period - The data was collected from August 2006 to February 2007.
Source of data:
1. Employees’ responses for their respective companies.
2. Records, annual reports, information on Website.
Method of data collection
A structured questionnaire along with a detailed note,(stating the purpose
a of the research and seeking cooperation)was prepared. The questionnaire had
following sections.
I. Organisation profile.- This section besides name and other general
information of the organization includes information on organization
variables like location, age, size and nature of business of the organisation
and their mode of entry in to Indian market.
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II. Respondent’s profile - Includes background information on the
respondents that includes their personal and work related information.
Here the variables taken are age, education, qualifications, their total
years of experience and past experience of CSR related work.
HI. Corporate social responsibility profile- This section includes
information regarding each MNC’s structure and functioning of CSR,
major CSR programmes undertaken at original and host country, CSR
drivers, barriers and expected outcomes etc and information regarding
their adaptation to CSR Regulation Guidelines. On the basis if this
information CSR Profile Index is prepared.
IV. Corporate social responsibility practice profile- In this section
statements indicating intentions, beliefs and responsible factors for CSR
Undertakings are prepared. And the organisations’s CSR Practice Index
is prepared on the basis of employees’ perception on them.
V. Corporate social responsibility processes- Socially Responsible
behaviour of any company is reflected through the processes involved in
its overall business operation. In this research enquiry,
Various processes that can promote CSR are grouped in to thirteen
Process Variables and they are,
1. CSR Policy 2. Business Ethics 3. Corporate Citizenship 4. CSR
Communications 5. CSR Knowledge 6. Stakeholder Dialogue 7. CSR
Decision making 8. Conflict Management 9. Corporate’s Gain
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10. Stakeholders’ Gain 11. CSR Audit 12. CSR Review 13. CSR
Reporting.
Corporate Social Responsibility Process Performance Index is derived
from the respondents perception on these variables.
VI. Adherence to CSR regulations as mentioned in CSR global guidelines
given for MNCs.
There are many CSR Standards/Regulation Guidelines declared by
various international and regional organisations and also governmental
guidelines (as given in chapter-3).The regulations addressed in most of
the Standards cover issues pertaining to various stakeholders. These
regulations are put in to twelve groups and they are taken as CSR
Regulation Adherence Variables. They are,
1. General Policy 2. Quality of work life 3. Employment conditions
4. Industrial Relations 5. Human Rights 6. Environment. 7. Consumer
Interests 8. Training 9. Direct Contribution to local communities
10. Disclosure 11. Corruption 12. Corporate Governance
CSR Regulations Adherence Index is prepared on the basis of the
respondents’ perception on these variables.
VII. International social responsibility with special reference to MNCs.
This section has twenty one statements grouped in to three major
variables. They are
1. Meaning of CSR 2. Preconditions of CSR 3. MNCs’ CSR Operations.
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The Opinion Index on International Social Responsibility is prepared on
the basis of the respondents opinion on these three variables.
Nature of Data: The present study is largely based on empirical data /
information collected from MNCs and its employees through questionnaire. The
open ended questions were categorised and coded.
Data Analysis
The entire data were pre-coded and meaningfully analysed using
1. Percentage Analysis
2. Chirsquare test
3. t- Test. ,
Data were presented in tabular forms using single and bi-variant tables.
Scheme of Chapterisation.
Chapter-1 Introduction.
The chapter includes an overview of business environment in India, need
for business to address development issues through Corporate Social
Responsibility, historical overview of Corporate Social Responsibility,
importance of Corporate Social Responsibility for Multinational Companies and
its outcomes.
Chapter-2 Review of Literature
In this chapter, a review of interpretations and submissions of Corporate
Social Responsibility as a theoretical concept by prominent scholars and its
130
contribution to the field of business ethics is presented. Also a brief review of
some of the relevant researches carried out in various fields throwing light on
Corporate Social Responsibility as an essential approach of overall business
operations is presented.
Chapter-3 Research Methodology
Along with significance of the study, the procedural details with
objectives, research design, operational definitions of the terms used,
chapterisation etc. are included here.
Chapter-4 Research Setting
This chapter helps developing an overall understanding of Multinational
companies, their historical development, their entry in to Indian market, their
corporate image most often reported and international efforts to set minimum
standards to regulate their corporate conduct.
Chapter-5 Corporate Social Responsibility-Theories and Models
An overview of some of the CSR Theories and Models is given in this
chapter. This helps understanding Corporate Social Responsibility through
various theories and concepts from where it is originated and then developed as a
full fledged theoretical concept by itself. Models of Corporate Social
Responsibility developed by few scholars are given that can help to
operationalise CSR in practice.
131
Chapter-6 Data Analysis and Interpretations.
Data is analysed and interpreted using Descriptive Statistics, and applying
parametric(t-Test) and non parametric(Chi-Square) tests.
Chapter-7 Findings, Conclusions, Suggestions and Action Plan
Findings and conclusions are separately written and on the basis of it,
implications, suggestions and action plan in the form of CSR Matrix are
presented in this chapter.
Limitations of the study
1. It takes longer and proves difficult to approach personnel from the
industries and receive feedback from them in the stipulated time. Despite
close, rigorous follow-up, spread for more than six months, through
personal visits, e-mail, telephone calls and even through personal and
professional references, responses were received from only eighteen
companies. Some of the companies had shown unwillingness to share
information formally on the pretext of ‘Company Policy’ even though the
researcher showed readiness to give in writing the assurance that the data
would be consolidated and the companies names would not be revealed in
the report. For the information on CSR Profile, some of the companies
asked to use information that is officially published in annual reports and
on websites in place of filling questionnaires after going through it.
2. The sample is not sub-divided by industrial sector and financial status as
there was a common apprehension among contacted industries to share
specific and revealing information.
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FIGURE - 5
List of the Multi National Companies in Guiarat.
Sr. Name of the Country of Location Type of Establishment

No. Industry Origin in Gujarat Industry Year in India
1 ABB Zurich/Sweden Vadodara Engineering 1989
2 BASF Germany Dahej Chemical 2001
Bayer Agro
3 Germany Ankleshwar 2002
Cropscience Chemicals
Bundy India
4 Vadodara Engineering 1998
Ltd.
5 Cairn Energy Scotland Surat Gas 1995
6 E.LDu Pont USA Savli Chemical 1998
Enarcon
7 Germany Jamnagar Energy 1995
India Ltd.
FAG
8 Germany Vadodara Engineering 1998
Bearings.
9 G E India USA Limbasi Engineering 1996
GEA Process
10 Germany Ranoli Process Eng. 2005
Eng.
General
11 USA Halol Automobile 1994
Motors
12 Gujarat Gas U.K. Surat Gas 1988
13 JM Huber Switzerland Jhagadia Chemical 2005
Ingersoll
14 USA Ahmedabad Engineering 1965
Rand
Lanxess
15 Germany Nandesari Chemical 2004
ABS
Container port
16 Maersk Denmark Pipavav 1996
Mgt
Health Care
17 Medtronic USA Vadodara 1990
Prod.
18 Perastrop Netherlands Vapi Pharmaceutical 1999
Pharmacia
19 USA Ankleshwar Pharmaceutical 1980
(Pfizer)
Sanofi-
20 France Ankleshwar Pharmaceutical 1989
Aventis
21 Siemens Germany Ahmedabad Engineering 2006
22 Shell India U.K. Surat Gas 1996
Atul-
23 Wyeth Ltd. USA Pharmaceutical 1998
Valsad
24 Inductotherm USA Ahmedabad Engineering 1984
25 Milacron USA Ahmedabad Plastic 1990s
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CHAPTER - 4
RESEARCH SETTING
This study is conducted focusing the Multinational companies’ business
operations in the host countries. MNCs and their business ethics in the host
country has remained a debatable issue in the fields of business management as
well as sustainable development since more than three decades. All most all the
international development organizations have discussed MNCs/TNCs and their
socially responsible and ethical behaviour using every available platform at
various levels. It is a common global understanding that if controlling not
possible, regulating MNCs operations is required for the sustainable development
irrespective of any regional boundaries. Today, we see many international
guidelines which deal with ethical standards of MNCs’ operations for the host
countries. This chapter helps developing an overall understanding of
Multinational companies, their historical development, their entry in to Indian
market, their corporate image most often reported and international efforts to set
minimum standards to regulate their corporate conduct.
Multinational Corporations (MNCs)
A Multinational Corporation is a business concern with operations in more than
one country. These operations outside the company’s home country may be
linked to the parent by merger, operated as subsidiaries, or have considerable
autonomy.
134
Multinational Corporations Definitions:
> Multinational corporations or enterprises (MNCs or MNEs) are businesses,
which have operations in more than one country. In the globalised economy,
most large corporations are multinational to some extent: businesses are
connected to governments, communities, tax-payers and individuals around
the world through investment, supply chains and markets. Corporations that
control assets in more than one country are also known as trans-national
corporations (TNCs).MNCs are large and powerful- ((Safarian, A.E.1993),
> Multinational corporations (MNCs) are large companies that conduct their
business operations in several states. Although trans-national corporations
(TNCs) are commonly thought to be synonymous with MNCs they are in fact
different in several regards. The primary defining factor is that they keep
their financial headquarters offshore to protect them from taxes. Thereby,
they lack financial accountability to the states in which they conduct their
primary operations. Ideally, MNCs would truly be global in nature; operating
across borders with no single national emphasis. However, this is rarely the
case. Generally, these companies are dominated by a parent company,
typically in the developed world, through which they conduct the bulk of
their research and to which they often repatriate profits. The companies that
control assets in more than one country are also known as transnational
corporations (TNCs). TNCs/MNCs are large and powerful. (Hoos,
Janos 2000),
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From Wikipedia, the well known encyclopedia:
A multinational corporation (MNC) or multinational enterprise (MNE) or
transnational corporation (TNC) is a corporation/enterprise that manages
production establishments located in at least two countries. Multinational
corporations (MNC) are often divided into three broad groups:
1. Horizontally integrated multinational corporations manage production
establishments located in different countries to produce same or similar
products.
2. Vertically integrated multinational corporations manage production
establishment in certain country/countries to produce products that serve
as input to its production establishments in other country/countries.
3. Diversified multinational corporations manage production establishments
located in different countries that is neither vertically nor horizontally
integrated.
Multinational corporations play an important part in the economies of
most countries and in international economic relations. This is of increasing
interest to governments as well as to employers and workers and their respective
organizations, as are perceived to link rich and poor economies. Through
international direct investment and other means such enterprises can bring
substantial benefits to home and host countries by contributing to the more
efficient utilization of capital, technology and labour. Within the framework of
development policies established by governments, they can also make an
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important contribution to the promotion of economic and social Development; to
the improvement of living standards and the satisfaction of basic needs; to the
creation of employment opportunities, both directly and indirectly; and to the
enjoyment of basic human rights, including freedom of association, throughout
the world. On the other hand, the advances made by multinational enterprises in
organizing their operations beyond the national framework may lead to abuse of
concentrations of economic power and to conflicts with national policy
objectives and with the interest of the workers. In addition, the complexity of
multinational enterprises and the difficulty of clearly perceiving their diverse
structures, operations and policies sometimes give rise to concern either in the
home or in the host countries, or in both. Whether these apprehensions are fair or
not, many MNCs are now attempting to manage these complex set of issues in
the host countries by implementing corporate social responsibility (CSR)
strategies because such issues may risk the success of their operations. However,
CSR can be an ambiguous tactic because it is often unclear what a corporation
can and cannot be held responsible for, particularly when weak governance and
institutions are involved.
History Of Multinational Companies.
Multinational corporations have existed since the beginning of overseas
trade. They have remained a part of the business scene throughout history,
entering their modem form in the 17th and 18th centuries with the creation of
large, European-based monopolistic concerns such as the British East India
Company during the age of colonization. These were rarely multinational, and
often instruments Of colonialism. However, traders of the maritime nations of
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that era led the expansion of trade, which occurred with the age of discovery and
the development of accurate long distance navigation at sea.
Multinational concerns were viewed at that time as agents of civilization
and played a pivotal role in the commercial and industrial development of Asia,
South America, and Africa. Corporations that do business in more than one state
are not new. In the fifteenth century, the Fuggers operated on a multinational
basis in several parts of Europe. Many companies, such as Singer, Herz,
Unilever, and Nestle, have been active in several countries for most of last
century.’
By the end of the 19th century, advances in communications had more
closely linked world markets, and multinational corporations retained their
favourable image as instruments of improved global relations through
commercial ties. The coming of the industrial age saw the need to capture
markets for an expanding output of basic manufactures. Improvements in ocean
and continental transportation and emerging thought about free trade as an
element of political and economic freedom, also gave rise to the first rudimentary
MNCs. Possessing multiple markets and raw material sources, the ownership,
management and capital of these early MNCs was still largely limited to the
nation of origin. They often enjoyed direct or indirect government support by
means of tariffs, investment and financing.
By the end of the 20th century, and with many former government
monopolies in telecommunication, power generation and transport expanding
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into international markets, the multinational corporation dominated world trade
in goods and services. They account for 70% of total foreign trade of $ 7 trillion.
Their operations range from mining, manufacturing and energy to modem
financial and communication services of all kinds.
Recently, India has witnessed presence of MNCs through Foreign Direct
Investments after the economic reform in 1991. Prior to 1991, the government
exercised a high degree of control over industrial activity by regulating and
promoting much of the economic activity. The development strategy discouraged
inputs from abroad in the form of investment or imports, while the limited
domestic resources were spread out by licensing of manufacturing activity. The
result was, a domestic industry was highly protected - from abroad, due to
import controls and high duties, and from domestic competition due to licensing
and reservations. Industrial policy was dominated by licensing constraints, by
virtue of which strict entry barriers were maintained under the Industries
Development and Regulation Act (1951).
The new industrial policy announced in 1991 led to de-licensing of
industry, competition rather than protection as the desired business environment.
The earlier requirement of approvals and licenses for any investments and
expansions were abolished for all except 18 industries. Within a few years, only
five sectors remained under the ambit of industrial licensing. De-licensing gave
companies freedom to take decisions for investments, expansions and plant
locations. Bureaucratic practices involved in the investment procedures were
reduced significantly. Lowering of entry barriers resulted in greater private sector
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participation. The government also liberalised its policy towards FDI. Many
constraints that had historically been imposed on portfolio and direct investment
were removed. As the restrictions on foreign investments were reduced or
removed, there was a sudden spurt in foreign net inflows. The number of
approvals of foreign technical collaborations registered a dramatic increase in the
new policy regime, and the number of foreign technology approvals went up.
The value of FDI approvals also increased significantly in the post-reform
period. 1997, $15.8 billion of FDI was approved in contrast to US$ 0.3 billion
approved in 1991. After 1991, foreign investment followed a steep upward
curve: from 1981 to 1990, FDI grew by 23 per cent annually; this increased to 44
per cent annual growth during 1991 to 2001. (World Bank Development
Indicators).
The reduction of rigidities in the investment procedures led to an increase
in the number of international collaborations and in the following years presence
of MNCs became a regular feature of Indian Corporate World.
Access of MNCs into new markets
Multinational corporations follow four general procedures when seeking
to access new markets:
1. Merger with or direct acquisition of existing concerns;
2. Sequential market entry;
3. Joint-ventures.
4. Greenfield-project
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Merger
Merger or direct acquisition of existing companies in a new market is the
most straightforward method of new market penetration employed by
multinational corporations. Such an entry, known as foreign direct investment,
allows multinationals, especially the larger ones, to take full advantage of their
size and the economies of scale that this provides. The rash of mergers within the
global automotive industries during the late 1990s are illustrative of this method
of gaining access to new markets and, significantly, were made in response to
increased global competition.
Sequential market entry
Sequential market entry often also includes;
1. Foreign direct investment, and
2. Involves the establishment or acquisition of concerns operating in niche
markets related to the parent company’s product lines in the new country
of operation.
Japan’s Sony Corporation made use of sequential market entry in the
United States, beginning with the establishment of a small television assembly
plant in San Diego, California, in 1972. For the next two years, Sony’s U.S.
operations remained confined to the manufacture of televisions, the parent
company’s leading product line. Sony branched out in 1974 with the creation of a
magnetic tape plant in Dothan, Alabama, and expanded further by opening an
audio equipment plant in Delano, Pennsylvania, in 1977.
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Sony further diversified its U.S. facilities and now also produces
computer displays and data storage systems, semiconductors and personal
telecommunications products in the United States. Sony’s example is a classic
case of a multinational using its core product line to defeat indigenous
competition and lay the foundation for the sequential expansion of corporate
activities into related areas.
Joint-ventures
Finally, multinational corporations often access new markets by creating
joint ventures with firms already operating in these markets. To maximize
benefits to local firms, governments in many developing countries have
stipulated that foreign firms set up business operations in these countries in the
form of joint ventures (TVs), assuming that such cooperation among
multinational enterprises and their local partners would facilitate the transfer of
technology and business practices.
This has particularly been the case in countries formerly or presently
under communist rule, including those of the former Soviet Union, eastern
Europe, and the People’s Republic of China. In such joint ventures, the venture
partner in the market to be entered retains considerable or even complete
autonomy, while realizing the advantages of technology transfer and
management and production expertise from the parent concern. The
establishment of joint ventures has often proved awkward in the long run for
multinational corporations, which are likely to find their venture partners are
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formidable competitors when a more direct penetration of the new market is
attempted.
MNEs often prefer to use JVs as vehicles for gaining a better
understanding about the business environment in the host countries, and to
develop business relationships with other firms, the governments and the
bureaucracy. Once these relationships are established, JVs are often dissolved;
usually the MNE buys out the equity stake of the others or it enters the market on
its own with a wholly owned subsidiary.
Greenfield project
This, refers to a project being conceived and executed where no project,
company, assets, or operations exist. A Greenfield site or project location is one
where no infrastructure exists to support the project. A Greenfield project entails
building a subsidiary from bottom up to enable foreign sale and/or production.
Real estate is purchased locally and employees are hired and trained using the
investor’s management, technology, know-how and capital. A Greenfield uses
the resources of the investor and combines them with assets acquired on local
markets. A Greenfield project gives the investor the opportunity to create an
entirely new organisation specified to its own requirements, but usually implies a
gradual market entry.
Multinational corporations are thus able to penetrate new markets in a
variety of ways, which allow existing concerns in the market to be accessed a
varying degree of autonomy and control over operations.
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Power of multinational corporations
Very large multinationals have budgets that exceed those of many
countries. They can have a powerful influence in international relations, given
their large economic influence in politicians’ representative districts, as well as
their extensive financial resources available for public relations and political
lobbying. Given their international reach and mobility, prospective countries, and
sometimes regions within countries, when compete with each other to have
MNCs locate their facilities (and subsequent tax revenue, employment, and
economic activity) within, offer attractive incentives to MNCs such as tax
breaks, pledges of governmental assistance or improved infrastructure, or lax
environmental and labour standards. MNCs’ annual turnovers dwarf the Gross
Domestic Product (GDP) of many countries. In 1998, the top five corporations
had annual revenues that were more than double the total GDP of the 100 poorest
countries,
Hence, the world’s multinational corporations - 63,000 of them at last
count - frequently find themselves the target of criticism by the world’s anti
globalization protesters. The protesters charge that MNCs are principally
responsible for the impoverishment of many of the world’s six billion people.
They are perceived as:
1. Large, utilitarian enterprises with little or no regard for the social and
economic well-being of the countries in which they operate,
2. Being exploitative of both their workers and the local environment, given
their relative lack of association with any given locality.
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3. Acquiring too much political and economic power in the modem business
environment.
4. Environmental protection agencies are concerned about the activities of
multinationals, which often maintain environmentally hazardous
operations in countries with minimal environmental protection statutes.
5. Finally, government agencies fear the growing power of multinationals,
which once again can use the threat of removing their operations from a
country to secure favourable regulation and legislation.
Left to their own devices, multinational corporations are likely to fulfill
their responsibilities in a minimalist and fragmented fashion. They need strong
and effective regulation and a coherent response from civil society.
Reported Controversial operations by MNCs
Below are the few cases of violations that run against the spirit of
Corporate Social Responsibility. These cases help understand various forms of
violations by MNCs in the host countries where they have business operations.
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Nestle and The Infant Formula Controversy.
“The story of the Nestle Baby Formula Controversy begins almost three
decades ago with the publication of a pamphlet called ‘The Baby Killer’ in 1974
by Mike Muller and War on Want, a London-based activist group concerned
with problems of the Third World (Akhter 1994). The pamphlet claimed that
Third World babies were dying because their mothers were feeding them infant
formula that was being marketed by multinationals such a Nestle of Switzerland
and United Kingdom’s Cow and Gate (Akhter 1994). The aftermath of the
publication led to an international crisis for Nestle.”
The discussion focused on their sale of breast milk substitutes in
developing countries which has been criticised for contributing to the deaths of
1.5 million babies every year. Milk substitutes discourage breast-feeding, with all
its immune functions; in addition, poor sanitation, illiteracy and a failure to
provide instructions in an adequate number of languages mean it is often mixed
incorrectly or with unhygienic water, with fatal results.
In developing countries substitutes had found their way into rural
communities with low literacy and poor sanitation. Despite Nestle’s argument
that they promote breast-feeding, the widespread availability of substitutes may
still discourage mothers from breast-feeding and its undeniable nutritional and
health benefits. Perhaps the strongest criticism was their refusal to stop selling
the product or limit its use to prescription-only. Evidence suggests the product
(which currently forms only 1% of their total sales) contributes to infant
mortality. This suggests despite its new ‘ethical’ claims, Nestle is still driven
primarily by profit, challenging whether big business will ever be compatible
with social responsibility.
Adapted from: Emma Farleigh 15/2/01)
www.heritage.org/Research/SocialSecuritv
This is a CSR Case against Faulty Marketing Strategy
146
Chevron in Nigeria
Nigeria is one of the world’s largest exporters of oil; it is also one of the
world’s poorest countries. Severe environmental destruction is the legacy of 40-
plus years of oil drilling by Shell Oil in an area of Nigeria known as the Niger
Delta, home to over 14 indigenous ethnic nationalities, including the Ogoni
people. Ogoni farmlands were expropriated without compensation, their
environment polluted, their communities attacked by the military if they
protested. The CIA reports that the Niger Delta has suffered the equivalent of 10
Exxon Valdez oil spills, without ever being cleaned up.
Shell Oil Company has also supported one repressive Nigerian military
regime after another, paying for “Shell police” - Nigerian police officers used to
guard oil installations and put down protests.
In 1999, a group of Nigerians of the Niger Delta region, where Chevron engages
in oil production activities, brought a lawsuit against Chevron in US federal
court. The plaintiffs allege that they suffered human rights violations, including
torture and summary execution, at the hands of the Nigerian military and police
acting in concert with Chevron to suppress the plaintiffs’ protests against
Chevron’s environmental practices in the Niger Delta. The claims against
Chevron are based on two incidents. First, two protestors were shot by Nigerian
military and police allegedly recruited by Chevron at its Parabe offshore
platform. Second, two Nigerian villages, Opia and Ikenyan, were attacked by
Nigerian soldiers using helicopters and boats allegedly leased and/or owned by
Chevron, and these attacks allegedly caused the death and injury of a number of
villagers. In March 2004, the court denied Chevron’s motion for summary
judgment (i.e., requesting that the court dismiss the case on the basis of the
documents before it without a trial, because there are no material facts at issue).
The trial is scheduled to commence in the fall of 2006.
In this particularly serious incident on January 4, soldiers using a Chevron

helicopter and Chevron boats attacked villagers in two small communities in
Delta State, Opia and Ikenyan, killing at least four people and burning most of
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the villages to the ground. More than fifty people are still missing. Chevron has
alleged to a committee of survivors of the attack that this was a “counterattack”
resulting from a confrontation between local youths and soldiers posted to a
Chevron drilling rig. Community members deny that any such confrontation took
place. In any event, the soldiers’ response was clearly disproportionate and
excessive. In the worst cases, people have been killed by the paramilitary Mobile
Police or other security responding to threats to oil production. In May 1998, two
youths were killed on Chevron’s Parabe Platform, off Ondo State, by members of
the security forces transported to the platform by Chevron to remove two
hundred protesters who had closed down production. The protesters had
demanded compensation for environmental damage caused by canals cut for
Chevron which opened local waterways to the sea. Frequently, protesters are
beaten and arbitrarily detained, for periods ranging from hours to weeks or
months; sometimes individuals are detained who simply go to oil company or
contractors’ premises asking for compensation for works being carried out. In
one case in 1997, landholders interviewed by Human Rights Watch had been
detained overnight and released without charge following a spill on their land
which Elf alleged had been caused by sabotage. They had apparently been held
on suspicion that they had caused the sabotage despite the lack of evidence to
this effect and the uncompensated damage caused to their crops. Following a
major Mobil oil spill in January 1998, up to three hundred people who demanded
compensation were reportedly detained; in July, further protests over damage
done by the spill and delays in compensation payments led to disturbances in
which eleven people were reportedly shot dead by police. As this report went to
press, the fatal shooting of tens of Ijaw youths calling for the oil companies to
withdraw from Nigeria was reported, together with the deployment of thousands
of troops to the Niger Delta region.
Adapted from: http://www.seen.org/PDFs/chevronfinaI.
A CSR Case against Human Right Violation
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Union carbide in Bhopal
In 1984, a pesticide factory owned by Union Carbide in Bhopal India
exploded killing 2,500 people and injuring additional 300,000 people. The city is
geographically divided between rich and poor sections, with the factory located
in the poor section. Although it was a multinational, Indian investors owned
almost half of the shares of the Indian plant, and Indians operated the plant. The
active ingredient for the pesticide was stored in 600 gallon tanks. The size of the
tanks themselves was a problem. Larger tanks are economically efficient since
they hold more gas, but they pose greater risks in case of a tank leak. For this
reason, regulations in Germany required a similar Union Carbide plant in that
company to restrict its tank size to 100 gallons. The tank that exploded in the
Indian plant was supposed to be refrigerated to zero degrees centigrade; instead
the refrigeration unit was not working and it was at room temperature. Although
the Indian factory had safety features to prevent disasters, several of the safety
systems were not functioning. The temperature alarm was shut down; the gas
scrubber was shut off, which was supposed to neutralize escaped gas; and a flare
tower was out of service, which was supposed to burn escaped gas.
The explosion started when someone added water to a 600 gallon tank of
the chemical, perhaps done as an act of sabotage by a disgruntled employee. The
temperature in the tank rose in a chain reaction, and the tank blew up. A fog of
the gas drifted through the streets of Bhopal, killing people on the spots that they
stood. Long term medical problems for the survivors included respiratory
ailments and neurological damage. The Indian government quickly arrested plant
managers and eventually spent 40 million on various disaster relief projects. The
company eventually paid half a billion dollars to victims. Although the US parent
company acted quickly and compassionately to the disaster, the tragedy raised
serious questions about the parent company’s views on safety in third world
countries. Even though Indians ran the Bhopal plant, Union Carbide’s laissez-
faire policy of decentralizing subsidiaries was not appropriate in matters of
safety. The tragic lesson is that multinational should follow U.S. safety standards
worldwide, and should not give cost cutting the highest priority.
A CSR case against Safety Standards.
149
Presence of Unilever in India
At 72, Ruby Martin had hoped to lead a happy retired life with son
Christopher Martin Colaraft and her grandchildren. It was not to be. Christopher
died in his prime, at 33, of what Ruby calls “long-term effects of unrestricted
exposure to mercury”. He had been employed at the Hindustan Lever
thermometer factory at Kodaikanal in Tamil Nadu from 1985 to 1991. He died
inl997.HLL, a subsidiary of multinational Unilever, acquired the thermometer
factory from Ponds India in 1997. In March 2001, the plant made news when a
report by the Indian People’s Tribunal (IPT), under the chairmanship of Justice
S.N. Bhargav, supported the allegations made by the locals that the company was
dumping mercury in the environment and its negligent safety standards had
affected workers’ health. HLL strongly denies this charge. “We appointed URS
Dames and Moore, leading international consultants and engineers to
make an independent investigation of the situation,” said Shubhabrata
Bhattacharya, general manager, corporate communication, HLL, Mumbai. “The
final report on the environmental site assessment and risk assessment for
mercury, presented in May 2001, concluded that the Kodai Lake has not been
impacted by mercury and that people who worked at the site have not suffered
adverse health effects due to the factory operations, and remedies to the soil are
needed at only the site.” However, environmentalists claim to have recovered a
blue drum filled with mercury waste in the forest, Pambar Shola, adjoining the
factory.
Finally, in May 2003, HLL sent 1,416 drums filled with 290 tones of hazardous
mercury waste to the recycling firm Bethlehem Apparatus, Pennsylvania, USA,
because India did not have the facility to process such material. This ended a
dramatic struggle staged by the local people led by the PHCC and Greenpeace,
India^.
Minding our Business Report-1997 www.isforum.org
A CSR Case against Quality of Work Life, Corruption and Environment
150
Unilever Use Child Labor in India
Both Hindustan Lever Ltd.an Indian subsidiary oWAritisK-
multinational company Unilever as well as the American mu 11i nationalAlonsanto

are making use of hazardous forms of child labour in cotton seed production in
India on a large scale. An estimated number of 25000 children, mostly girls work
an average of ten to thirteen hours a day for Hindustan Lever while around 17000
children work for Monsanto and their Indian subsidiary Mahyco. These children
get no education, earn less than 40 Eurocents (Rs. 20) a day and are exposed to
poisonous pesticides like Endosulphan during their work. More than 11000
children work under similar conditions for the multinationals Syngenta
(Swiss)Advanta (Dutch-British) and Proagro (owned by Bayer of Germany).
Cotton Seeds: Largest Employment of Children
In the Indian state of Andhra Pradesh alone, 247,800 children work in
cottonseed production and around 450,000 in all of India, most of them for
Indian-owned companies. No other industry in India employs so many children.
The cottonseed companies do not employ the children themselves, but they work
through agents called seed organisers. The companies unilaterally fix a price for
the farmers that make it almost impossible for them to employ adults. A child
earns 30% less than a woman and 55% less than a man.
Cottonseed production is very labour-intensive. The sector is ‘unique’ in
the sense that nine out of ten employees are children between 6 and 14 years of
age. Generally they are, through advances paid to their parents, bonded to the
same employer. According to Dr. Venkateswarlu’s research, almost 30% of the
children are being recruited by intermediaries to work as ‘migrants’ away from
home. These children work 12 to 13 hours a day and sleep in the farmer’s
cowshed or in a ‘child camp’ where ten to thirty children live.
This is the result from the research done by the Indian researcher Dr. D.
Venkateswarlu for the Indian Committee of the Netherlands May 14 2003
A CSR Case against Child Right and Employment rules.
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Arrogance and Impunity - Coca-Cola in India: By India Resource
Center August 10.2006
How long will it take before the powers that be in India refuse to allow
multinationals to treat Indians as guinea pigs? In what can only be characterized
as arrogance and impunity, we are learning that Coca-Cola and Pepsi have
continued to sell soft drinks in India with dangerously high levels of pesticides -
three years after even the government of India confirmed that these products
were dangerous. Perhaps the cola companies know something that we do not?
Are Indians immune to high levels of pesticides? It is time for the cola
companies to provide details of the studies they must have conducted to convince
themselves that the average Indian can consume pesticides safely at levels 24
times the average American and European.
> Since April 22, 2002, residents of Plachimada, Kerala have been on vigil—24
hours a day, 7 days a week—outside the gates of Coca-Cola’s bottling plant
in their village. The panchayat (village council) has refused Coca-Cola the
license to operate and the bottling facility, the largest Coca-Cola bottling
facility in India, has been ‘temporarily’ shut down and the struggle is
continuing make it permanent.
> Local residents in Mehdiganj, near the holy city of Varanasi, are also leading
a struggle against Coca-Cola and over 1,500 members demonstrated against
Coca-Cola in November 2004. Protesters were met at Coca-Cola’s factory
gates by ARMED police, sent to “protect’ the plant. This was no mere threat;
the protesters were severely beaten up.
> At Coca-Cola’s bottling facility in Kala Dera, near Jaipur, Rajasthan, and the
sinking water table has created water shortages for over 50 villages. Over
2,000 people marched in August 2004 to protest Coca-Cola’s practices.
> In Kudus village in Thane district in Maharashtra, villagers are forced to
travel long distances in search of water which has dried up in their area as a
result of Coca-Cola’s bottling operations. Coca-Cola has built a pipeline to
transport water from a river to its plant, and activists opposing the pipeline
and the facility are regularly harassed by local police.
> Sensing a pattern, more than 7,000 people in Sivaganga, Tamil Nadu, mostly
women, turned out in April 2003 to protest a proposed Coca-Cola factory in
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their village. Residents are justifiably worried that Coca-Cola’s joint
operations with a sugar mill in the area will lead to water scarcity and
contamination.
Thousands of people all across India are protesting Coca-Cola’s
operations in India. Led primarily by women, Adivasis (Indigenous Peoples),
Dalits (lower castes), agricultural laborers and farmers, a significant grassroots
movement has emerged in India to hold Coca-Cola accountable for its crimes in
India and internationally. The campaign is growing and winning extremely
important battles in the quest for justice.
A Pattern of Abuse has emerged for Coca-Cola’s bottling operations in India.

Coca-Cola is Guilty of:
> Causing Severe Water Shortages in Communities Across India
> Polluting Groundwater and Soil Around its Bottling Facilities
> Distributing its Toxic Waste as ‘Fertilizer’ to Farmers
> Selling Drinks with High Levels of Pesticides in India, including DDT—
sometimes 30 times higher than EU standards.
Communities living around Coca-Cola’s bottling facilities are facing
severe hardships. A majority of the community members affected by Coca-
Cola’s indiscriminate practices are also some of the most marginalized
communities in India- Indigenous Peoples, lower castes, low-income and
agricultural day-laborers.
“To me this is another shameless instance of MNCs openly arm-twisting
local interests using the crutches of law. Imagine someone digging a bore well in
your backyard, dumping the waste in your area, draining your own water
resources and then selling you their bottled products to you. People have been
crying foul on these biggies polluting the groundwater resources and soil since
years. When V.R. Krishna Iyer, a former Supreme Court judge accuses Coke of
‘bench shopping’ a favorable judgment, it is not as simple as it seems. The
“expert committee” found no evidence to shutdown the plant. But it turns out that
the “expert committee” had a member from Coke and no one from the
Panchayat.”(Debashish-June 2005)
A case against exploitation of Natural Resources and Environmental Abuse.
153
Thus, historically viewed in a very negative light, MNCs have been found
guilty of violations of human rights, exploitation of the environment, and
corruption of governments. Further, ethical issues unique to MNCs arose from
the diversity of national operating locations set against the uniformity of the
multinational organization (Tavis, 1996). This invited MNCs to act in an
egocentric manner, in part, because of a lack of any other uniform set of
standards to apply across multiple cultures and operating situations.
However, there are signs that this has changed in recent times, and that
the reputation of MNCs has improved dramatically. Many forces are also at work
to keep multinational corporations from wielding unlimited power over even
their own operations. Increased consumer awareness of environmental and social
issues and the impact of commercial activity on social development and
environmental quality have greatly influenced the actions of all corporations in
recent years. Labor, environmental, and consumer groups worldwide have long
advocated for legally binding regulations for industry, in light of the growing
power and mobility of multinational corporations.
Multinational Companies And Corporate Social Responsibility
The contemporary global economy is guided by market competition
which brings efficiencies, so to provide better quality goods and services at a
lower cost. Globalization has also brought jobs, investment and new technologies
to many poor peoples. However, reports have documented the disparities in
income and wealth that develop, as those people and nations who possess
resources are able to obtain a greater share of benefits, while those who have
154
little resources or skills fall further behind (World Development Report, 2003;
Tavis, 2000). Hence, there is a need for effective guidelines for the operation of
the international economy that will take into account current inequities, and thus
the interests of all people. Globalization, or as some call it Americanization, or
marketisation, accelerates this problem. The experience of every country in the
early stages of industrialization is that market forces in themselves encourage
lower wages, long hours, poor working conditions and shifting the costs
stemming from pollution onto others in the larger community.
One generally expects it to be the responsibility of the host country to set
fair standards for wages, working conditions and pollution. However, this does
not work well in poor countries at times. There is an overabundance of potential
workers and work sites in poorer nations; therefore these countries do not have
the negotiating power to insist on living wages, humane working conditions and
reducing pollution (Sethi, 2003). Or put as a question, What can be done about
global resources that are directed at productivity and growth at the expense of so
many who are left behind with no institution to represent them? (Tavis, 2000).
As corporate social responsibility is also about the relationships
companies choose to have beyond their premises - locally, nationally,
Asian/European etc. and world-wide. Good relations with their local setting are
important for companies: they recruit most of their staff from the local labour
markets and for most companies the local market is also their main market.
Companies profit from an ability to accumulate social capital, which means to
develop networks around them and to create links to other businesses. Large
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companies increasingly use these relations to support the integration of their
affiliates into the various markets in which they operate. Corporate social
responsibility also has a strong international dimension. A growing number of
firms are adopting codes of conduct covering working conditions, human rights
and environmental aspects, especially in their dealings with subcontractors and
suppliers. They do so not only to assume their corporate social responsibility but
also to improve their corporate image and reduce the risk of adverse consumer
reaction. There is nothing to have certain common expectations from MNCs
when they operate in some other country that:
> MNC activity help to reduce poverty in that host countries. Foreign direct
investment (FDI) and purchasing by MNCs can drive economic growth,
which is necessary for a country to become less poor.
> MNCs create jobs that employ local people, can raise employment standards:
they can pay better wages than local firms.
> Their environmental and health and safety protocols can set the standard for
local practices.
> MNCs can boost economic development by transferring technology and
knowledge to local economies.
> MNCs can bring benefits to consumers in developing countries, enabling
them to buy better quality and better-value products.
An encouraging result of this is that the trend seems to be a shift from
simple compliance with governmental regulations and avoidance of liabilities,
toward a more proactive stance representing adaptation to country-specific needs
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and innovation in management practices as a means of establishing a competitive
advantage. We can see that where countries once passed laws limiting their
influence, MNCs are now being courted by national and local governments eager
for the economic opportunities that they bring. But their operations need to be
watched closely. (Peter Utting, research coordinator at the UN Research).
Institute for Social Development (UNRISD) wrote in the report named ‘Visible
Hands’ “While multinational corporations would prefer to comply through
voluntary initiatives, the public interest can only be folly served through stronger
regulation and monitoring. Many companies have mastered socially responsible
rhetoric, he said, but few have taken action. Only a small proportion of
companies have introduced corporate codes of conduct. Even when they do,
these tend to be narrow in scope and are often not independently verified”, he
said. “Although MNCs have dramatically influenced the economic growth and
prosperity and increased employment, the lack of ethical considerations have
allowed MNCs with too much control and power. “Ultimately, most corporations
will only respond to stronger regulation and to close monitoring by NGOs (non
governmental organizations), trade unions and consumer groups,” he added. The
report echoes some recommendations made in the 1999 Human Development
Report that called for a multilateral code of conduct, arguing that multinational
corporations are “too important for their conduct to be left to voluntary and self
generated standards.”
The Rise Of Corporate Social Responsibility Codes
In the mid-1970s, a number of developing countries passed legislation
attempting to control transnational corporate activities within their borders. In
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addition, the UN and OECD adopted draft codes of conduct to ensure that
developing countries would share in the gains from the growth of international
corporate activity. By the 1990s, the focus of regulation had moved from
developing world subsidiaries to developing world suppliers and manufacturers,
and voluntary initiatives for labour standards regulation were adopted by the
business sector itself. The content of these voluntary codes of conduct varied
greatly. Changing public attitudes are an important part of the context in which
modem corporate codes of conduct have been adopted. The awareness of global
environmental and social issues has increased significantly since the 1970s,
fuelled by the development of global communications systems, enabling
corporations to control production activity on the ever widening scale.
The growing adoption of codes of conduct is also a response by
corporations to the concerted lobbying efforts by labour groups and NGOs for
the creation of a global system of labour regulation at the WTO level, and the
push for a social clause. MNEs are now aware, more than ever before, of the
need to voluntarily account for their labour practices, if for no other reason than
to prevent binding regulation from becoming a reality.
What Is ‘Code Of Conduct’?
A code of conduct is intended to be a central guide and reference for
employees in support of day-to-day decision making. It is meant to clarify an
organization’s mission, values, and principles, and to link them with standards of
professional conduct. A code of conduct provides visible guidelines for behavior
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and an important means of communication that reflects the commitment that an
organization has made to uphold its most important values.
In the CSR literature, codes of conduct are variably described and defined
but have common elements, such as being self-regulatory or voluntary in nature,
used to influence behaviour of a specified group or groups, and/ or to define
intentions/ actions on a certain group of issues or to a certain group of
individuals, sometimes from a market-based perspective.
A code of conduct is meant to complement relevant standards, policies,
and rules, yet not to be a substitute for them. There are various types of codes
that employ different strategies. For example, a distinction can be made between
codes of ethics, ethics statements, value statements and codes of conduct. An
ethics statement or code of ethics tends to be brief and usually includes guidance
of a more aspirational nature; that is, it indicates core values but it does not
dictate specific behaviour. Codes of conduct, on the other hand, tend to be far
more directive in their behavioural guidelines. What all codes have in common is
that they are created to embody and express consensus, and to standardize
behaviour. The ways in which they go about doing so, however, differ
substantially.
CSR Codes of conduct typically set guidelines on issues including child
labour, forced labour, wages, benefits, working hours, disciplinary practices,
freedom of association, human rights, and health and safety. They also may
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incorporate policies regarding legal compliance, ethics, environmental practices,
and community investments.
Codes . of conduct may be developed independently by individual
companies or draw on model codes written by civil society and academics. They
may be a short mission statement, or a sophisticated document with articulated
standards, principles, criteria for measuring company performance, and
mechanisms for enforcement. Guidelines on how the codes of conduct are to be
implemented, including clearly defined accountability, have proven to be
important for implementation. Codes of conduct use language that reflects the
company’s intention to enforce their standards of behaviour and cover all
important issues to the company. Effective codes of conduct are crafted with the
involvement and support of key company managers and stakeholders.
Additionally, effective codes of conduct are communicated clearly both
internally and externally to the organization. Communication about the code of
conduct should be periodic and the code must be regularly reviewed for
compliance with legislation and general relevance.
There is no single code or standard, no panacea that will lead to corporate
responsibility. Each company is different, with its own challenges, corporate
culture, unique set of stakeholders and management systems. The very same
company in one region may face different challenges in other parts of the world.
Corporate responsibility is a journey for which there is no single map but
hundreds of guides. Codes and standards are maps that can be combined in new
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ways for different journey, but there are countervailing forces at work within
corporate responsibility codes and standards:
> On the one hand is the need for convergence to simplify the large numbers of
codes and standards; and on the other hand there is the need to foster
diversity and innovation.
> It is a paradox that many of the best codes of conduct and standards are not
well known and that some corporate responsibility instruments that are well
disseminated are not terribly effective.
One of the first steps a company can take to become more socially
responsible is to adopt a code of conduct—but taking this step without clear
implementation strategies leave companies exposed. Dr Samuel Johnson once
said ‘A man may be very sincere in good principles without having good
practice’; the same is true for companies.
At best, codes of conduct and standards can promote corporate
responsibility, but they can also be used as an instrument to deflect criticism. It is
ironic that many of the companies involved in corporate scandals, such as Enron
. and Pepsi/cola, have excellent statements on social policies. The corporate
responsibility movement’s progress gets affected by these hollow statements.
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Types Of Code Of Conduct.
1. Company codes
These codes are adapted unilaterally by companies. They can relate to
their own operations and can communicate to stakeholders the organization’s
commitment to social responsibility.
2. Trade Association / Industry code
These codes are adopted by a group of firms in a particular industry. They
also tend to be unilateral measure adopted by firms. Industry codes of conduct
generally focus on key issues; for example, the gold industry’s code of conduct
focuses on cyanide management and the apparel industry’s code of conduct are
primarily concerned with labor conditions. Industry codes of conduct are often
one component of a larger initiative to collectively address specific problems that
plague the industry as a whole.
3. Multi-stakeholder code:
These codes are based on negotiations between several stakeholders,
including firms, NGOs and / or trade unions. Governments can also be involved.
Development of a code of conduct can be an excellent time for any type of
organization to engage stakeholders in a discussion about corporate social
responsibility and providing better goods and services. Engagement and two-way
communication can enhance the company’s reputation with stakeholders as a
good corporate citizen, decrease risk of investigation, litigation, and bad press, as
well as, improved relations with stakeholders, government, and industry officials.
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4. Model codes:
These codes are designed to provide benchmark with respect to codes of
conduct. Although, they are not practiced in totality, they serve as a model to
Companies which generally pull from multiple sources applying local laws on
some issues, internationally-established standards such as those set by
International Labour Organization (ILO) conventions on others, Amnesty
International for Human Rights etc.
5. Inter-Governmental codes:
These are negotiated at an international level and are agreed upon by
national governments. They date back to 1970s when both the OECD’s
Guidelines for Multinational Enterprises and the ILO’s Tripartite Declaration of
Principles Concerning Multinational Enterprises were adopted.
Benefits Of Code Of Conduct
> Clear Communication of Expected Behaviour. Codes of Conduct are an
effective way of communicating with employees about what decisions and
behaviours are to be expected.
> Codes of conduct are a useful entry point to addressing social and
environmental concerns. They build on management systems familiar to
business while requiring business to address broader issues.
> Codes are a voluntary framework for addressing those issues that the
company has identified as most important to good stakeholder relations and
shareholder value.
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> The benefits of an effective industry code include better dispute resolution
and a more transparent and efficient industry that inspires confidence and
industry growth.
Limitations.
> Codes of conduct are generally voluntary. There is frequently no
government or industry oversight on the implementation of the code of
conduct. However, a code of conduct is increasingly required for the social
license to operate and some industries and governments are beginning to
understand this.
> Accountability: Codes are often written without establishing clearly who in
the organization is responsible for ensuring compliance with the code of
conduct and how compliance will be enforced. Without mechanisms for
enforcement codes of conduct can be rendered ineffective.
> Lack of independent verification. Third party verification can be vital to the
effective implementation of a code of conduct. However, very few companies
involve third parties in the development, monitoring or enforcement of their
codes.
> Corrective action. Monitoring and verification of codes of conduct without
establishing a corrective action plan provides little use to companies.
Effective code implementation requires an established plan of corrective
action for violations.
In developing countries, CSR is not generally very high on the business
agenda (WBCSD-2000). For many, the demand for codes of conduct has been
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externally driven. Therefore, firms in developing countries, which produce for
developed country markets, have somewhat ambivalent attitudes toward codes of
conduct. Since their customers need them to meet the required labor or
environmental standards, they comply mainly to keep their markets. On the other
hand they are more likely to treat the adoption of codes as mere increase in costs.
This leads to a situation in which the sub-contractors are more likely to favor
relatively weak codes of conduct, which will meet the requirements of their
customers without imposing undue costs (Jenkins,2001).
Sethi (2003), however, feels optimistic about the potential of codes of
conduct to enable companies to fulfill a wide range of roles- economic, social,
and environmental. According to him the problem is not with the concept of
voluntary codes, which is a highly desirable concept because it offers a flexible
approach to resolving issues that have not been satisfactorily resolved through
existing legal and socio-political mechanisms, but lies largely with the MNCs
unwillingness to use this approach in a substantive and meaningful manner.
CSR standards promulgated by inter-governmental bodies concerning
activities of MNCs on labour and environment, as well as those by NGOs and
industrial associations (like standards by ISO, FLA and SAI), have helped
articulate social norms of acceptable corporate conduct in all jurisdictions where
companies do business. Meanwhile, ISO has begun its work to develop an
international CSR standard, which will sit alongside other voluntary standards
like the IS09000 and IS014000 series upon its completion by 2007.
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The Codes of Conduct and CSR Standards cover certain minimum norms
for working conditions. These are also often referred to as core standards. The
broad coverage of these codes is as below:
1. Prohibitions on Child Labour,
2. Prohibitions on forced labour,
3. Prohibitions on discrimination based on race, religion, or ethnic origin;
4. Requirements to ensure the health and safety of the workplace,
5. Provisions on wages, usually based on local laws regarding minimum
wage or prevailing wage levels in the local industries;
6. Provisions regarding limits on working hours, including elimination of
forced overtime, in accordance with local laws; and
7. Support for freedom of association and the right to organise and bargain
collectively.
Apart from these core labour standards, the codes have started
emphasising on environmental management systems. Codes of conduct prescribe
bare minimum standards on working conditions and compensation, but they do
not limit any company’s own novel initiatives.
Standards of Social Responsibility
A number of intergovernmental organizations (IGOs) have started to
address the issue, among these, the European Union (EU), the UN Industrial
Development Organization (UNIDO), the UN Development Program (UNDP),
the UN Commission of Human Rights (UNCHR), and the World Bank, some of
which are now participating in the UN Global Compact. Another important
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international initiative was recently taken by the International Standardization
Organization (ISO) to develop standards for social responsibility under the name
of IS026000, covering not only corporations but all organizations. The UN
Global Compact and the ISO initiative confirm the increasing importance of CSR
internationally, and at the same time give a status of legitimacy to CSR.
Given the absence of global government, globalization is understood to
have produced a regulatory vacuum, where no single state has the capacity to
regulate the totality of any global company’s activities. In this situation the actors
that push firms to enact CSR policies are non-governmental advocacy
organizations (NGOs). These include NGOs with a broad social justice or
environmental mission, such as Oxfam or Centre for Social Environment , as
well as NGOs whose work is specific to CSR. NGOs have become a powerful
and politically significant social force in the last few decades. There are also
corporate interest groups engaged in CSR discourses, either those with a specific
CSR focus, such as the World Business Council for Sustainable Development, or
those with a broader pro-business focus, such as the World Economic Forum’s
Corporate Citizenship Project.
From these diverse quarters, multiple norms of responsible corporate
behaviour are being articulated at the trans-national level, some with
demonstrated transformative power. Basically, there are two main strands of
CSR standards. The first broad category defines what it means to be socially
responsible by referring to governmental and inter-governmental standards. At
the national level, this includes national and sub-national laws and regulations
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governing businesses. Laws and legal frameworks change over time to reflect
changing social values and standards of behaviour, which has a clear bearing on
setting the minimum regulatory standards for business behaviour. There are also
examples where initial voluntary action has led to regulation (for example,
maximum working hours, welfare measures as appear in Factory’s ACT-1948)
At the intergovernmental level, this includes instruments like the ILO Tripartite
Declaration of Principles concerning Multinational Enterprises and Social Policy,
The second category relates to private standards developed by NGOs. In
many cases, these standards either select parts of existing governmental and
intergovernmental standards, applying them to specific activities, or set guidance
that goes beyond the existing governmental and intergovernmental standards.
These standards may also complement existing requirements (for example, the
International Chamber of Commerce Charter for Sustainable Development). On
the other hand, there are private standards designed for adoption by the
organisations that develop the standards, such as the Caux Roundtable Principles
(which advocate a moral capitalism by applying fundamental ethical norms to
promote better outcomes for globalisation and business deeision-making).CSR
reporting and related consultancy services.
The three most important guidelines within the current international
framework regulating MNEs and their employment practices are those
promulgated by the OECD, the ILO and the UN. Summary of these three
standards are presented below for the ready reference and the summary of few
other CSR Standards are given in the Annexture-lf
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1. The United Nations Global Compact
Origin. United Nations Secretary-General Kofi Annan proposed the Global
Compact at the World Economic Forum on January 31, 1999. He challenged
world business leaders to help build the social and environmental pillars required
to sustain the new global economy and make globalization work for the entire
world’s people.
Purpose. The Global Compact is not a regulatory instrument, but a tool designed
to promote institutional learning. It seeks to use the power of transparency and
dialogue to identify and disseminate good practices that are rooted in globally-
acknowledged principles. The Global Compact is now endorsed by most national
governments, a variety of unions and NGOs, in addition to nearly 1,500
companies in 70 countries.
The Global Compact is not a regulatory instrument to “police” corporate
conduct, nor is it a binding set of regulations or a corporate code of conduct.
Instead, the goal of the initiative is to advance the ten universal principles
through the “self-enlightened engagement of its participants.”
Critical Content: The Global Compact contains ten principles based on the UN
and the UN organizations’ work on human, labor and environmental rights. The
tenth principle on corruption was adopted in 2004 in the wake of a UN
convention on this.
The ten Global Compact principles are: The following list provides the
summary of some of the code, principle or standard may be found in the
industries contacted by the researcher since they are internationally
acknowledged and expected to be practiced or adopted by the MNCs operating in
India.
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Human rights
1. Businesses should support and respect the protection of internationally
proclaimed human rights within their sphere of influence -
2. Make sure that they are not complicit in human rights abuses.
Labour Standards
1. Businesses should uphold the freedom of association and the effective,
recognition of the right to collective bargaining *
2. The elimination of all forms of forced and compulsory labor.
3. The effective abolition of child labor-
4. Eliminate discrimination in respect of employment and occupation
Environment
1. Businesses should support a precautionary approach to environmental
challenges'
2. Undertake initiatives to promote greater environmental responsibility-
3. Encourage the development and diffusion of environmentally friendly
technologies^
Anti-corruption
1. Businesses should work against all forms of corruption, including extortion
and bribery.
Implementation . To engage in the Compact, companies are asked to have their
chief executive officer send a letter to the United Nations Secretary-General,
expressing a clear commitment to the Compact. Engagement includes (1) taking
concrete steps within the organization to act on the nine principles, (2) sharing
these experiences on the Global Compact website, to contribute toward the
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development of a “comprehensive learning bank”, and (3) advocating publicly
for the Global Compact
2. International Labour Organization : Tripartite Declaration Of
Principles Concerning Multinational Enterprises And Social Policy
Origin The Governing Body of the International Labour Organization adopted
the Tripartite Declaration of Principles concerning Multinational Enterprises and
Social Policy in 1977.
Purpose The Declaration is intended to encourage the positive contribution
which multinational enterprises (MNE’s) can make to economic and social
progress, and to minimize difficulties arising from their operations. It provides
principles regarding the social aspects of multinational enterprises, for the use of
governments, employee organizations, and MNE’s themselves.
General Policies MNE’s should obey national laws, respect international
standards, honour voluntary commitments, and harmonize their operations with
the social aims and structure of countries in which they operate.

/
Employment Promotion Governments should promote foil, productive, freely
chosen employment. MNE’s should endeavour to increase employment
opportunities and standards in host and home countries; give priority to the
employment, development, promotion and advancement of host country
nationals at all levels; and promote employment through use of employment
generating technologies and local sourcing arrangements.
Equality of opportunity and treatment All governments should promote
equality of opportunity in employment.
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Security of employment Governments should take suitable measures to deal
with the employment impacts of MNE’s. MNE’s should strive to provide stable
employment and reasonable notice to government authorities when operational
changes would have major employment effects. Governments, together with
MNE’s, should provide some form of income protection for workers whose
employment has been terminated.
Training Governments should develop national policies for vocational training
and guidance. MNE’s should ensure relevant training is provided to all
employees, to meet the needs of the firm and those of the host country.
Multinationals should also offer opportunities within the enterprise as a whole to
broaden the experience of local management
Conditions of work and life In developing countries, MNE’s should
provide the best possible wages, conditions of work (including health and
safety), and benefits, adequate to satisfy basic needs and within the framework of
government policies. Governments should adopt policies ensuring that lower
income groups and less developed areas benefit as much as possible from MNE
activities. MNE’s should provide upon request information concerning health
and safety standards observed in other countries which are relevant to local
operations.
Industrial relations Workers should have the right to establish and join
organizations of their choosing, and protection against anti-union discrimination.
MNE’s should allow collective bargaining, providing facilities and access to
resources that will allow meaningful negotiation. MNE’s and national enterprises
should consult regularly with employees on matters of mutual concern. All
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workers should have the right to submit grievances without prejudice, and to
have them investigated. MNE’s and national enterprises should work to develop
resolution mechanisms to assist in the prevention and settlement of disputes.
Implementation Implementation of these standards is on a voluntary basis.
3. OECD Guidelines For Multinational Enterprises
Origin. The Guidelines were originally adopted by the Organization for
Economic Cooperation and Development (OECD) in 1976 as one element within
its Declaration on International Investment and Multinational Enterprises . They
were last revised in June 2000.
Purpose. The Guidelines are targeted specifically towards multinational
enterprises from OECD member countries that adhere to the Declaration on
International Investment and Multinational Enterprises. They provide
multinational enterprises - defined here as “companies or other entities
established in more than one country and so linked that they may coordinate their
operations” - with voluntary, non-binding principles and standards of good
business conduct. The Guidelines are intended to help these enterprises
contribute to economic, environmental, and social progress, with a view towards
achieving sustainable development.
Content. Section I of the Guidelines (“Concepts and Principles”) establishes the
broad context for their use and implementation. The remaining sections articulate
standards in nine areas:
1. General Policies. 2. Disclosure 3. Employment and Industrial Relationships
4. Environment 5. Combating Bribery 6. Consumer Interests 7. Science and
Technology 8. Competition 9. Taxation
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Implementation. Implementation of the Guidelines ultimately depends upon the
initiative of the individual companies. To support their efforts, countries adhering
to the Declaration on International Investment and Multinational Enterprises are
required to establish National Contact Points (NCPs). The NCPs promote the
Guidelines, address inquires about them, and hold discussions with all interested
parties. NCPs also come together annually to share experiences and report to the
OECD Committee on International Investment and Multinational Enterprises
(CIME). CIME meets periodically to discuss the Guidelines and to consult with
business advisors, trade unions, and NGOs.
*Some of the other CSR Standards for MNCs/Global Guidelines for different
trades and in different parts of the world are given in Annexure-II (page-434)
Implementation Of CSR Standards
For a code of conduct when adopted by a company, to be effective,
should contain a clear method of implementation and a means to ensure
compliance. While a code will include a statement of principles concerning
business behaviour, this does not necessarily result in the application of those
principles in the firm’s operations. The IOE, for example, has estimated that 80%
of codes are really just statements about general business ethics and contain no
implementation plan.
Monitoring, Reporting & Auditing
While the monitoring of proper code implementation may be done
successfully through internal means, the legitimacy of the code will be
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heightened by external reporting or auditing of code compliance. External
verifiers may be engaged in observing the actual practice of a firm or its
suppliers or subcontractors, and may issue a direct report based on such
observance. Alternatively, a financial audit analogy can be used—that is, the
company itself undertakes the bulk of the information collection, which can then
be turned over to externally accredited experts for an audit.
It may also be possible for code of conduct compliance to be audited and
certified by an audit company established specifically for that purpose. The
independence of both auditors and monitors is critical to the success of voluntary
codes of conduct, as is their ability to judge whether a code has been complied
with or not. The function of auditors and monitors range from basic observation
(e.g. is the factory’s fire door blocked) to more specialized judgments (e.g. are
equal pay practices being adhered to).
There is also the further question of what sanctions may be imposed when
a code is not adhered to. In many cases, no clear sanctions are defined.
Approximately 60% of the company and business association codes in the OECD
inventory do not specify any penalties for non-compliance.
The Benefits Of Voluntary CSR
Although voluntary corporate codes of conduct have been subjected to
much criticism, there are some very clear benefits for those companies that
choose to implement them. There are also benefits for employees who are the
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beneficiaries of code provisions, along with NGOs, suppliers and their
employees, and consumers generally.
More and more consumers are “buying ethically” and are specifically
seeking out goods and services that are produced under fair labour conditions.
Publishing a corporate code of conduct and adhering to it may allow a company
to benefit from ethical purchasing, raise its profile as a responsible producer,
vendor or retailer and allow it to respond genuinely to criticisms of unethical
labour practices. The financial sector’s interest in CSR may at least in part be
explained by a recent Global Compact report undertaken in partnership with the
Swiss government and endorsed by twenty major investment companies. The
report, entitled “Who Cares Wins: Connecting Financial Markets to a Changing
World,” suggests that implementing CSR practices can lead to financial benefits.
A 2003 survey indicated that 78% of European fund managers and analysts
believe that the management of environmental and social risk has a positive
impact on a company’s long-term market value. Another direct benefit of
adhering to a code of conduct is the potential of attracting socially responsible
investment. No longer a fledgling concept, ethical investing is now a mainstream
force. While some estimates are more conservative, the UK Social Investment
Forum has estimated that socially responsible investment assets in the UK alone
increased from 22.7 billion pounds in 1997 to 224.5 billion pounds in 2001.
Finally, major stock exchanges in Europe and North America have now created
indices comprised of ethically responsible companies, such as London’s
FTSE4Good.
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Voluntary CSR Standards Vs Binding International Regulation
In spite of an increased willingness on the part of employers to address
the regulation of labour standards on a voluntary basis, many labour and NGO
groups argue that CSR does not go far enough.
> Practice shows that many codes of conduct do not take the ILO Core
Conventions into consideration. In a study of 140 codes of conduct in the
OECD inventory, there was tremendous variation in the labour issues
covered. Only three issues were dealt with in more than half the codes
surveyed, namely: a general commitment to a reasonable working
environment, an agreement to comply with local laws, and protection against
discrimination or harassment. The ILO Core Conventions were specifically
mentioned in only one in ten codes.
> The other major limitation of existing codes of conduct is a lack of
independent monitoring. Of the 246 codes included in the OECD inventory,
only just over 10% included provisions for independent external monitoring
and only four out of 100 individual company codes had such provisions. It
was with great enthusiasm, then, that labour groups and NGOs welcomed the
August 13, 2003 adoption of the Draft Norms on the Responsibilities of
Trans-national Corporations and other Business Enterprises with Regard to
Human Rights (the “UN Draft Norms”) by the United Nations Sub-
Commission on the Promotion and Protection of Human Rights. The UN
Draft Norms call on companies to “be subject to periodic monitoring and
verification” by the UN or independent agencies, implying a level of
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enforcement that goes significantly further than the voluntary compliance and
reporting encouraged by the Global Compact.
> The proposed UN Draft Norms also go further than voluntary codes of
conduct by stating that all private businesses, not just MNEs, should be
legally required to comply with socially responsible standards. Currently, the
UN Draft Norms are not legally enforceable, but they can be adopted with
binding force by individual nation states or used as a guide in drafting
domestic legislation. On April 16, 2004, the Commission on Human Rights
(“COHR”) affirmed that the UN Draft Norms have no legal standing, but
requested that the High Commissioner of Human Rights “...compile a report
setting out the scope and legal status of existing initiatives and standards
relating to the responsibility of transnational corporations and related
business enterprises with regard to human rights...”
> Employer groups argue that implementing the UN Draft Norms will cause a
negative reaction from the business community at a time when companies are
increasingly engaged in voluntary initiatives to promote responsible business
conduct and that voluntary codes and guidelines, such as the UN Global
Compact and the revised OECD Guidelines, are having a positive effect and
should not be undermined by binding legislation.42 Since 1992, when the
United Nations abandoned negotiations on a Code of Conduct for Trans
national Corporations under pressure from the United States and the United
Kingdom (among others), voluntary codes have seemed the most promising
alternative.
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> Proponents also point out that such codes are far less expensive to administer,
since no bureaucracy is needed to oversee and enforce them. Instead, public
scrutiny is said to do the job.
In view of how strong the profit motive is to businesses, we may wonder
how realistic many of these cross-cultural moral principles are. Until a few
hundred years ago, most philosophers believed that moral principles were pretty
useless unless people believed in God and were afraid that God would punish
them for evil deeds. In more recent times, social contract theorists argue that fear
of punishment from governments is the only thing that will motivate us to follow
moral principles. Perhaps we can generalize from these views and say that we
may not follow even the best moral principles unless an external authority
monitors our actions and punishes us when we go wrong. We can see the moral
responsibility of multinationals in the same light. There are reasonable moral
guidelines that multinationals should follow, such as those offered by Bowie and
De George, which managers of multinationals can probably figure out on their
own. Without an external monitoring authority, though, businesses may set them
aside for reasons of profit. Fortunately, several external mechanisms are already
in place to punish irresponsible multinationals. News organizations, the United
Nations, international human rights groups, and environmental groups all take
special interests in seeing that multinationals live up to high standards. All of
these organizations have limited clout, though, and rely mainly on the threat of
bad publicity to bring about change. But even this is effective since most large
businesses believe that their reputation is their biggest asset.
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In short, while private CSR standards may entail broad participation by
diverse interests, they do not carry the weight or legitimacy of inter
governmental standards in defining substantive social expectations (for instance,
the UN Global Compact). Further, private standards usually fall short of creating
new substantive standards, and a “pick and choose” approach to interpreting
governmental or intergovernmental standards may reduce or even obscure the
full scope of the latter.
International CSR Standard By ISO
The idea of an internationally agreed CSR standard was raised as a
serious possibility for the first time in 2001, with the International Organisation
for Standardisation (ISO) then forming a taskforce to weigh the pros and cons of
an international CSR standard. In June 2004, ISO adopted a decision to develop
an international CSR standard - the objective was to produce “a guidance
document, written in plain language which is understandable and usable by non
specialists” and not intended for use in certification.
The international CSR standard, which is planned for completion by
2007, will sit alongside other ISO voluntary standards such as the ISO 14000 and
9000 series.1 Working on this CSR standard is another illustration of ISO
broadening its scope from merely providing a growing portfolio of technical
standards, to supplying solutions for social and environmental issues in the
global economy. Progress towards developing a generally-agreed definition of
how organisations should understand - and respond to - their social
responsibilities has taken a small but significant step forward in Bangkok at the
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2nd meeting of the International Organisation for Standardisation (ISO) Social
Responsibility Working Group (SRWG). An ISO standard on social
responsibility is well on track for completion by 2008 following a successful
meeting in Bangkok, reports Paul Hohnen.( consultant on sustainable
development and CSR policy issues).
In developing an international CSR standard, ISO has emphasised that it
intends to add value to, and not to replace, existing inter-governmental
agreements with relevance to social responsibility, such as those adopted by ILO
and UN. The work, which will be carried out in a manner consistent with ISO’s
basic principles (including openness and transparency), will be of great interest
to stakeholders such as consumers, workers, NGOs and regulators.
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CHAPTER - 4
Corporate Social Responsibility - Theories and Models
The Corporate Social Responsibility (CSR) field presents not only a
landscape of theories but also a proliferation of approaches, which are accepted,
controversial, complex and unclear. In the literature, there are many theories
from which CSR is borrowed and various models have been developed by
distinguished analysts of CSR. The discussion on and around CSR as an
approach, as an ethical practice whether, to be practiced or not in the interest of
business only or for the achievement of the larger social objectives so on and so
forth that drew the researcher’s attention are presented hereafter.
A recent surge in media and academic interest in Corporate Social
Responsibility (CSR) may suggest that theory of the corporation-society
interface is a recent phenomenon. The reality is that a long list of authors since
Adam Smith, and beyond, has exercised their minds on the subject. Nevertheless
there are numerous unresolved theoretical and empirical issues in CSR and
historically, academics have drawn on several existing theories to explain
critique and study the area. Theories drawn on include: agency theory (Friedman,
1970); stakeholder theory (Freeman, 1984; Donaldson and Preston, 1995);
institutional theory and classical economic theory (Jones, 1995); a resource-
based-view-of-the-firm (Penrose, 1959; Barney, 1991; Wemerfelt, 1984; Hart,
1995); economic models of CSR (Baron, 2001; Feddersen and Gilligan, 2001)
and; systems theory (Preston and Post, 1975) and may be many more according
to the need for establishing relevance with one’s own work.

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The roots of present day CSR may be found as early as in the middle of
the of 19th century. However it was not until the 1960s that the concept of CSR
became much more fully developed concept. The table below illustrates the
journey of ‘social responsibility’ approach for merely economic gains to
incorporating larger social concerns and better quality of life for all.
Figure- 6
Development of CSR
Year Type Characteristics

1859- Corporation is A firm has primarily an economic
1900 responsible to owners responsibility to contribute to the society
and managers only by making profit and produce goods and
services while labor is a commodity to be
bought & sold.
1900- Corporation is A firm’s consideration of employees grows

1950 responsible to owners, more than a mere factor of production as
managers and employees the firm has an obligation to provide a
stimulating work environment and
recognize employee rights as promulgated
by employee unions.
1945- Corporation is A firm must supply complete product

1965 responsible to information to consumers and not engage
owners, managers, in deceptive practices. Firms must not be
employee and other abusive in their pricing policies and market
target environment. unsafe product.
Since Corporation is A firm must not degrade the environment,
1960 responsible to owners, must provide opportunities to minority
onwards managers, employees, groups and actively work to promote social
other target environment justice. A firm is a social institution as
and public at large. much as a legal and economic institution.
Source: Kolk ‘Economics of Environmental Management (2000)
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Hay and Gray (1977) point out that the corporate response to
environmental and social issues has been studied by many pioneering authors,
which several studies viewed as progressing through three stages. The three
stages are profit maximization management, trusteeship management and
“quality of life” management.
1. In the profit maximization management stage, the belief is that the
individual’s drive for maximum profits and the regulation of the
competitive market would interact to create the highest aggregate wealth
for a nation and result in a maximized public good.
The most extreme position on economic CSR and profit maximizing view
was taken by Albert Carr (1996) in his classic Harvard Business Review article
“Is Business Bluffing Ethical?” Carr said that the sole purpose of business is to
turn out a product at a profit. Due to the prevalence of competition and
negotiation, he viewed business people as having a lower set of moral standards
than those in the rest of society have. He argued that business has the impersonal
nature of an isolated game, like poker, in which anything goes within the
accepted rules of the game (legally set by the government and the courts). Thus,
the lower business ethics standards permit things like misstatement and
concealment of pertinent facts during negotiations, lying about one’s age on a
resume, automobile companies’ neglect of car safety—in short, “bluffing,” i.e.,
deception. Those who don’t play by the “rules of the game” will not be very
successful in business. One’s duties to the employer as a loyal agent override her
other moral obligations. Carr’s only standard of social responsibility above
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economics was obedience to the law. Like Carr, Friedman too advocated just
economic values, not social values, which he felt to lie beyond the company’s
mandate to maximize shareholder value while acting legally, ethically, and
(unlike Carr) honestly.
2. During the second stage of Trusteeship management, there was a shift,
from the mere profit motive, to the focus of upholding of equality towards
all the competing claims from stakeholders like customers, employees,
creditors and the community et cetera. Major groups that put more
pressure on business during this period were labor unions and national
governments.
The concept of ‘Trusteeship’, as propounded by Mahatma Gandhi, finds
echo in the concept of ‘Triple Bottom Line’ impact of business. The religion and
charity have always been linked in India with business, and people being
nurtured in a social environment founded on the belief that ‘giving’ is good.
3. During the “Quality of life” management period, some new social
concerns developed. This as a result from the problem that societies
became drenched with goods and services because of the economic
success. These other issues of concern were inequitable distribution of
wealth, air and water pollution, de-graded landscapes et cetera. Enhanced
focus about the inherent trade-offs between economic gains and declining
social and physical environments emerged in every business discussion.
Business was now expected to assume responsibilities beyond the area of
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economic considerations, and attempt to be proactively responsive to
social and environmental issues in order to improve social concerns.
In the traditional paradigm, most corporate bodies viewed CSR as the
extension of a financial input for a humanitarian cause. However, the
contemporary context is more complex: “A company that undertakes activities
aimed at communities (be they philanthropic, social investment or commercial
initiatives) but does not comply with business basics and ethics cannot be termed
socially responsible.” (Harish 8& ShankarV.)
In the corporate social responsibility literature, ‘social responsibility is
often employed as a synonym for a business’s or business person’s ethical
obligations. A business’s or business person’s ordinary responsibilities are to
manage the business and expend business resources so as to accomplish the
specific purposes for which the business was organized. In the case of a business
organized for charitable or socially beneficial purposes (e.g., nonprofit
corporations such as the Red Cross or the Nature Conservancy and United Way
in which the stockholders pass resolutions compelling charitable contributions),
it is a manager’s ordinary responsibility to attempt to accomplish these goals.
Even when a business is organized strictly for profit, it may be part of a business
person’s ordinary responsibilities to expend business resources for socially
beneficial purposes when he or she believes that such expenditures will enhance
the firm’s long-term profitability (e.g., through the creation of customer
goodwill).
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Reference Theories and Corporate Social Responsibility Models:
As several theoretical frameworks have been used to examine CSR, the
concept of CSR is derived from varied concepts and theories such as legitimacy
theory, concepts of social contract and public responsibility, stakeholder theory,
business ethics and corporate citizenship etc (Waldon and Schwartz 1997).
Historically, the normative theories of business ethics grew out of the literature
on corporate social responsibility. Business ethics has come to be considered a
management discipline, especially since the birth of the social responsibility
movement in the 1960s. In that decade, social awareness movements raised
expectations of businesses to use their massive financial and social influence to
address social problems such as poverty, crime, environmental protection, equal
rights, public health and improving education. An increasing number of people
asserted that because businesses were making a profit from using our country’s
resources, these businesses owed it to our country to work to improve society.
Many researchers, business schools and managers have recognized this broader
constituency, and in their planning and operations have replaced the word
“stockholder” with “stakeholder,” meaning to include employees, customers,
suppliers and the wider community.
Theory from Business Ethics: Throughout history there has been argued
whether ethics in business may be more tolerant than social and personal ethics.
Basically there are two different views: the theory of amorality and the theory
of moral unity. The theory of amorality means that business should act amorally
and carry out their business activities without reference to the foil range of
ethical standards and ideals that is present in the society. The theory of moral
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unity holds that business activities should be judged by the general accepted
ethical standard in the society, not by a special set of more tolerant standards
(Steiner & Steiner, 2005).
In the theory of amorality, desire to succeed can be an excuse to neglect
ethical standards, and actions are seen as good if they make money, even if they
brake an ethical standard. Followers to the theory of moral unity, on the other
hand, claims that “Ethical conflicts can not be avoided simply because they arise
in the course of business” (Steiner & Steiner, 2005, p. 183).
Thus, the field of business ethics is trapped between two competing and
flawed conceptions of corporate responsibility. On the one hand is the
shareholder value model, championed by Nobel Prize winning economist Milton
Friedman, which claims that corporations owe positive moral obligations only to
their shareholders. On the other hand is the normative stakeholder theory, which
claims that corporations are morally obliged to secure the interests of a broad
range of groups, of which shareholders are only one. And as with any process
based on the collective activities of communities of human beings (as companies
are) there is no “one size fits all”. In different countries, for different companies
there are different priorities, and values that shape how business act.
Some Of The Theories Against CSR
Theodore Levitt could be credited with setting the agenda for the debate
about the social responsibility of business in his HBR article “The Dangers of
Social Responsibility,” in which he cautions that “government’s job is not
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business, and business’s job is not government” (1958, p. 47). The business was
created for the purpose of increasing its shareholders wealth. The state
sanctioned the enterprise by granting it a corporate charter. It is logically
inconsistent to claim that an artificial creation of the state is more perceptive in
assessing social responsibility than the state’s legally appointed representatives
who were instrumental in the creation of the firm.
Milton Friedman (1970) expressed the same sentiment and added that the
mere existence of CSR was a signal of an agency problem within the firm. An
agency theory perspective implies that CSR is a misuse of corporate resources
that would be better spent on value-added internal projects or returned to
shareholders. Under agency theory, corporate agents are authorized by
shareholders to increase shareholder value. To the extent that corporate agents
exceed that authority, they not only violate their employment arrangement, they
also undercut the free enterprise system through their intervention in social
welfare issues and circumvention of public policy and political processes. It also
suggests that CSR is an executive perk, in the sense that managers use CSR to
advance their careers or other personal agendas. By undertaking actions that are
not consistent with increasing shareholder value opens a venue for individuals to
divert wealth from shareholders to others. This is a road to managerial
corruption.
Shareholder Theory
Shareholder theory was, and in many business circles still is, a way to
understand the responsibilities of corporations to the community at large. Often
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defined as the “Friedman Paradigm” after its proponent, Milton Friedman,
shareholder theory argues that a corporation’s social responsibility is to use its
resources and engage in activities designed to increase its profits so long as it
stays within the rules of the game, which is to say, engages in open and free
competition without deception or fraud.
The neo-classical economist Milton Friedman argued in an oft-quoted
article published in 1970 that “the business of business is business” and that
corporate social responsibility was a “fundamentally subversive doctrine.” He
went on to observe:
[Businessmen who believe that] business has a ‘social conscience’ and
takes seriously its responsibilities for providing employment, eliminating
discrimination, avoiding pollution and whatever else may be the catchwords of
the contemporary crop of reformers.,, are ... preaching pure and unadulterated
socialism.
Friedman’s approach labelled by some as “fundamentalism,” embodies
the rejection of corporate personhood. He dismissed the idea that corporations
are social, and argued that they can have no responsibilities because they are only
“artificial persons.” Only human actors - in this case, executives - can have
responsibilities, and those corporate responsibilities relate exclusively to
shareholders. Friedman argued that spending corporate money on social causes
amounted to taxation - either in the form of lower shareholder returns or higher
consumer prices - and redistribution: (Friedman 1970).
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Friedman’s paradigm has found limited acceptance in the CSR and
Business Ethics literature, as it is said to be based only on economic aspects of
business. It is an ethical egoist approach stating that the corporation is to be
managed for the sole interest ofjust one group needs rejection. Using a utilitarian
approach that the corporation is to be run for the benefit of only the stockholder
group because this will maximize ‘the greatest good for the greatest number’ is
also rejected in the CSR literature.
According to Evan and Freeman (1993), “The corporations are to be
managed under the principle of ‘respect the human dignity’ considering persons
as ends in themselves. The corporation serves at the pleasure of its stakeholders
and none may be sacrificed as a means to the ends of another without
participatory rights”. The logic is that the corporation is forum for stakeholder
interaction. The interest of all stakeholders outweighs those of any one individual
or group. Management acts as a fiduciary to the whole forum. When,
management works on shareholder theory as in case of Enron, just to protect
stockholders’ interest, it reflects absolute disregard for the interest of the other
stakeholder groups. In the case of Enron, as a result the loss was in terms of
destroyed careers of many executives meaning to loss of livelihood for many
others. With this debate, Friedman’s views about the social role of the
corporation hold little currency today.
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Theories that Support CSR
Legitimacy Theory:
According to theory of organizational legitimacy, a business is operating
under a mandate from the society, which could be withdrawn if a business is seen
not to be doing the thing the society expects of it (Woodward et al 2001). CSR is
seen as a contractual obligation a company has towards society. The notion of the
social contract implies that a company operates in a society via an implied social
contract. It is society that has permitted a company to use natural and human
resources and has given it the right to perform its productive function to attain its
power status (Donaldson, 1983). However society’s license for a company to
operate is not permanent and organizational survival and company’s growth are
based upon this type of social contract. Therefore a company must constantly
evolve and adapt to the changing needs and expectations of society and must
meet the test of legitimacy and seek society’s approval (Patten; 1991).
Legitimacy Theory stresses the way company management reacts to
community expectations and may include pollution prevention and remediation
of the physical environment, assurance to health and safety to employees and
customers and those who reside in the nearby communities where products are
manufactured and wastes are dumped, as well as responsibility in relation
consequences of unemployment through technological innovation or plant
closure (Patten 1991). The theory implies that given the growth in community
awareness and concern that companies will take measures to ensure their
activities and performances are acceptable to society and meet society’s wider
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and growing expectations (Walder and Schwartz 1997;Wilmshurst and Frost
2000).
This theory has embodied elements of the Social Contract Theory and the
Stakeholder Theory.
Social Contract Theory
Social contract theory (or contractarianism) is one approach used to
explain the operation of the Stakeholder Theory. It is a concept used in
philosophy, political science, and sociology to denote an implicit agreement
within a state regarding the rights and responsibilities of the state and its citizens,
or more generally a similar concord between a group and its members, or
between individuals. All members within a society are assumed to agree to the
terms of the social contract by their choice to stay within the society without
violating the contract; such a violation would signify a problematic attempt to
return to the state of nature. It has been often noted, indeed, that social contract
theories relied on a specific anthropological conception of man as either “good”
or “evil”. The basic idea is a simple one. What makes some particular system of
collectively enforced social arrangements legitimate is that it is the object of an
agreement for the people who are subject to it. In the case of a literal contract --
say for an exchange of goods — each of the parties has reason to honour the terms
of the contract either in the (bare) fact of having agreed to its terms (under
certain circumstances) or in the fact of its terms being agreeable ones. Similarly,
in the case of a social contract, each of the parties has reason to honour h/er
responsibilities under the terms of the contract -- e.g. to pay taxes, conform to
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laws, participate in decision-making, etc. -- either on account of h/er agreement
to do so, or, perhaps, on account of its being reasonable that s/he do so.
In essence the social contract theory is an agreement whereby people
accept certain restrictions on them for the benefit of society. Often such
restrictions are enforced by a ‘sovereign (or political) ruler’ and usually take the
form of laws. At the heart of social contract theory the simple assumption is that
we can better understand the obligations of key social institutions, such as
business and government, by attempting to understand what a fair agreement or
“contract” between those institutions entails.
Social contract theorists observe that business decisions often impact
large numbers of individuals, groups, or institutions, i.e., stakeholders.
Stakeholders include: (1) any individuals or groups affected by the organization’s
actions, policies, and decisions, (they have a stake in outcome of the company’s
decisions), as well as (2) any individual or group who is vital to the survival and
success of the enterprise (Freeman, 2001).
These theorists see corporations as acting within the boundaries of an
implicit agreement with the rest of society, an agreement that is constantly
evolving. As societal values change, so do the rules by which corporations must
abide. Corporate social contract theorists envision a ‘moral floor’ that limits
corporate actions. They argue that legal constraints alone are insufficient to
ensure a minimum acceptable level of socially responsible behavior by firms.
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They must be supplemented by constraints on corporate behaviour that are built
into the implicit “contract” between the firm and society. (Wexler 2000).
Stakeholder Management Theory
Another theoretical approach that originates largely in the business ethics
literature is the “stakeholder” concept that is an “offspring of social contract
theory,’’and tightly linked with the legitimacy theory. It represents the most
influential set of ideas affecting the way that corporations currently practice
CSR. The stakeholder-management model minimizes the vagueness of the social
contract approach by identifying specific constituents with which the corporation
interacts and to whom it owes responsibility.
Despite the lack of consensus on many aspects of stakeholder theory, and
a lack of sophisticated understanding of the dynamics within stakeholder groups,
stakeholder management theory has proven over time to be of considerable
practical relevance. Over the past 20 years, the stakeholder approach has gained
legitimacy among management theorists and corporate leaders alike, and has
contributed to a “refocusing on a broad set of stakeholder relationships rather
than a narrow set of purely economic relationships.”
The original stakeholder concept appeared in traditional management
through the work of scholars such as Dill(1958) and Aoki(1984) but most of the
elaborations and extensions of the concept has appeared in the business ethics
literature by Freeman (1984), Caroll (1989); Goodpaster (1991). Donaldson and
Preston(1995) have provided a framework for understanding this diffuse
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literature by classifying it into three branches; “normative”, “descriptive” and
“instrumental” branches. The normative stakeholder seeks to justify and identify
recognizable ethical obligations on the part of firms to respond to the legitimate
interest of corporate stakeholders (Kuhn and Shriverl991;Hosseini and
Brenner, 1992). The instrumental approach establishes a framework for
examining the connections, if any between the practice of stakeholder
management and the achievement of various corporate performance goals
(Preston and Sapienza 1990, Preston et al 1991, McGuire et al 1988). The
descriptive stakeholders approach seeks to determine the extent to which firms
can be described accurately in terms of stakeholder concept or to what extent
extant law requires, or is at least supportive of such approaches (Orts 1992).
In the later part of 1990s a decisive stakeholder approach was emphasized
stating ‘a company through its policies and operations can impact upon various
stakeholder groups. The company may encounter demands from them to devote
resources to meet its responsibilities’. (Buchhoiz 1998, MacWilliams and Siegel
2001). Henriques and Sadorsky (1999) classify corporate stakeholders in to four
groups.
1. Organisational- that includes customers, shareholders, suppliers and
employees.
2. Community- local residents and special interest groups.
3. Regulatory- municipalities, regional & central governments, regulatory
systems and
4. Media scholars.
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Stakeholder theory emphasizes the necessity for companies to consider
the needs, interests, and influence those affected by their policies and operations.
Stakeholder management involves taking the concerns of these various
individuals and groups in to account in a process of decision making, so they can
be satisfied to some extent, at least the most of them( Buchholz 1998).
The greatest elaborations of this approach has been in the work of Ed
Freeman ( Freeman and Reed 1983, Freeman 1984, 1991 Freeman and Gilbert
1987, Evan and Freeman 1988, Freeman and Evan 1990).
The concept has now reached a watershed in which certain critical
normative questions need to be resolved before it can achieve foil status as a
specialised “ theory” of business ethics. The issues raised or controversial are....
> What serves to justify a particular claim by a stakeholder as a stakeholder....?
> It is critically unclear that at the time of competing interest of two sets of
stakeholders, whose interest is more legitimate....?
The Stakeholder theory has critiques other than its supporters. Jennings
(1998) asserts that Stakeholder Theory is about business strategy and not
business ethics. She argues that it fails as an ethical theory because it suffers
from “sloppy imprecision” in formulation of how many stakeholders there are or
may be. Kaler(2002) categorises one classification of stakeholder definitions as
being “influencer” based, requiring the stakeholder status is achieved by any
interest group that has capacity to influence the workings of a business. This is a
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very expensive formulation since “ just about anyone in any sort of casual
interaction with a business is going to be capable of influencing ( or being
influenced by ) its operations”. Kaler lists competitor firma and terrorists as
stakeholders under this definition. Jennings,(1998) making fun of such an
expansive definition, lists good friends in Mister Rogers’ neighbourhood and all
the fowls in the air and creatures in the sea and critters in our woodlands”. She
reminds that the other scholars have expressed similarly wild views including
Singer (1993) who includes dogs, Starik (1993) who includes slaves, indigenous
people, women, minorities, the homeless, abused children and political prisoners
- all of whom have been “affected” by corporation actions and therefore, should
be stakeholders and Stone (1972) who, in describing who should have legal
rights, includes a cluster of deciduous trees, a star filled evening, or a pool of
diving whales. Kaler (2002) rejects previous definition and argues that the proper
list is a “claimant definition”, requiring that “stakeholders in a business have to
be people with a role specific, strong or weak, morally legitimate claim to have
their interest served by that business”
Above discussions make the researcher conclude that,
> While the Stakeholder Theoiy is not simple or easy to be accepted by all,
many corporations understand and undertake the corporate community
relations interdependent to business success.
> Stakeholder Theory suggests “common good” of the society at large through,
prime business activity of ‘Profit Making’
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Resource-Based Theory.
Resource-based theory (RBT) has developed in a variety of business
disciplines - from strategic management (and strategic Human Resource
Management - see Wright et al, 2001) to studies of finance and corporate
governance (see Jacoby, 2005). RBT’s utility in the CSR literature lies in its
capacity to explain firstly, why a strong CSR orientation may be a source of
competitive advantage and secondly, why some firms are more committed than
others to CSR issues. RBT essentially posits that competitive advantage in
contemporary organizations often lies in the internal combination of unique firm
resources, capabilities, competencies and tacit knowledge. As Jacoby (2005, p97)
has explained, RBT has the effect of shifting strategic thinking away from pure
market factors towards developing inimitable firm characteristics including
unique human capital or a distinctive corporate culture. In Jacoby’s (2005, p98)
view, ‘the resource-based approach is consistent with a stakeholder orientation’
since it requires firms to make longer term investments in employees and
develop strong relationships with suppliers, customers and communities in which
the firm does business.
RBT is helpful in explaining differing levels of commitment to CSR and
in identifying some of the economic incentives that are encouraging firms to
address CSR seriously.
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Various Models of CSR
The CaroIl’S CSR Model
Carroll (1979, 1991) and Wood (1991) have contributed to building
definitions of the different levels at which organisations respond to their
corporate social responsibilities. These levels of responsibility are defined as
follows:
Levels of Responsibility
1. Economic Level : Organisation produces products and services that
society wants and sells them at a profit.
2. Legal Level: Organisation obeys all the laws and rules applied by the
state. (E.g.tax, regulation, etc.)
3. Ethical Level : Organisation views it as its responsibility to satisfy
society’s expectations of business to go beyond basic legal requirements
and do what is just and fair, and their practice is reflective of this.
4. Discretionary Level : Organisation goes beyond stakeholder views of
what is just and is an exemplary corporate citizen.
Carroll (1979) first delineated the now-familiar four categories of CSR in
a paper on corporate social performance, depicting them as ordered layers which
he labelled economic, legal, ethical and discretionary responsibilities (see Figure
6.1).
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Figure 7.1
Social Responsibility Categories (Carroll, 19
Discretionary
responsibilities L
Ethical
responsibilities L
Legal
responsibilities
Economic
responsibilities
Carroll (1979) explained that the four classes “are simply to remind us
that motives or actions can be categorized as primarily one or another of these
four kinds”. The order and relative weighting was “to suggest what might be
termed their fundamental role in the evolution of importance”. In its first
conception, therefore, the framework took a retrospective developmental
perspective, based on the claim that “the history of business suggests an early
emphasis on the economic and then legal aspects and a later concern for the
ethical and discretionary aspects”.
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Figure 7.2
The Pyramid of Corporate Social Responsibility (Carroll, 1991)
Contribute resources
a good corporate Philanthropic to the community;
citizen Responsibilities improve quality of
Obligation to do what
Ethical is right, just and fair.
Responsibilities I Avoid harm.
\ Law is society’s
Legal \ codification of right
Responsibilities \ and wrong. Play by
\ the rules of the game.
Economic The foundation up

Responsibilities which all others
rest.
Carroll (1991) organized different corporate social responsibilities into a four
layered Pyramid model, called the pyramid of responsibilities. The four different
responsibilities are economical, legal, ethical and philanthropical. The pyramid is
constructed in a way that one kind of responsibility cannot be achieved if another
responsibility located beneath it in the pyramid model is absent. Carroll (1998)
stresses that the pyramid of responsibilities has a global reach, resulting in that
multinational corporations operating in a globalized economy should practice
global corporate citizenship, (cited in Windsor, 2001).
More recently Carroll (2004) implemented the notion of stakeholders in
the pyramid of responsibilities model. Carroll makes clear that economic
responsibility means doing what is required by global capitalism, legal
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responsibilities seize that corporations do what is required by global
stakeholders, ethical responsibility means to do what is expected by global
stakeholders while philanthropic responsibility means to do what is desired by
global stakeholders (CSR Quest, 2006).
Describing and explaining the pyramid of corporate social responsibility
Carroll (1991) notes that it; - - portrays the four components of CSR,
beginning with the basic building block notion that economic performance
undergrads all else. At the same time, business is expected to obey the law
because the law is society’s codification of acceptable and unacceptable
behaviour. Next is business’s responsibility to be ethical. At its most
fundamental level, this is the obligation to do what is right, just and fair, and to
avoid or minimize harm to stakeholders (employees, consumers, the environment
and others). Finally, business is expected to be a good corporate citizen. This is
captured in the philanthropic responsibility, wherein business is expected to
contribute financial and human resources to the community and to improve the
quality of life.”
As Carroll’s CSR Pyramid is both a durable and useful model for defining
and exploring CSR, the criticism of the model also exists in the literature
pertaining to CSR.
Carroll is not consistent in his explanation of why CSR is depicted as a
hierarchy. Sometimes, he suggests it is the way CSR has developed historically
(Carroll, 1979, 1991), other times he uses it to depict an order of dependence
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(Carroll, 1991, 2004), and his empirical evidence implies yet another rationale,
namely that it reflects the relative perceived importance assigned by managers
(Edmondson et al., 1999; Pinkston et ah, 1994, 1996). He even suggests at one
point that the model was simply conceived to make the point that these various
obligations (economic and ethical) should be fulfilled simultaneously (Carroll,
2000).
Although these criticism suggests limitation of his model, he himself has
expressed and cautioned that; “No metaphor is perfect, and the CSR pyramid is
no exception. It is intended to portray that the total CSR of business comprises
distinct components that, taken together, constitute the whole. Though the
components have been treated as separate concepts for discussion purposes, they
are not mutually exclusive and are not intended to juxtapose a firm’s economic
responsibilities with its other responsibilities.” (Carroll 1991:42)
Carroll (1998) appeared to briefly retract his controversial equating of
philanthropy with corporate citizenship and to abandon his pyramid concept by
reconceiving his model as “the four faces of corporate citizenship”, but soon
returned to his original construct (Carroll, 2000). Most recently Carroll (2004)
reproduced his 1991 CSR pyramid once again, but this time attempted to
incorporate the notion of stakeholders, in terms of which economic responsibility
contains the admonition to “do what is required by global capitalism”, legal
responsibility holds that companies “do what is required by global stakeholders”,
ethical responsibility means to “do what is expected by global stakeholders”, and
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philanthropic responsibility means to “do what is desired by global
stakeholders”.
Keith Davis Model
(Davis, L. (1975). “Five Propositions for Social Responsibility.” Business
Horizons June: 19-24.)A model of corporate social responsibility that was
developed by Keith Davis provides five propositions that describe why and how
businesses should adhere to the obligation to take action that protects and
improves the welfare of society and the organization:
> Proposition 1: Social responsibility arises from social power.
> Proposition 2: Business shall operate as an open system, with open receipt of
inputs from society and open disclosure of its operation to the public.
> Proposition 3: The social costs and benefits of an activity, product, or service
shall be thoroughly calculated and considered in deciding whether to proceed
with it.
> Proposition 4: Social costs related to each activity, product, or service shall
be passed on to the consumer.
> Proposition 5: Business institutions, as citizens, have the responsibility to
become involved in certain social problems that are outside their normal
areas of operation.
The areas in which business can become involved to protect and improve
the welfare of society are numerous and diverse. Some of the most publicized of
these areas are urban affairs, consumer affairs, environmental affairs, and
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employment practices. Although numerous businesses are involved in socially
responsible activities, much controversy persists about whether such involvement
is necessary or appropriate. There are several arguments for and against
businesses performing socially responsible activities.
The best-known argument supporting such activities by business is that
because business is a subset of and exerts a significant impact on society, it has
the responsibility to help improve society. Since society asks no more and no less
of any of its members, why should business be exempt from such responsibility?
Additionally, profitability and growth go hand in hand with responsible treatment
of employees, customers, and the community. However, studies have not
indicated any clear relationship between corporate social responsibility and
profitability.
CSR Model By S. Prakash Sethi.
It presents three management approaches to meeting social obligations:
1. The social obligation approach - The social obligation approach, for
example, considers business as having primarily economic purposes and
confines social responsibility activity mainly to conformance to existing laws.
It is being accountable to stockholders and legal requirements.
2. The social responsibility approach - The socially responsible approach sees
business as having both economic and societal goals. It accepts broader
measures of corporate performance that include a social dimension.
3. The social responsiveness approach - Accepts its role as defined by society
and is willing to account for its actions to other groups, including legislators.
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Social responsiveness is the degree of effectiveness and efficiency an
organization displays in pursuing its social responsibilities. The greater the
degree of effectiveness and efficiency, the more socially responsive the
organization is said to be. The socially responsive organization that is both
effective and efficient meets its social responsibilities without wasting
organizational resources in the process. Determining exactly which social
responsibilities an organization should pursue and then deciding how to
pursue them are perhaps the two most critical decision-making aspects of
maintaining a high level of social responsiveness within an organization. That
is, managers must decide whether their organization should undertake the
activities on its own or acquire the help of outsiders with more expertise in
the area.
In addition to decision making, Various approaches to meeting social
obligations are another determinant of an organization’s level of social
responsiveness. A desirable and socially responsive approach to meeting social
obligations involves the following:
> Incorporating social goals into the annual planning process
> Seeking comparative industry norms for social programs
> Presenting reports to organization members, the board of directors, and
stockholders on progress in social responsibility
> Experimenting with different approaches for measuring social performance,
and
> Attempting to measure the cost of social programs as well as the return on
social program investments
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Each of Sethi’s three approaches contains behaviour that reflects a
somewhat different attitude with regard to businesses performing socially
responsible activities. The social responsiveness approach considers business as
having both societal and economic goals as well as the obligation to anticipate
upcoming social problems and to work actively to prevent their appearance.
Organizations characterized by attitudes and behaviours consistent with
the social responsiveness approach generally are more socially responsive than
organizations characterized by attitudes and behaviours consistent with either the
social responsibility approach or the social obligation approach. Also,
organizations characterized by the social responsibility approach generally
achieve higher levels of social responsiveness than organizations characterized
by the social obligation approach. As one moves from the social obligation
approach to the social responsiveness approach, management becomes more
proactive. Proactive managers will do what is prudent from a business viewpoint
to reduce liabilities whether an action is required by law or not.
Ackerman/Bauer Model of Corporate Responsiveness
This model represents three Phases with three levels of management:
CEO, Staff specialists, and Division management.
Concept of social responsiveness emerged as an attempt to escape the
unresolved dilemmas that emerged from the social responsibility debate. The
focus shifted from moral issues to the way corporations respond to social
problems.
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Phase 1: The chief executive officer recognizes a social problem to be
important, develops an up-to-date company policy, and increases the
awareness of the policy’s purpose to operating units that carry out the
policy.
Phase 2: Staff specialist is appointed to examine the issue and coordinate the
corporation’s response to the social problem. A specialist develops
information and mediates between operating divisions and external
organizations, including government.
Phase 3: Division management establishes procedures, reward systems for
compliance, performance measurements, etc. as the policy becomes
institutionalized.
Shortcomings Of Corporate Responsiveness
1. How should resources be allocated in response to social problems?
2. What pattern of responsiveness produces the greatest social betterment?
3. What is the role of government in the social response process?
4. The concept ignores normative “moral” issues in terms of management-
oriented responses without an ethical or moral basis for actions.
CSR Model By Geoffrey P. Lantos (2001)
He proposes three models of CSR: Ethical CSR, Altruistic CSR, and
Strategic CSR.
Ethical Model: CSR is morally mandatory and goes beyond fulfilling a firm’s
economic and legal obligations, to its responsibilities to avoid harms or social
injuries, even if the business might not benefit from this.
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Ethical CSR involves fulfilling the firm’s ethical duties. This is “social
responsibility” in the sense that a corporation is morally responsible to any
individuals or groups where it might inflict actual or potential injury (physical,
mental, economic, spiritual, and emotional) from a particular course of action.
Any organization not adhering to its ethical responsibilities would be acting as a
morally irresponsible agent. Although harms cannot always be avoided, they
should be minimized where feasible. However, experience, anecdotal evidence,
and empirical evidence reveal that in the long run “good ethics is good
business.”(Lantos: 2001).
> First, moral behaviour builds trust and enhances the firm’s reputation, which
attracts customers, employees, suppliers, and distributors, not to mention
earning the public’s goodwill.
> Second, ethical actions minimize the cost of fines and litigation, not to
mention the bad publicity that unethical actions often attract, especially with
today’s instantaneous, global communications and media.
The origins of the first ethical model of corporate responsibility lie in the
pioneering efforts of 19th century corporate philanthropists such as the Cadbury
brothers in England and the Tata family in India.
The pressure on Indian industrialists to demonstrate their commitment to
social progress increased during the Independence movement, when Gandhiji
developed the notion of, ‘trusteeship’ whereby the owners of property would
voluntarily manage their wealth on behalf of the people. Gandhiji’s influence
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prompted various Indian companies to play active roles in nation building and
promoting socio-economic development during the 20th century. The history of
Indian corporate philanthropy has encompassed cash or kind donations,
community investment in trusts, and provision of essential services such as
schools, infirmaries, etc. Many firms, particularly ‘family-run businesses’,
continue to support such philanthropic initiatives.
In India the Tata Group, India’s largest industrial and technological
conglomerate with vast holdings in iron and steel, power utilities, and textiles
was founded by Jamshedji Nusserwanji Tata in 1868. He believed in and set the
path for ‘trusteeship management’ through his company’s business operations.
The Group built the first steel mill in India in 1911 at Jamshedpur, India’s first
planned industrial city. The owners of property would voluntarily manage their
wealth on behalf of the people.
Altruistic or humanitarian CSR suggests genuine optional caring, even at
possible personal or organizational sacrifice. Altruistic (humanitarian,
philanthropic)CSR. involves contributing to the common good at the possible,
probable, or even definite expense of the business. Humanitarian CSR has firms
go beyond preventing or rectifying harms they have done (ethical CSR) to
assuming liability for public welfare deficiencies that they have not caused. This
includes actions that morality doesn’t mandate but which are beneficial for the
firm’s constituencies although not necessarily for the company. Humanitarian
CSR is Carroll’s “fourth face” of CSR— philanthropic responsibilities—to be a
“good corporate citizen” by “giving back” to society, furthering some social
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good, regardless of whether the firm will financially reap what it has spiritually
sown. It demands that corporations help alleviate “public welfare deficiencies”
(Brenkert, 1996, p. 525), such as urban plight, drug and alcohol problems,
poverty, crime, illiteracy, lack of sufficient funding for educational institutions,
inadequate moneys for the arts, chronic unemployment, and other social ills
within a community or society. The business has no “moral obligations,” only
alleged “social obligations” (DeGeorge, 1990, p. 168). Humanitarian CSR is
based on capability responsibility—the company has the resources to be able to
do social good. In some peoples’ thinking it is also founded on role-related
responsibility—companies and their professionals are participants in the social
contract.
Strategic CSR or “strategic philanthropy ” (Carroll, 2001, p. 200) is done to
accomplish strategic business goals—good deeds are believed to be good for
business as well as for society. With strategic CSR, corporations “give back” to
their constituencies because they believe it to be in their best financial interests to
do so. This is “philanthropy aligned with profit motives” (Quester and
Thompson, 2001) -
...Social goals might be profitable in the long run since market forces
provide financial incentives for perceived socially responsible behaviour.
Stakeholders outside the stockholder group are viewed as means to the ends of
maximizing shareholder wealth (Goodpaster, 1996). Such strategic philanthropy
grew popular beginning around the mid-1980s (Jones, 1997), and Carroll (2001)
expects it to grow in the years ahead. The idea is that while being socially
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responsible (and ethical, too) often entails short-run sacrifice and even pain, it
usually ultimately results in long-long-gain.
Expenditures on strategic CSR activities should properly be viewed as
investments in a “Goodwill Bank” (Vaughn, 1999, p. 199) which yields financial
returns (McWilliams and Siegel, 2001). These long-term benefits might not
immediately show up on a firm’s financial statements, as is true of economic
outcomes of many marketing activities, such as marketing research and image-
building advertising.
The Community Service View And Communitarianism
This most-developed version of CSR demands that corporations help
alleviate “public welfare deficiencies,” that is., problems such as drugs, poverty,
crime, illiteracy, under-funded educational institutions, chronic unemployment,
et cetera. (Brenkert, 1996). Whereas the economic, legal, and ethical obligations
are mandatory, philanthropic responsibility is desired by society, that is, it is
optional in that it is not expected with the same degree of moral force (Carroll,
2001) since corporations are not causally responsible for the deficient conditions
they are attempting to rectify. However, there are increasing pressures and rising
expectations for such altruistic CSR because there has been a decline in the
social institutions that have traditionally tied communities together, viz. families,
religious organizations, and neighbourhoods, along with higher mobility, and so
it many people believe that it is business’ obligation to help fill the void (Carroll,
2001).
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According to eomimmitarianism, society is more than the sum of the
individuals in it. The communitarian ethic is based on the view that, in a socially
interdependent society, no manager can act ethically without considering the
claims of others. While managers have direct obligations to stockholders and
employees, they must also recognize other claimants (e.g., customers, suppliers,
and the community itself from which the corporation derives its existence).
Communitarianism is closely related to social contract theory and
emphasizes the social nature of the corporation which exists as the result of a
highly implicit and flexible contract that determines its duties and rights. The
corporation is portrayed as responsible to and subject to the will of society (i.e.,
the people). Both the state and the law are creatures of society. Since, from the
perspective of communitarians, corporations are created by the government
which, in turn, owes its existence to society, it follows that corporations are
actually made by society and are responsible to the public to serve whatever is
deemed to be in the public interest or for the common good. Since the
corporation only exists because of social permission, society is said to be able to
legitimately demand that a corporation perform certain activities that the owners
and managers do not wish to perform.
During the 20th century, society has been reassessing its expectations of
corporations and has pressured them to balance profit-making with social
responsibility. Communitarians believe that corporations should be socially
responsible both out of gratitude for their existence and a moral sense of
reciprocation for benefits received from society, including the purchase of their
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goods and services and the access to, and use of, public goods. In essence, the
corporation is viewed as more like common property than as private property.
Some communitarians even propose that the corporation be brought under
government control to assure the common good.
These are the various views given by some of the legendry and
contemporary thinkers and theorists suggesting universal application of
Corporate Social Responsibility as an approach to socially responsible behaviour
of any organization. These varied approaches to CSR can be directly linked to
dynamic social and political forces shaping the context in which corporations act.
These forces have transformed the role of the corporation in society, and
society’s expectations of its behavior. Understanding these forces may help
corporations respond more effectively to the demands of various stakeholder
groups. Although this fundamental shift in perspective was induced by
globalization, its impact is felt by both national and multinational corporations.
These concerns have resulted in greater scrutiny of corporate activities and
scepticism about their motives. Globalization has reinforced the notion that we
live in a shrinking and increasingly “boundary-less” world, forcing us to rethink
notions about the dividing line between business and society, between what is
“private” and what is part of “the community.”
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CHAPTER - 5
DATA ANALYSIS AND INTERPRETATION
Achieving success in fulfilling commitment to corporate social

responsibility involves many processes in the overall business operations. The
process starts at policy planning goes through implementation and ends at
reporting. We come across many published corporate social responsibility reports
on environmental or health and safety issues by multinational companies, but
they mention nothing about the processes involved that can give some idea about
the intensity or commitment which corporate social responsibility is being
undertaken and adhered to. Hence, the data presented and interpreted here will
help to assess the present corporate social responsibility profile of multinational
companies, their practices for contributing in development cause, various CSR
processes undertaken and adherence to Regulations under CSR global guidelines.
The data is analysed using percentage analysis, chi-square and t-tests. The
analysed data is tabulated and presented using simple frequency tables and bi
variant tables.
I. Following information is presented with percentage analysis.
1. Organisation Profile (Table-1 to Table -7) contents characteristics/

information about the 18 Multinational Companies from which data is
collected.
2. CSR Profile of the Organisation (Table-8 to Table- 28) contents information
about the physical aspects of companies’ CSR characteristics that are present.
3. Respondents’ Profile (Table-29 to Table-37) contents characteristics/
information about 105 respondents/employees from 18 Multinational
companies.
4. CSR Practice Profile (Table- 38 to Table- 46) reflects the Perceptions of the
Respondents on CSR Practices of their company.
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5. CSR Process Performance Profile from Table-47 to Table-59 presents
distribution of respondents by their Perception on thirteen Corporate Social
Responsibility Processes undertaken at their respective companies.
6. CSR Regulations Adherence Profile from Table-60 to Table- 71 presents
distribution of respondents by their perceptions on twelve regulation aspects
of CSR International Guidelines for MNEs in general.
7. International Social Responsibility Profile (Table-72 to Table- 74) presents
distribution of respondents by their opinion on three aspects of CSR with
reference to MNCs.
II. Association between two variables have been established by using Chi-
Square Test (Non-Parametric) and presented in Table-75 to Table-79 and
table 80 presents scores on five CSR Indices drawn for measuring CSR
Undertakings.
III. ‘T-Tests’(Parametric) is applied to understand if the two means of the

uncorrelated variable vary significantly in relation to independent variable
and these independent and dependent variables are:
> Organisation Variables and Perception Indices -Table-81 to Table-100

> Respondents’ Variables and Perception Indices -Table 101 to Table-120
> CSR Profile of Organisation and Perception Indices -Table 101 to Table-120
> Comprehensive Data and its Presentation- Table 121 to Table-128
IV. Product Moment Coefficient of Correlations between the Respondents’

Perception Indices
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1. Organisation Profile.
Table-1 Distribution of the industries by their location
Sr.
Location Frequency Percentage
No.
1 Urban 9 50%
2 Rural 9 50%
Total 18 100 %
Among the responding 18 MNCs, 9 (50%) are located in urban and another 9
(50%) are located in rural areas.
Table-2 Distribution of the industries by their presence in India
Sr.
Establishment Frequency Percentage
No.
1 Before 2000 (OLD) 13 72.22%
2 After 2000 (NEW) 05 27.78%
Total 18 100%
As per the above table, there are 13 (72.22%) industries whose presence as
MNCs in India is not quite recent as compared to 05 (27.78%) industries that are
comparatively newer.
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Table-3 Distribution of the industries by their investment pattern
Sr.
Investment Pattern Frequency Percentage
No.
1 100 % Subsidiary 10 55.56%
2 More than 50 % FDI Investment 08 44.44%
Total 18 100%
As per the sample taken for the present study, only those companies were
selected in which, more than 50% shares of the company are with foreign
industries, groups or individuals. So, the above table shows all 18 (100%)
Industries have more than 50% FDI. Among them 10 (55.56) are 100%- (voting
shares) owned subsidiary of the parent company and 08 (44.44%) have above
50% FDI. Thus, these industries are owned by the companies that are not
originated in India.
Table-4 Distribution of the industries by their mode of entry in India
Sr.
Mode of Entrv Frequency Percentage
No.
1 Joint Ventures 09 50.00%
2 Acquisition & Mergers 05 27.78%
3 Greenfield Project 04 22.22%
Total 18 100 %
Out of 18 Industries, 09 (50%) have entered Indian market through Joint

Ventures, 05 (27.78%) through M & A and 04 (22.22%) are Greenfield projects.
219
Table- 5 Distribution of the industries by their size.
Sr.
Number of Emnlovees Frequency Percentage
No.
1 Less than 500(Big) 11 61.11%
2 501 and above(Small) 07 38.89 %
Total 18 100%
The table above indicates, the size of the company based on its total number of
employees. In 11 (61.11%) industries, less than 500 employees are there and in
07 (38.89%) industries the number of employees is above 500.
The total number of employees represents that group’s total strength of
employees in their multi-location operations within Gujarat.
Table-6 Distribution of the industries by their nature of business
Sr.
Nature of Business Frequency Percentage
No.
1 Engineering 08 44.44%
2 Others 10 55.56%
Total 18 100%
Out of total 18 industries, 08 (44.44%) industries are engineering industries and

10 (55.56%) of industries are from other industries which includes pharma.,
chemical, gas and petroleum, I.T. and logistics.
220
Table-7 Composition of the board of governance.
Sr.
Composition Frequency Percentage
No.
1 Expatriates 118 62.77%
2 Indians 27 37.23%
Total 188 100%
Out of total 188 members in the board of governance across the 18 industries,
118 (62.77%) are expatriate, that is not of Indian origin, where as 27 (37.23%)
are of Indian origin.
221
Board Composition
Nature of Business
T
Size of Industry
Organisation Variables
m
Q_
CD
ZD
O
Investment pattern
r **
Presence in India
Location
o
LO
o o
CO
o
CM
Percentage
2. Corporate Social Responsibility Profile of the Organisations
Table-8 Distribution of industries by their CSR management structure
Sr.
CSR Board / Committee Frequency Percentage
No.
1 At international level only 04 22.22%
2 At national level 02 11.11%
3 Do not have separate Board / Committee 12 66.67%
Total 18 100%
Out of 18 industries, majority, that is 12 (66.67%) do not have any separate CSR
Board or Committee either at international or national level. Among those having
separate structure to discuss CSR 04 (22.22%) have at international level and
only 02 (11.11 %) have it at individual country level.
222
Table-9 Distribution of industries by frequency of CSR discussions
Sr.
Meetinss/vear Frequency Percentage
No.
1 Once 04 22.22%
2 Twice 02 11.11%
3 None (CSR Discussion) 12 66.67%
Total 18 100%
Out of 18 industries, majority, that is 12 (66.67%) do not have any special

/separate meetings called only to discuss CSR agenda. Among those having
special/separate meetings for CSR discussion 04 (22.22%) have it once in a year
and only 02 (11.11%) have the CSR meetings twice in a year.
Table-10 Distribution of industries by employment on CSR
Sr.
CSREmDlovees Frequency Percentage
No.
1 Employed for CSR 00 00.00%
2 Not employed for CSR 18 100%
Total 18 100%
As per the above table, none (00.00%) of the industry has employed a single
employee to carry out specifically CSR function.
223
Table-11 Distribution of industries by CSR Co-ordination
Sr.
Co-ordination Through Frequency Percentage
No.
1 Human Resource Department 14 77.78%
2 Admin./PR. Dept. 01 05.55%
3 A cross-functional Team 03 16.67%
4 Through outside NGO 00 00%
Total 18 100%
As per the above table, CSR Activities are coordinated by Human Resource
Dept, in 14 (77.78%) out of 18 (100%) MNCs under this study. 3 (16.67%)
MNCs have identified a cross- functional team across the organization for CSR,
and only 1 (05.55%) MNC has made its Administration / PR Department
undertake the CSR .None of the MNC has given their CSR to be handled directly
by any outside NGO.
224
Table-12 Distribution of industries by patterns of employees’
involvement in CSR
Sr.
Emnlovees’ Involved in CSR Frequency Percentage
No.
1 Shoulder Dual Responsibility 16 88.89%
2 Willingly rotated on CSR Job 02 11.11%
3 Exclusively work on CSR 00 00%
Total 18 100%
There are 16 (88.89%) industries where employees shoulder CSR over and above
their regular duties. In few that is, 02 (11.11%) industries, employees are
involved on their willingness to work on CSR for a stipulated period or on
special project of their interest None of the industry under the study has
specially appointed staff to work only on CSR.
225
Table-13 Distribution of industries by CSR training of employees
Sr.
CSR Training Frequency Percentage
No.
1 Professionally Qualified 08 44.45%
2 Self learning expected 06 33.33%
3 On the Job Training 04 22.22%
Total 18 100%
In 08 (44.45%) industries, the employees involved in CSR possess some

professional qualification relevant to work on CSR, in 06 (33.33%) industries,
employees learn while working on CSR whenever needed. When the employees
are not professionally qualified, and are involved in CSR related functions, in 04
(22.22%) industries, some guidance or formal training is provided to equip the
employees carry out CSR work smoothly.
Table-14 Distribution of the Industries by Assistance on Employees’ Exit
Multiple Response
Sr.
Assistance on Exit Frequency Percentage
No.
1 Financial Security 18 100%
2 Training to equip for other job 01 0.05%
3 Counseling for personal adjustment 01 05.5%
4 Counseling/assistance to family members 01 05.5%
The figures on the table reveals that all 18 (100%) MNCs under the study extend
help in terms of financial security at the time of an employees exit (in unnatural
226
conditions e.g.YRS) but extending help beyond that is minimal, there is only 1
(05.5%) industry which undertakes extra responsibilities as mentioned in other
three categories of helping the employees at the time of exit.
Table-15 Distribution of the industries on stakeholders identified by them
Multiple Response
Sr.
Stakeholders Frequency Percentage
No.
1 Employees 14 77.77%
2 Customers 11 61.11%
3 Suppliers 09 50.00%
4 Communities 09 50.00%
5 Shareholders 09 50.00%
6 Environment 08 44.44%
7 Government 03 16.66%
8 Competitors 02 11.11%
The table above gives a list of major stakeholders as identified by the responding
industries.
Out of 18 (100%) industries, majority, that is, 14 (77.77%) have identified
Employees as stakeholders, 11 (61.11%) have identified Customers as
stakeholders. 09 (50.00%) have identified Suppliers, Communities and
Company’s Shareholders as stakeholders. Environment as a stakeholder is
identified by 08 (44.44%) of the industries, Government by 03 (16.66%), and
Competitors by 02 (11.11 %) of the industries.
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Table-16 Distribution of the industries by their CSR benchmarks
Sr.
CSR Benchmark Frequency Percentage
No.
1 Reporting 08 44.45%
2 Stakeholder Engagement 04 22.22%
3 Wider accessibility 04 22.22%
4 Management System 02 11.11%
Total 18 100%
Out of 18 (100%) total industries 08(44.45%) have their CSR benchmarked on

Reporting, 04(22.22%) on Stakeholder Engagement and Wider accessibility and,
02(11.11%) on Management Systems.
Table-17 Distribution of the Industries on Basis for Designing CSR.
Sr.
Designing CSR Frequency Percentage
No.
1 Stakeholders’ needs 14 77.78%
Government Guidelines
2 04 22.22%
(host country)
3 Company’s global CSR Framework 03 16.67%
Total 18 100%
From 18 (100%) MNCs, the responses received for their considerations while
designing CSR in the host country, are seen in the above table. Majority of the
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industries, that is 14 (77.77%) refer to their company’s CSR designing as per the
stakeholders’ needs. Other 04 (22.22%) industries refer to the CSR designing in
reference to the host country’s government guidelines. (These 04 industries are
not included in the 14 industries who are included in category one). In the 03
(16.76%) industries, along with community needs of the host country the
company’s global CSR Frame work is also considered for designing CSR.
Table-18 Distribution of the Industries by Adaptation of Code for CSR

Conduct
Sr.
Codes of Conduct Frequency Percentage
No.
1 Company Code 12 66.67%
2 Intergovernmental Codes 03 16.67%
3 Multi Stakeholder Code 02 11.11%
4 Model Codes 01 05.55%
5 Trade Association Code 00 00.00%
Total 18 100%
Out of the 18 (100%) MNCs under the study, 12 (66.67%) have devised their
own company’s Code of Conduct, 03 (16.67%) industries have adopted
Intergovernmental Codes and their CSR conduct is adapted from it, 02 (11.11%)
have Multi Stakeholder Code as the source of CSR conduct, and 01 (05.55%) has
its Code of Conduct based on the Model Code and that is the source of their CSR
conduct. None of the industries has adapted Trade Association Code.
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Table-19 Distribution of the Industries by Adaptation of CSR Regulation
Guidelines
Sr.
CSR Standards Frequency Percentage
No.
1 The Global Compact-1999 05 27.78%
2 The ILO Tripartite Declaration 03 16.76%
3 The Global Sullivan Principles 01 05.55%
4 The OECD Declaration 02 11.11%
5 Not aware of this. 07 38.89%
Total 18 100%
There are various International CSR Standards or Guidelines to regulate CSR

conduct of MNCs in the host countries. Among them, Out of total 18 MNCs,
majority that is 07 (38.89%) industries, respondents were not aware about their
company’s adherence to any such standards. 05 (27.78%) industries adhere to the
Global Compact-1999 declared by United Nations, 03 (16.76%) adhere to the
ILO Declaration, 02 (11.11%) adhere to the OECD Declaration and 01 (05.55%)
adhere to the Global Sullivan Principles.
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Table-20 Distribution of the Industries by CSR Linkages
Multiple Response
Sr.
Linkages between Frequency Percentage
No.
1 CSR & Business Performance 14 77.77%
2 CSR &‘Feel Good’factor 09 50.00%
3 CSR & Community Support 04 22.22%
4 CSR & Customer Loyalty 02 11.11%
5 CSR & Employee Retention 00 00.00%
The above table refers to the 18 (100%) industries’ in terms of their company’s
linkages with CSR. There are 14 (77.77%) industries, which say that CSR has
linkages with the performance of Business. Then for 09 (50%) industries, CSR is
a Feel Good factor, whereas 04 (22.22%) and 02 (11.11%) industries respectively
feel that CSR has its linkages with receiving community support and customer
loyalty. None of the industry could see the linkages between CSR and employee
retention.
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CSR Undertakings through Social Sector Investment
1. Economic Function Area

Table-21 Distribution of the Industries by their CSR Undertakings in.
Economic Function Area
Multiple Response
Sr.
CSR Undertakings Frequency Percentage
No.
1 Paying Fair Wages 14 77.77%
2 Ensuring Employees’ Safety 14 77.77%
3 Producing goods and services that people need 06 33.33%
4
Employment for Disadvantaged groups 06 33.33%
•
5 Vocational /Entrepreneur training 02 11.11%
6 Assistance for Capacity building 00 0.00 %
7 Measures for Poverty Eradication 00 0.00 %
In the above table, the contributions in various economic aspects by 18 MNCs

undertaking is seen.
Paying fair wages and Ensuring Employees’ safety are most common direct
measures that are undertaken by14 (77.77%) industries. The second best
responded contributions are towards Producing goods and services that people
need and Employment for Disadvantaged groups by 06 (33.33%), ( all the 06
responses for Employment for Disadvantaged groups come from rural based
industries). Contributing towards Vocational /Entrepreneur training to the people
of the nearby communities is 02 (11.11%) industries and there is no contribution
made by these MNCs in the areas of Assistance for Capacity building of poor
people in the communities and any other direct Measures for Poverty Eradication
in the host country.
232
2. Social Investment Area
Table- 22 Distribution of the Industries by their Investment on

Education
Multiple Response
Sr.
No.
1 School Enrollment 03 16.67%
2 Sponsorship to needy 03 16.67%
3 Merit awards 03 16.67%
4 Creating own educational institution 01 05.55%
The above table reveals 18 (100%) MNCs’ contributions made in its various
forms. The table shows that 03 (16.67%) industries have undertaken the tasks of
School Enrollment, Sponsorship to needy students and Merit awards to good
students (among the two groups of stakeholders, those are employees’ children
and children of local nearby communities). Only 01(05.55%) industry has built
up its own educational institution that is a school in the rural area.
233
Table-23 Distribution of the Industries by their Investment on Health
Multiple Response
Sr.
No.
1 Maternal and child health care program 04 22.22%
2 Providing lifesaving drugs to needy 04 22.22%
3 HIV / AIDS Control Program 02 11.11%
4 Family welfare/Population control program 01 05.55%
5 Training to healthcare providers 01 05.55%
6 Any particular disease control (Leprosy) 01 05.55%
7 Building and running own hospitals 00 00.00%
8 Rehabilitation of disabled 00 0.00%
The above table reveals the fact about 18 (100%) MNCs contribution in another
area of Social Development through CSR Undertakings, that is Health. In a
multiple response table, there are only thirteen responses over all. The number of
industries contributing in the areas of Maternal and child health care program and
Providing lifesaving drugs to needy are 04 (22.22%). working for the cause for
HIV/ AIDS is by 02 (11.11%) industries. The other three areas, Family
welfare/Population control program, Training to healthcare providers and any
particular disease control areas undertaken by 01 (05.55%) each. None of the
industry presently contributes in the other two areas, namely, building and
running own hospitals and rehabilitation of disabled.
234
Table-24 Distribution of the Industries by their Investment on
Infrastructure
Multiple Response
Sr.
No.
1 Safe drinking water 04 22.22%
2 Provision of housing facilities 01 5.55%
3 Building transportation facilities 01 5.55%
Other civic amenities

4 01 5.55%
(Community latrines)
5 Creating communication services 00 00.00%
The table reveals more or less similar facts about contributions towards
infrastructure development for the benefit of stakeholders of the company. From
the 18 (100%) industries, 04 (22.22%) have looked into safe drinking water
facilities in (other than their employees within the factory premises) the
local/nearby communities. Provision of housing facilities, Building
transportation facilities and providing any other civic amenities in form of
community latrines are the three other areas where 01 (05.55%) industry have
made direct contributions. Creating communication services is the most
neglected area among the 18 MNCs under this study. 07 (38.88%) have not
made any contributions in the development of infrastructure.
235
Table-25 Distribution of the Industries by their Investment on
Constructive leisure time.
Multiple Response
Sr.
No
1 Creating / maintaining recreation services 02 11.11%
2 Supporting sports/ cultural events 02 11.11%
3 Entertainment facilities 01 05.55%
4 Arranging self development activities 01 05.55%
The above table tells about another area of social development, that is
constructive leisure time. Most of these recreation facilities are for the internal
stakeholder i.e. employees. From the 18 (100%) MNCs, 02 (11.11%) industries
have created and maintained recreation services within the factory and
02(11.11%) industries support sports/ cultural events of the employees and their
families. Entertainment facilities in the form of group picnics and self
development activities occasionally by 01(05.55%) industry are undertaken.
236
Table-26 Distribution of the Industries by their Investment in Polity
Multiple Response
Sr.
No.
1 Support to human right perspective 02 11.11%
2 Participation in civic activities 01 05.55%
3 Citizenship training 01 05.55%
4 Generating political awareness 01 05.55%
5 Encouraging volunteerism/volunteers’ training 01 05.55%
The above table tells about Polity, one of the indicators of social development.
This again is strictly in reference to the activities within the factory and with the
employees on occasional basis only. Most of these categories mentioned in the
above table were prepared to bring more clarity to the term Polity. From the 18
MNCs, 02 (11.11%) industries agreed that they support human right perspective.
Participation in civic activities, Citizenship training, Generating political
awareness and Encouraging volunteerism/volunteers’ training are responses
given by only 01(05.55%) industry.
237
Table- 27 Distribution of the Industries by their Investment for Problem
Solving
Multiple Response
Sr.
No.
1 Problems of neighbourhood community 06 33.33%
2 Gender equality 03 16.67%
3 Work for vulnerable groups and their abuse 01 05.55%
4 Awareness campaigns on relevant issues 01 05.55%
5 Rehabilitation of socially stigmatized 01 05.55%
6 Substance Abuse 00 00.00%
The table above indicates some of the typical problems in the existing social
milieu where these 18 MNCs operate. Here 06 (33.33%) industries contribute by
addressing Problems of neighbourhood community, issues of gender equality is
addressed by 03 (16.67%) industries. 01 (05.55%) industries are working in the
area of the needs of the vulnerable groups and their abuse, awareness campaigns
on relevant issues and rehabilitation of socially stigmatized. Substance abuse is a
much neglected area and is not addressed by any of these MNCs.
238
Table-28 Distribution of the Industries by their Investment in Quality Of
Life Area
Multiple Response
Sr.
No.
1 Dealing fairly with employees and customers 10 55.56%
2 Producing high quality of goods 08 44.45%
3 Helping in natural disaster 08 44.45%
4 Efforts to preserve the natural environment 06 33.33%
5 Hardcore business ethics 02 11.11%
6 Undertaking family based interventions 01 05.55% .
7 Supporting local commy .in agricultural devt. 01 05.55%
The above table reveals data regarding 18 (100%) MNCs undertakings in the
area of Quality of life. From the total responding industries 10 (55.56%) deals
fairly with employees and customers, 08 (44.45%) each believes helping in
natural disaster and producing high quality of goods, 06 (33.33%) are for
protection of environment, 02 (11.11%) practices hard core ethics in their
business operations and lastly, 01 (05.55%) is for family based interventions and
supporting local communities for agricultural development at the time of need.
239
3. Respondents’ Profile
The consolidated data of total 105 respondents across the 18 MNCs of Gujarat is
presented below.
Table-29 Distribution of the Respondents by their Age
Sr. Ase GrouDS

Frequency Percentage
No. Mean = 38.12
1 Young 60 57.14%
2 Old 45 42.86%
Total 105 100%
The age range of the 105 respondents is from 26 to 55 years and the mean age
comes to 38.12. On the basis of this mean age 60 (57.14%) respondents fall in
the category of Young group and 45 (42.86%) belong to the Old group.
Table-30 Distribution of the Respondents by their Education Background
Sr.
Qualification Frequency Percentage
No
1 Technical. 41 39.04%
2 Non-Technical 64 60.96%
Total 105 100%
Here the post graduate degrees of the respondents are considered. From total 105
(100%) respondents, 41 (39.04%) possess technical qualifications and 64
(60.96%) are having non-technical qualifications that includes degrees in social
sciences and management.
240
Table-31 Distribution of the Respondents by their Years of Work
Experience.
Sr. Work Experience

Frequency Percentage
No. Mean-14.41
1 Less 53 50.47%
2 More 52 49.53%
Total 105 100%
From total 105 (100%) respondents, 53(50.47%) of respondents’ total years of

work experience ranges is below its mean and consists a group of respondents
with less experience and 52 (49.53%) respondents work experience ranges higher
than the mean and are considered as the group with more work experience.
Table-32 Distribution of the Respondents by_Management Levels.
Sr.
Management Levels. Frequency Percentage
No
1 Middle management 79 75.23 %
2 Top management 26 24.77 %
Total 105 100 %
The employees are from two management levels. From total 105 (100%)
respondents 79 (75.23%) belong to middle management and 26 (24.77%) belong
to the top management.
241
Table-33 Distribution of the Respondents by their areas of Function.
Sr.
Departments Frequency Percentage
No.
1 Production/Operation 37 35.24%
2 Commercial 37 35.24%
3 Human resource 31 29.52%
Total 105 100%
From total 105 (100%) respondents 37 (35.24 %) are from several departments
of production/operation related function, 35 (33.33%) respondents are from
departments concerned with commercial function and 31 (31.43%) are from the
department of Human Resources.
Table-34 Distribution of the Respondents by their Past Experience on

CSR
Sr.
Past Experience Frequency Percentage
No.
1 Have not worked 65 61.91%
2 Have worked 40 38.09%
Total 105 100%
From total 105 (100%) respondents 65 (61.91%) have not worked on CSR
related functions in the past whereas 40 (38.09%) have experience of working
with CSR related function in the past.
242
Table-35 Distribution of the Respondents by their Present association
with CSR
Sr.
Present Association Frequency Percentage
No.
1 Not Associated with CSR 82 78.10%
2 Associated with CSR 23 21.90%
Total 105 100%
From total 105 (100%) respondents 82 (78.10%) are presently not associated
with CSR related work, and 23 (21.90%) are presently associated with CSR
related work.
Table-36 Distribution of the Respondents by their Strategic

Position/Status
Sr.
Status of Respondents Frequency Percentage
No.
1 Planner/Advisor/ Evaluator 16 15.23%
2 Implementer / functionary 7 6.67%
3 Not applicable 82 78.10%
Total 105 100%
From total 105 (100%) respondents 82 (78.10%) do not have any association
with CSR but from remaining, 16 (15.23%) are working on CSR in the capacity
of Planner, Advisor or Evaluator and 7 (6.67%) of respondents are actual
implementers.
243
Table- 37 Distribution of the Respondents by Reception of CSR
incentive.
Sr.
CSR Incentive: Frequency Percentage
No.
1 Monetary * 1 0.95%
2 Award 1 0.95%
3 No Incentive 103 98.10%
Total 105 100%
It is assumed that the respondents may be receiving some incentive to work on CSR
when for most of them it is an ‘add-on’ responsibility. From total 105 (100%)
respondents only 01(0.95%) has received monetary incentive, and 01(0.95%)
received award for community development work. Other 103 (98.10%) have not
received/ heard of any such incentive.
* Rs.35000 only once as an exemplary work on developing Pollution control
measure.
244
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4. CSR Practice Profile
Table-38 Distribution of Respondents by their perception on CSR

Management
Sr.
CSR Treated as Frequency Percentage
No.
1 An investment 61 58.10%
2 Charity 33 31.43%
3 A cost 11 10.47%
Total 105 100%
From total 105 (100%) respondents 61 (58.10%) perceived their companies

treating CSR as an investment, 33 (31.43%) perceived it as charity and 11
(10.47%) perceived it as a cost.
245
Table-39 Methods involved for CSR Undertaking.
Multiple Response
Sr.
Methods Frequency Percentage
No.
1 Volunteerism of employees 39 37.14%
Utilization of organizational resources for

2 38 36.19%
development. Work
Direct financial contributions for civic
3 26 24.76%
projects
4 Raising funds for social cause 14 13.33%
From total 105 (100%) respondents, 39 (37.14%) perceived that their company
contributes in CSR through volunteerism of its employees’ involvement and 38
(36.19%) perceived that the company undertakes CSR by utilizing organizational
resources for development work. Then 26 (24.76%) perceived that their company
makes financial contributions for charitable and civic projects, and 14 (13.33%)
perceived that the company engages in raising funds in the difficult times like
natural disasters.
246
Table-40 Drivers of CSR
Multiple Response
Sr.
CSR Drivers Frequency Percentage
No.
1 A deep sense of social responsibility 60 57.14%
2 Congruence between economics and ethics 33 31.43%
3 Stakeholder’s awareness 27 25.71%
4 Direct pressure from the stakeholder 8 7.61%
From total 105 (100%) respondents 60 (57.14%) perceived that the company has
undertaken CSR due to a deep sense of social responsibility, 33 (31.43%)
perceived it to be a Congruence between economics and ethics, 27 (25.71%)
perceived the compliance due to increasing awareness among stakeholders and, 8
(7.61%) perceived it only as a direct pressure from the stakeholders.
247
Table-41 Barriers to CSR
Multiple Response
Sr.
CSR Barriers Frequency Percentage
No.
1 Lack of visible results 33 31.43%
2 Long gestation period 33 31.43%
3 Willingness of leadership 27 25.71%
4 National policy regulation 18 17.14%
5 Community’s resistance 15 14.28%
6 NGO’ s/Media attention 09 08.57%
From total 105 (100%) respondents 33 (31.43%) perceived lack of visible results
and long gestation period as major barriers in motivating company to undertake
CSR, 27 (25.71%) perceived willingness of the leaders as a barrier to CSR, 18
(17.14%) perceived host country’s policy regulations as a barrier. 15 (14.28%)
perceived resistance of local communities as a barrier and 09 (8.57%) perceived
undue media attention as a barrier.
248
Table -42 Outcome of CSR policy
Multiple Response
Sr.
CSR Policy Outcomes Frequency Per cent
No.
1 A feeling of volunteerism among employees 56 53.33%
2 More employment opportunities for the locals 26 24.76%
3 Loyalty among stakeholders 25 23.80%
4 Positive shifts in ethics paradigm of company. 21 20.00%
Out of total 105 (100%) respondents, 56 (53.33%) respondents perceived that the
company’s CSR Policy has been able to create a feeling of volunteerism among
its employees. 26 (24.76%) respondents perceived that, CSR Policy has been
able to generate more jobs for the locals, 25 (23.80%) respondents perceived its
impact as stimulated stakeholders’ loyalty, and 21(20.0%) perceived that the
CSR Policy has been able to shift company’s ethics levels over a period.
249
Table-43 CSR and Corporate Governance
Multiple Response
Sr.
Factors of Coroorate Governance Frequency Percentage
No.
1 Corporate reputation and goodwill 85 80.95%
9 Relationship with Government 78 74.28%
7 Price for consumers 63 60.0%
8 Stockholders’/ Future investors’ response 49 46.66%
5 Long term profitability 44 41.90%
3 Scope for survival for the firm 43 40.95%
4 Attracting better managerial talent 23 21.90%
2 Job satisfaction among all employees 21 20.0%
6 Strengthning diversity of Indian society 21 20.0%
Socio economic system in which company

10 21 20.0%
operates
In the above table ten factors of Corporate Governance are mentioned. Whether
the company undertakes or does not undertake CSR it has its impact on these
factors. According to majority i.e.85 (80.95%) of the respondents, company’s
reputation and goodwill is affected the most by their company’s present state of
CSR, and 78 (74.28%) feel company’s relations with Government is affected. 63
(60.0%) perceived, it affects price for the consumers whereas 49 (46.66%) feel
the state of CSR affairs affects stockholders’ future response. 44 (41.90%)
perceived that CSR will have effect on long term profitability and 43(40.95%)
feels it influences the scope for survival of the company. Only 23 (21.90%)
perceive that the state of CSR affect their company’s ability to attract better
managerial talent. And 21 (20.0%) equally perceived that CSR has something to
do with job satisfaction among the employees and the socio economic system in
which company operates.
250
CORPORATE SOCIAL RESPONSIBILITY
80.95
Percentage
Corporate Relationship with Price for Investors future Longterm Scope for survival Attractin Better Job Satisfaction Strengthening Socio- eco.system
reputation and Govt. consumers response profitability for firm managerial talent Among Emloyees diversity of Indian in which Company
goodwill Society Operates
Factors of Corporate Governance

Yg.'
Table-44 Stages of CSR (P. Sethi. Model of CStf):''
1
1 :=»*
v' cv
.
w
Sr.
CSR Stases Frequency Percentage
No.
1 Fulfills all the statutory and legal obligations 48 45.71%
2 Meets some of social issues 20 19.05%
Proactive approach towards development of

3 37 35.24%
society.
Total 105 100%
From total 105 (100%) respondents, 48 (45.71%) perceived their company at the
first stage of CSR, that is, fulfilling all the statutory and legal obligations. 20
(19.05%) respondents perceived their company has grown from this first stage
and meets some of social issues and is at the second stage, and lastly, 37
(35.24%) respondents perceived their company has grown from this first and
second stages and has adapted to a proactive approach towards development of
the society in which it operates.
Stages of CSR(Dr.Prakash Sethi)
□ Social Obligations
□ Social Responsibility
□ Social Responsivenes
19.05
251
Table-45 CSR and Stages of Social Responsibility
The stages of Social Responsibility are devised from various readings on

International Social Rsponsibility. They are in ascending order from 1 to 7.
Sr.
CSR is directed to achieve Frequency Percentage
No.
Empowerment of individuals and various
1 34 32.38%
groups
2 Resolving conflict in existing social structure 23 21.90%
3 Building stronger social institutions 10 9.52%
4 Community building 16 15.23%
5 Nation building 09 8.57%
6 Region building 05 4.76%
7 World building 08 7.61%
Total 105 100%
From total 105 (100%) respondents, 34 (32.38%) of respondents perceived that

their company’s CSR is directed towards the first stage of social responsibility,
that is, empowerment of individuals and various groups, 23 (21.90%)
respondents perceived that their company makes efforts at the second stage of
social responsibility, that is, resolving conflict in existing social structure, 10
(9.52%) perceived that their company is able to build stronger social institutions
through its CSR, 16 (15.23%)perceived that their company has undertaken
community building through its CSR, 09 (8.57%) perceived that their company’s
CSR is able to contribute in nation building, 05 (4.76%) perceived that their CSR
is able to contribute in region building, 08 (7.61%) perceived that their
company’s CSR is for World building, that is, the seventh and the last stage of
Social Responsibility.
252
Table-46 Present state of CSR
Sr.
State of CSR Frequency Percentage
No.
1 Most satisfying 47 44.77%
2 Inadequate to stakeholders’ needs 18 17.14%
3 Inadequate to business goals 10 09.52%
4 Doesn’t matter personally 30 28.57%
Total 105 100%
From total 105 (100%) respondents, to 47(44,47%) respondents find present state
of CSR of their company most satisfying, 18 (17.14%) of respondents find the
present state of CSR inadequate to stakeholders’ needs and 10 (9.52%) find it to
be inadequate to meet the long -term business goals, whereas 30 (28.57%) of
respondents are indifferent to company’s CSR activities.
253
5. The Respondents’ Perception on Their Companies’ Commitment
to CSR Processes.
Table-47 Distribution of Respondents by their Perception on CSR

Philosophy/Social Policy
CSR Philosophy here means inbuilt attitudes and considerations a company

projects for undertaking ‘socially responsible’ business operations. In other
words, a business policy that takes care of generating social benefits and does not
focus pure profit maximisation only.
Multiple Response
Agree Undecided Disagree Total

Sr. CSR Philosophy/Social
No Policy Freq. Freq. Freq. Freq.
Percent, Percent. Percent. Percent
Industries are powerful agents 99 05 01 105
1
of positive social change. 94.28% 4.77% 0.95% 100%
Responsibilities & Respect
93 04 08 105
2 for the dignity & interest of
88.58% 3.81% 7.61% 100%
stake holders
Support to government’s
89 10 06 105
3 policies and programs that
84.77% 9.52% 5.71% 100%
promise human devt.
A will to contribute to the
77 08 20 105
4 prosperity and social cohesion
73.34% 7.61% 19.05% 100%
of communities.
Law and market forces are
69 15 21 105
5 not sufficient to guide orgn.’s
65.72% 14.28% 20.0% 100%
social conduct
The statements of the above table contain major aspects covered within Social
Responsibility/Social Policy statements mentioned (in their reports or web sites)
by the MNCs approached for this study. Majority of the respondents have been
254
able to perceive the presence of these philosophical aspects in their respective
companies’ day to day conduct. Out of 105 total respondents 99 (94.28%)
perceived that their companies’ conduct reflect industries as agents of social
change, 93 (88.58%) perceived that the companies’ conduct reflects respect and
dignity for the stakeholders, 89 (84.77%) and 77(73.33%) respectively perceived
that the companies support governments agenda of human development,
prosperity and social cohesion of the local communities. 69 (65.72%) perceived
that their companies social conduct do not get guided only by laws and market
forces.
Compared to the majority, less number of respondents that is 04(3.81%) to

15(14.28%) could not decide on their companies’ conduct on the above aspects
whereas 01(0.95%) to 21(%) of respondents perceived absence of these aspects
in their companies’ day to day conduct.
255
Table - 48 Distribution of Respondents by their Perception on
Business Ethics
Business Ethics is adapting ‘fair’ business practices for the ‘good’ of the
respective stakeholder group. Through various procedures and processes, the
companies reflect its social values in business operations.
Multiple Response

Sr.
Business Ethics
No Freq Freq Freq Freq
Perct Perct. Perct Perct
Fair and competitive returns on
102 03 105
1 the investors investment- 00
97.14% 02.86 % 100%
shareholders 00%
Assisting employees in
developing transferable and 102 03 00 105
2
relevant skills and knowledge. 97.14% 02.86% 00% 100%
Employees
Highest quality products and 95 03 07 105
3
consistent services customers 90.47% 02.86% 6.66% 100%
Effective and prudent use of 88 09 08 105
4
resources. Environment 83.81% 8.57% 07.61% 100%
Ethical practices of the
86 15 105
5 suppliers are preferred in their 04
81.91% 14.28% 100%
selection. Suppliers 3.80%
Fairness and truthfulness
activities like pricing, licensing 85 09 11 105
6
and right to sell 80.96% 08.57% 10.47% 100%
Competitors
Business Ethics at operational level concerns different stakeholders. Through

various procedures and processes, the companies reflect its social values in
business operations. The respondents perceive this in the above table.
256
Highest number of respondents that is 102 (97.14%) perceived that, their
r
respective companies’ apply professional and diligent management to secure fair
and competitive returns on the investors’ investment. Similarly 102 (97.14%)
respondents perceived their companies being most ethical with employees, as
they encourage and assist employees in developing transferable and relevant
skills and knowledge that they require. Then in the descending order, 95
(90.47%) perceived business ethics get reflected in the issues concerning
customers as the company thrives to produce highest quality products and give
consistent services. 88 (83.81%), perceived environmental issues are dealt
ethically by effective and prudent use of resources, 86 (81.91%) respondents
perceived that ethical practices of the suppliers are preferred over the business
motives in their selection and lastly, 85 (88.58%) respondents perceived their
companies being ethical with competitors by seeking fairness and truthfulness in
all the activities like pricing, licensing and right to sell etc.
Compared to the above majority who agreed, less number of respondents that is 0
to 09 (8.57%) could not decide on their companies’ ethical conduct with various
stakeholders whereas 0 to 15(14.28%) of respondents perceived absence of
ethical aspects in their companies’ conduct with stakeholders.
257
Table-49 Distribution of Respondents by their Perception on Corporate
Citizenship
Corporate citizenship is shouldering and sharing of responsibilities of a common
citizen in other social institutions in the course of business activities.
Multiple Response

Sr.
Corporate Citizenship Freq. Freq. Freq. Freq.
No
Perct. Perct. Perct. Perct.
Protects and improve 101 04 00 105
1
environment 96.19% 3.81% 00.0% 100%
Employment of differently 86 00 19 105
2
able. 81.91% 00% 18.09% 100%
Eliminate corruption, crimes 83 10 12 105
3
etc. 79.04% 9.53% 11.43% „ 100%
Business activities free from 81 09 15 105
4
coercion and litigation. 77.14% 8.58% 14.28% 100%
National policy objectives in
74 10 21 105
5 the company’s corporate
70.47% 9.53% 20.0% 100%
planning.
Within the five Corporate Citizenship aspects as mentioned in the above table,
majority of the respondents have perceived that their companies’ perform as
‘Corporate Citizen’. Out of total 105 respondents, 101(96.19%) agreed to witness
their company’s efforts to protect and improve environment for sustainable
development, 86 (81.91%) agreed that the company does support employment of
differently able people where they can be genuinely useful, 83 (79.04%) agreed
to that the company seeks cooperation with other stakeholders to eliminate
corruption, corporate crimes etc, 81 (77.14%) agreed to witness their company’s
business activities free from coercion and avoidable litigation and, 74 (70.47%)
witnessed incorporated national policy objectives in the company’s corporate
planning and, its implementation.
Compared to the majority, less number of respondents that is 0 to 10(9.53%) could
not decide on their companies’ conduct on corporate citizenship issues whereas 0 to
258
21(20%) of respondents perceive absence of these aspects in their companies’
conduct.
Table-50 Distribution of Respondents by their Perception on CSR

Communications
CSR Communication is about making a conscious effort to keep the employees
and the other stakeholders well informed about company’s commitment and
functioning above and beyond government regulation minimums and standard
business ethics.
Multiple Response

Sr.
CSR Communication Freq. Freq. Freq. Freq.
No.
Perct, Perct. Perct. Perct.
Honest and open in sharing 97 03 05 105
1
rightful information 92.38% 2.86% 4.76% 100%
Discloses relevant and true 94 03 08 105
2
information to its investors 89.53% 2.86% 7.62% 100%
Pro-active, transparent
90 09 06 105
3 communication to
85.72% 8.57% 5.71% 100%
stakeholders.
Direct Communication with
82 15 08 105
4 the key audiences about
78.09% 14.28% 7.62% 100%
products.
Acquiring commercial
information by unethical 37 14 54 105
5
means is irresponsible business 35.24% 13.33% 51.43% 100%
practice
The table reveals that 97(92.38%) respondents perceived their companies being
honest and open in sharing rightful information with employees, 94 (89.53%)
respondents perceived that the companies discloses relevant and true information
to its owners / investors, 90 (85.72%) perceived the communication as
transparent and proactive to all its stakeholders, 82(78.09%) perceived their
company holds direct communication with the key audiences to influence their
decision for the company and its products, whereas only 37(35.23%) perceived
259
their companies consider it irresponsible business practice when commercial
information is acquired through unethical means.
The presence or absence of above aspects of Communication process in their
companies could not be decided by 03(2.86%) 15 to (14.28%) respondents
whereas 05(4.76%) to 54(51.43%) of respondents perceived absence of these
aspects in their companies.
Table - 51 Distribution of Respondents by their Perception on CSR

Knowledge
CSR Knowledge, is the planning and implementing CSR Strategies through

conscious efforts among management and various stakeholders.
Multiple Response

Sr.
CSR Knowledge Freq. Freq. Freq. Freq.
No
Perct. Perct. Perct. Perct
Stakeholders are informed
86 10 09 105
1 about the ethical issues in the
81.91% 9.52% 8.57% 100%
business.
Integrate stakeholders through 74 13 18 105
2
revelation of CSR strategies 70.47% 12.38% 17.14% 100%
Educate and train managers, 72 15 18 105
3
and other actors on CSR. 68.58% 14.29% 17.14% 100%
Guidance from local
69 13 23 105
4 communities to identify ‘key
65.72% 12.38% 21.90% 100%
communities and their needs’
Scientific inquiry to suit
66 19 20 105
5 particular region and
62.86% 18.09% 19.05% 100%
community
Among 105 respondents, 86 (81.91%) agreed that the companies keep

stakeholders informed about the ethical issues in the business operation,
74(70.47%) perceived that the companies integrate various stakeholders through
260
informing them about companies5 CSR strategies, 72 (68.58%)perceived that the
companies educate and train managers, workers and others on CSR. 69 (65.72%)
perceived that the companies seek guidance and support from local communities
to identify ‘key communities and their needs’ and, 66 (62.86%) perceived that
the companies make scientific inquiry to plan and implement specific CSR
model for particular region and community. Compared to the majority, less
number of respondents that is 10(9.52%) to 19(18.09%) could not decide on their
companies’ conduct on CSR Knowledge whereas 09(08.57%) to 23 (21.90%) of
respondents perceive absence of these aspects of CSR Knowledge in their
companies.
261
Table - 52 distribution of Respondents by their Perception on
Periodical interaction between business and its stakeholders for social
responsibility issues is an important CSR Process to strengthen CSR outputs.
Multiple Response

Sr.
Stakeholder Dialogue Freq. Freq. Freq. Freq.
No
Perct. Perct. Perct. Perct
Holds regular meetings with 72 11 22 105
1
stakeholders at different stages. 68.58% 10.48% 20.95% 100%
Articulates the CSR more at
72 1 11 22 105
2 the mgt. level than community
68.58% 10.48% 31.43% 100%
level.
Collaborates with Govt, NGO
69 12 24 105
3 for endorsement of CSR
65.72% 11.43% 22.86% 100%
programs
Interacts to understand the
culture of customers, 68 17 20 105
4
integrates it into marketing and 64.77% 16.19% 19.05% 100%
products.
The stakeholders’ suggestions 66 00 39 105
5
are invited and acted upon. 62.86% 00% 37.14% 100%
The respondents’ perceptions on this interaction process as taking place in their

companies are reflected in the above table.
Out of total 105 respondents, 72 (68.58%) perceived that their company’s CSR
strategies are expressed more at management level, and also that, their company
holds regular meetings with various stakeholders at different stages of business,
69(65.72%) perceived their companies working in collaborations with
government and NGOS for the endorsement of CSR programs, 68 (64.77%)
perceived their companies interact with stakeholders to understand the culture of
the customers and then integrate it into marketing and products offered. 66
(62.86%) perceived their companies invite stakeholders, suggestions and act
upon it.
262
Compared to the majority, less number of respondents that is 0 to 17(16.19%)
could not decide on their companies’ conduct on the above aspects of
Stakeholder Dialogue whereas 20(19.05%) to 39(37.14%) of respondents
perceived absence of these aspects in their companies.

Corporate’s Gains
Corporate’s Gain is undertaking CSR with a fundamental motive to help

‘business’ in different ways.
Multiple Response
Agree Disagree Total

Sr. No Corporate’s Gain Freq. Freq. Freq.
Perct. Perct. Perct.
CSR helps in building brand equity
76 29 105
1 and corporate reputation in the
72.38% 27.62% 100%
market.
CSR helps public acceptance and 74 31 105
2
support of the local communities. 70.47% 29.53% 100%
CSR strengthens management - 73 32 105
3
stakeholder (labor) relationship 69.52% 30.47% 100%
CSR helps in profit maximization in 71 34 105
4
the long run 67.62% 32.38% 100%
CSR attracts and retains key 62 43 105
5
employees for the company. 59.05% 40.95% 100%
At times a company undertakes CSR to gain certain benefits from it. From the
above table it is interpreted that out of 105 total respondents, highest number of
respondents that is, 76 (72.38%) perceived that their companies have undertaken
CSR as it helps to gain reputation and brand equity in the market. 74 (70.47%)
perceived CSR to gain public acceptance and community support. 73 (69.52%)
263
perceived that it is to gain strong management-stakeholder relations. 71(67.62%)
perceived CSR as a means to profit maximization in the long run and, 62
(59.05%) respondents perceived that their companies undertakes CSR to attract
and retain its employees on the name of CSR.
There are no respondents who could not decide the purpose of their companies5
CSR undertakings but 29(27.62%) to 43(40.95%) of respondents perceived that
their companies do not undertake CSR for Corporate Gain.

Stakeholders’ Gains
Stakeholders5 Gain is undertaking CSR with a fundamental motive to help

‘society5 at large.
Multiple Response

Sr. No Stakeholders’ Gain
Freq. Freq. Freq.
Perct. Peret. Perct.
78 27 105
1 CSR builds human and social capital
74.28% 25.72% 100%
CSR improves quality of life of 69 36 105
2
people 65.72% 34.28% 100%
CSR safeguards larger societal 65 40 105
3
interests 61.90% 38.10% 100%
CSR restores people’s faith in 60 45 105
4
industrial development 57.14% 42.86% 100%
CSR tackles issues like alleviation of 58 47 105
5
poverty 55.23% 44.77% 100%
From a company’s CSR undertakings, stakeholders/society at large benefit from

it. The purpose of their company to undertake CSR are perceived by 105 total
respondents in the above table. Majority, 78 (74.28.%) of respondents perceived
that the company undertakes CSR to build human and social capital, 69 (65.72%)
264
perceived that CSR is to improve quality of life of people through an organized
effort, 65 (61.90%) perceived that CSR is to safeguard larger societal interests
through ethical business operation, 60 (57.14%) perceived that CSR restores
people’s faith in industrial development and business operations and, CSR for
dealing with some of the national developmental issues like alleviation of
poverty is least perceived by 58 (55.23%) respondents.
On the issues of Stakeholders’ Gain no respondents were unable to decide
whereas 27(25.72%) to 47(44.77%) of respondents perceived that their
companies’ CSR is not undertaken with the purpose of Stakeholders’ Gain.
265
Conflict Management
Conflicting situations are bound to arise in any organization where there are
competing interests of management and stakeholders. Socially responsible
companies manage conflicts proactively to its various stakeholders’ satisfaction.
These situations are managed/avoided through different approaches.
Multiple Response

Sr.
Conflict Management
No Freq. Freq. Freq. Freq.
Proactively providing working
88 10 07 105
1 conditions that respect each
83.81% 9.52% 6.66% 100%
employee’s health and dignity.
Avoiding discriminatory
84 02 19 105
2 practices at all the levels of
80.00% 1.90% 18.09% 100%
business operations.
Listening and acting on the
79 03 23 105
3 stakeholders suggestions and
75.23% 2.85% 21.90% 100%
ideas to their satisfaction
Reflecting institutional concern
for social and ethical issues 76 08 21 105
4
and working responsibly 72.38% 7.61% 20.0% 100%
towards it.
Engaging in good faith
67 30 08 105
5 negotiations with respective
63.81% 28.57% 7.61% 100%
stakeholder
The above table reflects 105 respondents’ perception about the management of
conflicts in their respective companies.
Highest number of respondents, 88 (83.81%) perceive that their company
proactively provides working conditions that respect each employee’s health and
dignity, 84 (80%) perceive their company manages conflict by avoiding
266
discriminatory practices at all levels of business operations, 79 (75.23%) of
respondents perceive that their company listens and acts on stakeholders’
suggestions/ ideas to their satisfaction, help management of conflict, 76(72.38%)
perceive that their company reflects institutional concern for social and ethical
issues and works responsibly towards it to manage conflict. Lastly 67 (63.81%)
perceive that the company engages itself in truthful negotiation with stakeholders
in their interest helps managing conflict.
of Conflict management whereas 07(6.66%) to 23(21.90%) of respondents
267
CSR Decision Making
The process of decision making is crucial for appropriateness and effectiveness

of CSR Undertakings. It reflects genuinity of that company towards CSR.
Multiple Response

Sr.
CSR Decision Making Freq. Freq. Freq. Freq.
No
Regular Participatory appraisal 66 30 09 105
1
with stakeholders 62.86% 28.57% 8.57% 100%
Corporate board undertakes all 60 15 30 105
2
the decisions concerning CSR. 57.14% 14.28% 28.57% 100%
CSR decisions taken on the
57 12 36 105
3 available extra, deployable
54.28% 11.42% 34.28% 100%
resources of the company.
CSR is based on the successful 48 20 27 105
4
model in some other country. 45.72% 19.04% 25.71% 100%
The national and local teams 40 11 54 105
5
are deployed to strategies CSR 38.10% 10.47% 51.42% 100%
The table reflects some of the approaches through which CSR Decisions are
made.
CSR Decisions taken by Participatory appraisal in their companies is perceived
by 66 (62.86%) of the respondents. CSR Decisions taken only by corporate
board (without consulting stakeholders) by their companies is perceived by 60
(57.14%) of respondents. Decisions taken based on available extra deployable
resources is perceived by 57 (54.28%) of respondents. Decisions taken based on
its success story in some other country rather than its relevance in local context is
perceived by 48 (45.72%) of the respondents. National/local people’s
involvement to make decisions on CSR is perceived by 40 (38.10%) of
respondents.
268
11(10.47%) to 30(28.57%) of respondents could not decide on their companies’
conduct on the above aspects Of Decision Making process whereas 09(8.57%) to
54(51.42%) of respondents perceived absence of these aspects in their
companies.

CSR Review
Reviewing CSR has to be an important feature for its continuity and
effectiveness. Reviewing exercise can be undertaken with varied purposes.
Multiple Response

Sr.
CSR Review Freq. Freq. Freq. Freq.
No.
Periodical reviewing of CSR 74 03 28 105
1
is a regular feature. 70.47% 2.85% 26.66% 100%
CSR review to measure
69 06 30 105
2 impact on financial
65.71% 5.71% 28.57% 100%
performance.
Reviewing exercise is for
63 11 31 105
3 monitoring & strengthening
60.00% 10.47% 29.52% 100%
CSR
Impact assessment of CSR to 60 04 41 105
4
expand its social benefits. 57.14% 3.81% 39.05% 100%
Reviews suggest local
60 09 36 105
5 communities’ influence on
57.14% 8.57% 34.29% 100%
future CSR strategies
With the help of above table it is interpreted that out of 105 respondents, 74
(70.47%) perceived that their companies do undertake reviewing of CSR
regularly.,69 (65.71%) perceived that CSR Review is for measuring its impact on
the companies’ financial performance, 63 (60%) perceived that systematic
reviewing exercise is for monitoring and strengthening CSR and, 60 (57.14%)
269
perceived that the impact assessment of CSR is undertaken to expand its social
benefits. Lastly, 60 (57.14%) of respondents perceived that reviewing gave scope
to act upon suggestions made by stakeholders.
Compared to this majority, less number of respondents that is 03(2.85%) to
of CSR Reviewing, whereas 28(26.66%) to 41(39.05%) of respondents perceived
absence of these aspects in their companies.
CSR Audit
CSR Audit helps a company recognize the importance of managing CSR
performance between commitments made and social responsibility objectives set.
A company undertakes it to suit their requirements.
Multiple Response

Sr.
CSR Audit Freq. Freq. Freq. Freq.
No
CSR Audit builds corporate 82 04 19 105
1
accountability. 78.10% 3.81% 18.09% 100%
Improve the strategic planning
81 03 21 105
2 by identifying potential
77.14% 2.86% 20.% 100%
problems.
Reporting of achievements 78 01 26 105
3
based on verified evidence.. 74.28% 0.95% 24.76% 100%
Permits to judge achievements 62 03 42 105
4
for the social cause 59.04% 2.86% 40% 100%
The third party certification of
60 20 25 105
5 voluntary actions is a better
57.14% 19.05% 23.81% 100%
tool.
In the above table out of total 105 respondents, 82 (78.10%) of respondents

perceived that CSR Audit is undertaken by their companies for building image of
accountability, 81 (77.14%) perceived, as it helps improve the strategic planning
by identifying potential problems, 78 (74.28%) perceived that their companies
270
undertake it as it allows reporting on achievements based on verified evidence,
rather than an unsubstantiated claims. 62 (59.04%) perceived that CSR Audit
permits the investors and stakeholders to judge its social performance, 60
(57.14%) respondents perceived that their companies undertake CSR Audit as
the third party certification of voluntary actions is a better tool to judge
company’s CSR Performance.
01(0.95%) to 20(19.05%) of respondents could not decide whereas 19(18.09%)
to 42(20%) of respondents do not agree with these aspects in undertaking CSR
Audit in their companies.
271
CSR Reporting
Through CSR Reporting an organization discloses information in the public
domain. In doing so, stakeholders can track an organization’s impact of
economic function on the state of environmental and social conditions of the
local land. CSR reporting promotes transparency and accountability.
Multiple Response

Sr.
CSR Reporting Freq. Freq. Freq. Freq.
No
Reporting used as a
management tool to build 89 06 10 105
1
corporate image among 84.77% 5.71% 9.52% 100%
business associates.
Reporting to raise creditability 79 05 21 105
2
among stakeholders 75.23% 4.76% 20.0% 100%
Reporting avoids speculations 71 08 26 105
3
on the company’s intentions. 67.62% 7.62% 24.76% 100%
CSR reporting is a responsible 69 10 26 105
4
corporate activity. 65.72% 9.52% 24.76% 100%
CSR reporting along with 55 40 10 105
5
financial reporting as a routine. 52.38% 38.09% 9.52% 100%
From the 105 respondents from the MNCs under this study, 89 (84.77%)
perceived that their company uses CSR reporting as a management tool to build
corporate image among business associates, 79 (75.23%) perceived that CSR
reporting raises creditability among various groups of stakeholders, 71 (67.62%)
perceived that CSR reporting is used to avoid (media’ speculations on the
company’s intentions., 69 (65.72%) perceived that in their companies CSR
Reporting is a genuine responsible corporate activity, 55 (69.14%) of the
respondents perceived that their companies undertake CSR Reporting along with
financial reporting as a routine activity.
272
Compared to these, 05(04.76%) to 40(38.09%) number of respondents could not
decide on their companies’ conduct on CSR Reporting whereas 10(9.52%) to
26(24.76%) of respondents did not agree to these aspects of CSR Reporting.
273
□ Disagree+Undecid
□ Agree
ed
CSR Reporting
CSR Audit
CSR Review
COMMITMENTS TO CSR PROCESSES
CSR Decision Making
Conflict Management
CSR Process Variables

Stakeholders Gain
Corporates Gain
CSR Knowledge
CSR Communication
Business Ethics
CSR Philosophy
Percentage
6. Corporate Social Responsibility Regulations Adherence Profile
There are some common aspects covered under all the International Regulatory
CSR Standards especially drafted to guide MNCs’ conduct while undertaking
business operations in the host countries. The following tables show the
respondents’ perceptions of their respective company’s level of adherence to
these regulatory aspects of global guidelines on the scale of low, moderate and
high level. The perceptions are based on the employees’ observations of their
company’s day-to-day practices.
Table-60 Distribution of Respondents by their Perception on Adherence

to General Policy Regulations
Multiple Response
High Moderate Low Total

Sr.
General Policy Regulations
No. Freq. Freq. Freq. Freq.
Percent. Percent. Percent. Percent.
72 31 02 105
1 National laws and regulations
68.57% 29.52% 1.90% 100%
71 30 04 105
2 Sovereigcn rights of the state.
67.62% 28.57% 3.81% 100%
Commitments made to various 56 46 03 105
3
stakeholders 53.33% 43.81% 02.86% 100%
Development priorities, social
56 43 06 105
4 aim & structure of the host
53.33% 40.95% 05.71% 100%
country.
54 45 06 105
5 Local practices
51.43% 42.86% 5.71% 100%
Relevant international 52 49 04 105
6
standards. 49.52% 46.67% 3.81% 100%
MNCs’ practices are to be based on the above mentioned aspects under the
General Policy Framework. In all the six categories given in the table, from 105
274
total number of respondents majority perceived, their companies compliance at
high and moderate levels, that is,
Obedience to national laws and regulations, 72(68.57%) perceived it to be high,
31 (29.52%) at moderate level.
Respect for Sovereign rights of the state in which their company operates, 71
(67.62%) perceived it to be high, 30 (28.57%) at moderate level.
Honoring commitments made to various stakeholders, 56 (53.33%) perceived it
to be high, 46 (43.81%) at moderate level.
Undertaking activities in harmony with development priorities, social aim and
structure of the host country, 56 (53.33%) perceived it to be high, 43 (40.95%) at
moderate level.
Giving due considerations to local practices, 54 (51.43%) perceived it to be high,
Respecting relevant international standards, 52 (49.52%) perceived it to be high,
Only 1.90% to 05.71% of the respondents perceive it at lower level.
275
to Regulations on Quality of work life
Multiple Response

Sr. Regulations on Quality of
No. work life Freq. Freq. Freq. Freq.
Highest standard of health & 71 31 03 105
1
safety at work place. 67.62% 29.52% 2.86% 100%
Comparable wages, benefits 63 40 02 105
2
and conditions of work. 60.0% 38.10% 1.90% 100%
Equal remuneration for equal 61 40 04 105
3
work to men and women. 58.10% 38.10% 3.81% 100%
Procedures in collective lay
38 51 16 105
4 offs/dismissals from
36.19% 48.57% 15.24% 100%
merges/takeover.
Ensuring benefits to poorest of 35 41 29 105
5
poor as much as possible. 33.33% 39.05% 27.62% 100%
Income protection to when
32 57 16 105
6 employment has been
30.48% 54.29% 15.24% 100%
terminated.
The above table shows six aspects of Quality of work life the companies are
expected to adhere to, wherein, Out of 105 respondents, majority, 71(67.62%)
perceived that the company is providing highest standard of health & safety at
work place and 31(29.52%) perceived it at moderate level.
63 (60 %) of respondents perceived adherence to comparable wages, benefits
and conditions of work observed in the host country to be high and 40 (38.10%)
at moderate level. Equal remuneration for equal work to men and women,
61(58.10%) of respondents perceived it to be high, 40 (38.10%) at moderate
level.
Procedures in collective lay offs/dismissals from merges/takeover, 38 (36.19%)
of respondents perceived it to be high, 51 48.57(%) at moderate level.
276
Ensuring benefits to poorest of poor/lower income group as much as possible,
35 (33.33%) of respondents perceived it to be high, 41 (39.05%) at moderate
level, Income protection to workers whose employment has been terminated, 32
(30.48%) of respondents perceived it to be high, 57(54.39%) at moderate level
Here the respondents who perceive adherence to given aspects of quality of work
life at lower level ranges betweenl.90% to 27.62 %.
277
to Regulations on Employment Conditions
Multiple Response

Sr.
Employment Conditions
Effective abolition of child 85 18 02 105
1
labour 80.95% 17.14% 1.90% 100%
Elimination of all forms of 65 34 06 105
2
forced & compulsory labour. 61.90% 32.38% 5.71% 100%
Manpower planning in
58 38 09 105
3 harmony with national
55.24% 36.19% 8.57% 100%
employment policy.
Non Discrimination in
employment/occupation in 53 45 07 105
4
terms of opportunities & 50.48% 42.86% 6.67% 100%
practices
Empowering Employment 51 50 04 105
5
stability & social security. 48.57% 47.62% 3.81% 100%
Using technologies that 46 48 11 105
6
generate employment. 43.81% 45.71% 10.48% 100%
Conditions of Employment applies to all employers and workers and regulates

employment conditions. The companies conscious of its social responsibility
undertake to enhance its CSR Policy as per the needs of the host country’s
national policies. The above table shows six aspects of Employment Conditions,
wherein, Out of 105 respondents, majority perceived, their companies’ adherence
at high and moderate levels, that is,
Effective abolition of child labour 85 (80.95%) of respondents perceived it to be
high, 18 (17.14%) at moderate level,
Elimination of all forms of forced & compulsory labour.65 (61.90%) of
respondents perceived it to be high, 34 (32.38%) at moderate level,
Manpower planning in harmony with national social development policies
278
58 (55.24%) of respondents perceived it to be high, 38 (36.19%) at moderate
level,
Non Discrimination in employment and occupation in terms of opportunities &
practices 53(50.48%) of respondents perceived it to be high, 45 (42.86%) at
moderate level,
Empowering Employment stability & social security, 51(48.57%) of respondents
perceived it to be high, 50 (47.62%) at moderate level,
Using technologies which generate employment.46 (43.81%) of respondents
perceived it to be high, 48 (45.71%) at moderate level
r
Adherence to Employment Conditions is perceived at lower level by only 1.90 %
to 10.48 % of the respondents.
279
to Regulations on Industrial Relations
Multiple Response

Sr. Regulations on Industrial
No. Relations Freq. Freq. Freq. Freq.
Harmonious, co-existence of 58 47 00 105
1
trade union and Mgt. 55.24% 44.76% 0.00% 100%
Comparable standards of 46 56 03 105
2
Industrial relations. 43.81% 53.33% 2.86% 100%
Right to submit Grievances 45 38 22 105
3
without suffering prejudices. 42.86% 36.19% 20.95% 100%
Support to Representative 42 59 04 105
4
employer’s organization. 40.00% 56.19% 3.81% 100%
Objectivity in examining 40 52 13 105
5
grievances. 38.10% 49.52% 12.38% 100%
Freedom of Associations & 38 65 02 105
6
Right to organization. 36.19% 61.90% 1.90% 100%
37 56 12 105
7 Right to collective bargaining.
35.24% 53.33% 11.43% 100%
Freedom to consultation with
33 57 15 105
8 national and international
31.43% 54.29% 14.29% 100%
organization.
Employers proactively need to implement measures to eliminate the risk of

discrimination and harassment occurring due to several aspects of Industrial
Relations. The above table shows six aspects of Industrial Relations, wherein,
Out of 105 respondents, majority perceived, their companies’ adherence at high
and moderate levels, that is,
Attempting, harmonious, co-existence of trade union and management 58
(55.24%) of respondents perceived it to be high, 47(44.76%) at moderate level,
280
Observing comparable standards of Industrial relations.46 (43.81%) of
respondents perceived it to be high, 56 53.33(%) at moderate level,
Right to Submit Grievances without suffering prejudices, 45(42.86%) of
respondents perceived it to be high, 38(36.19%) at moderate level,
Support to Representative employer’s organization, 42(40%) of respondents
perceived it to be high, 59(56.19%) at moderate level,
Objectivity in examining grievances 40(38.10%) of respondents perceived it to
be high, 52(49.52%) at moderate level,
Freedom of Associations & Right to organization, 38(36.19%) perceived it to be
high, 65(61.90%) at moderate level,
Right to collective bargaining, 37(35.24%) perceived it to be high, 56(53.33%) at
moderate level,
Freedom to consultation with national and international organization by
employer 33(31.43%) of respondents perceived it to be high, 57(54.29%) at
moderate level
Here, 2.86%to 20.95 % of the respondents perceive it at lower level.
281
to Regulations on Human Rights
Multiple Response

Sr. Regulations on Human
No. Rights Freq. Freq. Freq. Freq.
Human right language and 65 40 00 105
1
sprit. 61.90% 38.10% 0.00% 100%
Making sure that company is
60 42 03 105
2 not complicit in human right
57.14% 40.00% 2.86% 100%
abuses.
The internationally proclaimed 56 38 11 105
3
human rights. 53.33% 36.19% 10.48% 100%
Consideration for employment 56 38 11 105
4
rights of the disabled. 53.33% 36.19% 10.48% 100%
Articulating standards of corporate responsibility and accountability, focusing on

international human rights and humanitarian law, principles, and best practices is
obligatory on the part of MNCs.
The above table shows four aspects of Human Right issues, wherein, Out of 105
respondents, majority perceived, their companies’ adherence at high and
moderate levels, that is,
Communication of all types includes human right language and sprit 65(61.90%)
of respondents perceived it to be high, 40 (38.10%) at moderate level,
Making sure that company is not complicit in human right abuses 60(57.14%) of
respondents perceived it to be high, 42(40%) at moderate level,
Supporting & respecting the internationally proclaimed human rights 56(53.33%)
of respondents perceived it to be high, 38(36.19%) at moderate level,
Consideration for employment rights of the disabled, 56(53.33%) of respondents
perceived it to be high, 38(26.19%) at moderate level
Only 2.86% to 10.48 % of the respondents perceived it at lower level.
282
to Environment Regulations
Multiple Response

Sr.
Regulations on Environment
Regular monitoring of
68 37 00 105
1 environmental safety &
64.76% 35.24% 0.00% 100%
controlling objectives/targets.
Contingency plans for
67 29 09 105
2 environmental and health
63.81% 27.62% 8.57% 100%
damages.
Environmental impact of the
61 42 02 105
3 product accounting human
58.10% 40.00% 1.90% 100%
health & safety.
Environmentally friendly 60 45 00 105
4
&meaningful public policy 57.14% 42.86% 0.00% 100%
Company’s actual 58 45 02 105
5
environmental performance. 55.24% 42.86% 1.90% 100%
A precautionary approach to 54 50 01 105
6
environmental challenge. 51.43% 47.62% 0.95% 100%
CSR highlights that economic growth cannot be at the expense of the

environment and society. There is a need for balance and harmony between
economic, social and environmental needs of the host country. To address some
of these environmental concerns, how their companies are performing is known
through 105 respondents, perceptions as,
Regular monitoring and verification of progress toward environmental safety &
controlling objectives or targets is perceived at high level by 68(64.76%) of
respondents and (35.24%) of respondents perceived at moderate level,
Maintain contingency plans for serious environmental and health damages in
emergencies i.e. accidents etc.67 (63.81%) of respondents perceived it to be high,
29(27.62%) at moderate level,
283
Reflecting greater understanding of the environmental impact of the product
accounting human health & safety.61 (58.10%) of respondents perceived it to be
high, 42(40%) at moderate level,
Encouraging the development & diffusion of environmentally friendly &
meaningful public policy 60(57.14%) of respondents perceived it to be high,
Their company’s actual environmental performance 58(55.24%) of respondents
Adapting a precautionary approach to environmental challenge, 54(%)of
respondents perceived it to be high, 50(47.62%) at moderate level
Only 0.95% to 8.57 % of the respondents perceive it at lower level.
284
to Regulations on Consumer Interest
Multiple Response

Sr. Regulations on Consumer
Freq. Freq. Freq. Freq.
No. Interest
Accurate & Clear Information
78 27 00 105
1 regarding content, safe use,
74.29% 25.71% 0.00% 100%
storage etc.
Product ensures all legally
72 32 01 105
2 required standards for health &
68.57% 30.48% 0.95% 100%
Safety of Consumers.
Effective & Transparent
procedure to address & resolve 66 29 10 105
3
consumers’ complaints without 62.86% 27.62% 9.52% 100%
cost or under burden.
Not Engaging in any unfair,
misleading or fraudulent 56 36 13 105
4
practices against consumers’ 53.33% 34.29% 12.38% 100%
interest.
The above table shows four aspects of protecting Consumer interest, wherein,
Out of 105 respondents, majority perceive, their companies’ adherence at high
and moderate levels, that is,
Accurate & Clear Information regarding content safe use, storage etc.
78(74.29%) of respondents perceived it to be high, 27 (25.71%) at moderate
level,
Product Ensure all legally required standards far health & Safety of Consumers.
72(68.57%) of respondents perceived it to be high, 32(30.48%) at moderate
level, Effective & Transparent procedure to address & resolve consumers
complaints without under cost or burden 66(62.86%) of respondents perceived it
to be high, 29(27.62%) at moderate level, Not Engaging in any unfair,
misleading or fraudulent practices which an against consumers interest 56
(53.33%) perceived it to be high, 36(34.29%) at moderate level
Only 0.95% tol2.38 % of the respondents perceives it at lower level.
285
to Regulations on Direct Contribution to local Communities
Multiple Response
Regulations on Direct High Moderate Low Total

Sr.
Contribution to local
Communities
Community investment for 39 46 20 105
1
social development. 37.14% 43.81% 19.05% 100%
Liasioning with local 36 51 18 105
2
governance. 34.29% 48.57% 17.14% 100%
Has Developed mechanism for 35 48 22 105
3
community partnership. 33.33% 45.71% 20.95% 100%
Community involvement for 32 43 30 105
4
capacity building of the needy. 30.48% 40.95% 28.57% 100%
Supporting and Handling 31 52 22 105
5
community issues. 29.52% 49.52% 20.96% 100%
Direct Contribution to local Communities for development input acts as a major

means of improving quality of life of communities. The above table shows five
aspects of direct contribution to local communities, wherein, out of 105
respondents, majority perceive, their companies’ adherence at high and moderate
levels, that is,
Community investment for social development. 39(37.14%) of respondents
Liasioning with local govemance.36 34.29(%)of respondents perceived it to be
high, 51(48.57%) at moderate level
Developed mechanism for community partnership, 35(33.33%) of respondents
Community involvement for capacity building of the needy, 32(30.48%) of
Supporting and Handling community issues, 31(29.52%) perceived it to be high,
52(49.52%) at moderate level
286
Compared to previous aspects, there is a substantial rise, that is, 17.14% to 28.57 •
% of the respondents perceived it at lower level.
Table-68 Distribution of Respondents by their Perception on Adherence to

Regulations on Training
Multiple Response

Sr.
Regulations on Training Freq. Freq. Freq. Freq.
No.
Imparting relevant training
appropriate to company’s needs 57 39 09 105
1
and national employment 54.29% 37.14% 8.57% 100%
policy.
Training for self- employment 49 35 21 105
2
& entrepreneurship. 46.67% 33.33% 20.00% 100%
Adequate Education & training
42 51 12 105
3 in environment health and
40.00% 48.57% 11.43% 100%
safety matters.
Leadership Training for 42 43 20 105
4
stakeholders 40.00% 40.95% 19.05% 100%
Citizenship training to 28 49 28 105
5
concerned stakeholders. 26.67% 46.67% 26.67% 100%
Several groups within and outside an organization have a stake in training

conducted to suit their development needs. Training needs differ according to
various groups.
Imparting relevant training appropriate to company’s needs and national
development policy 57(54.29%) of respondents perceived it to be high, 39
(37.14%) at moderate level,
Training for self employment & entrepreneurship 49(46.67%) of respondents of
Adequate Education & training in environment health and safety matters,
42(40%) perceived it to be high, 51 (48.57%) at moderate level,
287
Leadership Training, 42(40%) of respondents perceived it to be high,
Citizenship training to concerned stakeholders 28(26.67%) of respondents
perceived it to be high, 49 (46.67%) at moderate level
Only 8.57% to26.67 % of the respondents perceived it at lower level.

Adherence to Regulations on Disclosure
Multiple Response

Sr.
Regulations on Disclosure
Clear & Complete information
27 70 08 105
1 on operations to appropriate
25.71% 66.67% 7.62% 100%
stakeholders
Social, Environmental & Risk 38 63 04 105
2
reporting. 36.19% 60.00% 3.81% 100%
Communicating of activities
39 64 02 105
3 influencing sustainable
37.14% 60.95% 1.90% 100%
development outcomes.
Transparency & effectiveness
40 61 04 105
4 of non financial disclosure for
38.10% 58.10% 3.81% 100%
independent verification.
Company’s annual reporting of social impact of their business operation lacks

any agreed framework. The four aspects of disclosure considered under CSR
Global Guidelines are seen in the above table. The 105 respondents’ perception
on their companies level of adherence to these regulations are,
Clear & Complete information an enterprises operations to appropriate
stakeholders 27(25.71%) of respondents perceived it to be high, 70(66.67%) at
moderate level., Social, Environmental & Risk reporting 38(36.19%) of
respondents perceived it to be high, 63 (60%) at moderate level,
288
Communicating of their activities’ influence on sustainable development
outcomes 39(37.14%) of respondents perceived it to be high, 64 (60.95%) at
moderate level, Transparency & effectiveness of non financial disclosure for
independent verification 40(38.10%) of respondents perceived it to be high,
61(58.10%) at moderate level
Only 1.90% to7.62 % of the respondents perceived it at lower level.

to Regulations on Corruption
Multiple Response

Sr.
Regulations on Corruption Freq. Freq. Freq. Freq.
No.
Abstaining from improper
54 39 12 105
1 involvement in local political
51.43% 37.14% 11.43% 100%
activities.
Enhancing public awareness of
48 36 21 105
2 problems of corruption,
45.71% 34.29% 20.00% 100%
bribery.
Combating extortion and
43 50 12 105
3 bribery and making employees
40.95% 47.62% 11.43% 100%
aware about company policy.
Controlling flow of bribe for 36 40 29 105
4
retaining business. 34.29% 38.10% 27.62% 100%
Fostering a culture of ethics 32 64 09 105
5
within the enterprise. 30.48% 60.95% 8.57% 100%
Corruption can take many different forms as mentioned in CSR Global

Guidelines and seen in the above table. The 105 respondents’ perceptions on
their companies adherence to it are,
289
Abstaining from improper involvement in local political activities 54(51.41%) of
respondents perceived it to be high, 39 (37.14%) at moderate level,
Enhancing public awareness of the problems of corruptions & bribery
48(45.71%) of respondents perceived it to be high, 36(34.29%) at moderate
level,
Combating extortion and bribery and making employees aware about company
policy 43(40.95%) perceived it to be high, 50(47.62%) at moderate level,
Flow of bribe for retaining business 36(34.29%) of respondents perceived it to be
high, 40(38.10%) at moderate level,
Fostering a culture of ethics within the enterprise.32(30.48%) of respondents
Only 8.57% to 27.62% of the respondents perceive it at lower level.
290
Table-71 Distribution of Respondents by their Perception on Adherence to
Regulations on CSR Governance
Multiple Response
Sr. High Moderate Low Total

Regulations on CSR
No.
Governance Freq. Freq. Freq. Freq.
Social & Sustainable
38 41 26 105
1 development dialogue with
36.19% 39.05% 24.76% 100%
stakeholders.
Corporate partnership for 37 40 28 105
2
national development. 35.24% 38.10% 26.67% 100%
Overall ethics in business 36 54 15 105
3
conduct. 34.29% 51.43% 14.29% 100%
Emphasizing corporate 32 48 25 105
4
citizenship. 30.48% 45.71% 23.81% 100%
31 58 16 105
5 Social Auditing and Reporting
29.52% 55.24% 15.24% 100%
Accountability in non-finaneial 30 61 14 105
6
issues. 28.57% 58.10% 13.33% 100%
Cross cultural stakeholders 29 53 23 105
7
engagement 27.62% 50.48% 21.90% 100%
Participation in Humanitarian 29 55 21 105
8
Relief. 27.62% 52.38% 20.00% 100%
Corporate Governance is indirectly a trusteeship principle that suggests the need

to protect the interest of all stakeholders and addressing issues of accountability.
The perceptions of 105 respondents on adherence to regulations of Corporate
Governance in the above table are,
The company’s engagement in Social & Sustainable development dialogue with
stakeholders, 38(36.19%) of respondents perceived it to be high, 41(39.05%) at
moderate level,
Corporate partnership for national development 37 (35.24%) of respondents
291
Overall ethical practices in business conduct, 36 (34.29%) of respondents
Emphasizing corporate citizenship values, 32 (30.48%) of respondents perceived
it to be high, 4(45.71 %) at moderate level,
Giving importance to Social Auditing and Reporting 31(29.52%) of respondents
perceived it to be high, 58(55.24%) at moderate level,
Accountability in non-fmancial issues, 30 (28.57%) of respondents perceived it
to be high, 61 (58.10%) at moderate level,
Cross cultural stakeholders engagement, 29 (27.62%) of respondents perceived it
to be high, 53(50.48%) at moderate level,
Participation in Humanitarian Relief, 29 (27.62%) of respondents perceived it to
be high, 55(52.38%) at moderate level
Here, 13.33% to 26.67% of the respondents perceived it at lower level.
292
□ Moderate
■ High
□ Low
Contributions to
Communities
Corporate Governance
Corruption
ADHERENCE TO CSR REGULATIONS
Disclosure
CSR Regulation Variables

Training
Consumer Interest
Environment
Human Rights
Industrial Relations
Quality of Work Life
General Policy
oooooooo
r-~ ro in "3- co <m i-
Percentage
8. Opinions on International Social Responsibility
In the following three tables total twenty one statements divulge the common
conjectures about CSR at global level are grouped in three parts. The first group
is the understanding about what CSR is and should be. The second group is about
the conditions of CSR required at global level and the third group is about their
opinions on MNCs operations in the Host Countries in general. The respondents
opinion are their own and not anyway related to their company’s performance.
Table- 72 Distribution of Respondents by Opinion on CSR Meaning
Multiple Response

Sr.
CSR Meaning Freq. Freq. Freq.
No.
Percent. Percent. Percent.
99 06 105
1 CSR is a link to sustainable development
94.28% 05.72% 100%
CSR means the recognition of the need for

98 07 105
2 business to address the impact of their
93.33% 06.67% 100%
operations
CSR is not about shifting public 92 13 105
3
responsibilities to the private sector 87.62% 12.38% 100%
CSR complements rather than replaces 84 21 105
4
legislations and social dialogue 80.00% 20.00% 100%
CSR is an effective strategy to accelerate 81 24 105

5
economic progress 77.14%% 22.86% 100%
Social responsibility arises from social

76 29 105
6 power which a business organization
72.38% 27.62% 100%
enjoys in a society.
CSR is not an “add on” to core business 72 33 105
7
activities 68.58% 31.43% 100%
The above table enables respondents to opine about meanings of CSR as viewed
by them. Out of 105 total respondents, to 99 (94.28%) respondents it is good to
293
link CSR with the concept of sustainable development. To 98 (93.33%)
respondents CSR means the recognition of the need for business to address the
social, economic and environmental impact of their operations. To 92 (87.62%)
CSR is not about shifting public responsibilities to the private sector but a
partnership. To 84 (80%) respondents CSR complements rather than replaces
legislations and social dialogue. To 81 (77.14%) respondents CSR is an effective
strategy to accelerate economic progress. To 76 (72.38%) respondents Social
responsibility arises from social power which a business organization enjoys in a
society. To 72 (68.58%) respondents CSR is not an “add on” to core business
activities.
294
Table- 73 Distribution of Respondents by their Opinion on condition for
CSR
Multiple Response

Sr.
Pre-conditions for CSR Freq. Freq. Freq.
No.
CSR education and training of managers, 96 09 105
1
workers, and other actors is vital 91.42% 08.58% 100%
CSR generates from the corporate
88 17 105
2 orientation to managerial ethics and
83.81% 16.19% 100%
professionalism
There must be honest & open
87 18 105
3 communication between business and
82.86% 17.14% 100%
society representatives.
CSR stands or falls on transparency and 78 27 105
4
credible validation tools 74.28% 25.72% 100%
CSR practices cannot be developed,
75 30 105
5 implemented & evaluated unilaterally,
71.42% 28.58% 100%
stakeholders need to be involved
Business must consider long & short term
72 33 105
6 social consequences of all business
68.58% 31.43% 100%
activities
52 53 105
7 Profitability is a precondition for CSR
49.53% 50.47% 100%
Corporate Social Responsibility is constantly adapting new paradigms, where the

concepts of stakeholders and socially responsible behaviour are expanding
manifolds. Establishing sound CSR systems needs the involvement of a wide
range of conditions that strike an appropriate balance among them.
From 105 total number of respondents 96 (91.42%) respondents opine that CSR
education and training of managers, workers, and other actors is vital. To 88
(83.81%) respondents, managerial ethics and professionalism is important for
CSR. To 87 (82.86%) respondents, ongoing honest & open communication
between business and its stakeholders is a must. To 78 (74.28%) respondents,
295
transparency and credibility are fundamental and to 75(71.42%) respondents to
be credible, stakeholders’ involvement is essential. To 72 (68.58%) respondents,
considering long term & short-term social consequences of all business activities
is crucial. And finally, in 52 (49.53%) respondents’ opinion Profitability is a pre
condition for CSR.
Table- 74 Distribution of Respondents by their Opinion on MNCs’ CSR

Operations
Multiple Response

Sr.
MNCs’ Operations
No. Freq. Freq. Freq.
Any business is responsible for helping 69 36 105
1
society solve its problem. 65.72% 34.28% 100%
The cost of CSR should be passed on to 51 54 105
2
consumers. 48.58% 51.42% 100%
CSR is forced by activist groups critical of 45 60 105
3
MN operations & LPG policy 42.86% 57.14% 100%
44 61 105
4 CSR regulations accelerates global poverty
41.90% 58.10% 100%
MNCs are not interested in creating benefits 38 67 105
5
without being paid for it. 36.19% 63.81% 100%
MNCS major concern is “returns” on social 33 72 105
6
program investments 31.42% 68.58% 100%
MNCs are often complicit in human rights 28 77 105
7
abuse. 26.67% 73.33% 100%
There is an ongoing global debate on certain issues associated with CSR and
particularly where MNCs are concerned. Some of these speculation with the
respondents’ opinions on them is given in the above table.
296
Out of total 105 respondents 69 (65.72%) believe that if a business possesses
expertise to solve a social problem with which it may not be directly associated,
it should be held responsible for helping society solve that problem.
51 (48.58%) feels that the cost of maintaining socially desirable activities within
business should be passed on to consumers.
45 (42.86%) respondents believe that MNCs do not willingly undertake CSR but
CSR is forced on them by activist groups hostile /critical of multinational
operations and LPG policy, according to 44 (41.90%) respondents CSR is likely
to spread costly regulations worldwide which accelerates global poverty,
according to 38 (36.19%) respondents, MNCs are profit maximizing and thus
naturally are not interested in creating benefits for others without being paid for
it, 33 (31.42%) respondents believe that MNCs’ only major concern is “returns”
on social program investments.
And 28 (26.67) respondents believe that MNCs are often complicit in human
rights abuse & ought to be held accountable for their actions.
297
Association between Variables
Table- 75 Index of CSR Profile of Organisation & Location of the

Organisation.
Chi-Square Test against Equality Hypothesis
Intensity / Location High Low Total
Rural
4 5 9
Observed
Expected 4.50 4.50
Urban
5 4 9
Observed
Expected 4.50 4.50
Total 9 9 18
Chi-Square Value= 0.556, DF= 1 Not Significant at 0.05 Level
From the above table it is observed that the observed frequency for high and low
in the Index of CSR Profile with respect to the Location of the Organisation, i.e.
Rural is 4 and 5 respectively. It is also found that the high and low Index of CSR
Profile with respect to the, Location of the Organisation, i.e. Urban is 5 and 4
respectively. And the Chi Square Value against Equality Hypothesis is found to
be 0.556, which is found not to be significant at 0.05 levels with DF-1.
Hence it can be said that there is no relationship between Location of the
Organisation and CSR Profile of the organization.
298
Table-76 Index of CSR Profile of Organisation & Age of the
Organisation

Intensity/
High Low Total
Age of the Organisation
Before 2000(01d)
8 5 13
Observed
Expected 6.50 6.50
After 2000(New)
1 4 5
Observed
Expected 2.50 2.50
Total 9 9 18
Chi-Square Value = 2.692 DF= 1 Not Significant at 0.05 Level
in the Index of CSR Profile with respect to the Age of the Organisation, i.e.
Before 2000(01d) is 8 and 5 respectively. It is also found that the high and low
Index of CSR Profile with respect to the, Age of the Organisation, i.e. After
2000(New) is 1 and 4 respectively. And the Chi Square Value against Equality
Hypothesis is found to be 2.692, which is found not to be significant at 0.05
levels with DF-1.
Hence it can be said that there is no relationship between Age of the
299
Table-77 Index of CSR Profile of Organisation & Mode of MNCs’Entry
Intensity/
High Low Total
Mode of Entry
Joint Venture
5 4 9
Observed
Expected 4.50 4.50
Other Mode
4 5 9
Observed
Expected 4.50 4.50
Total 9 9 18
Chi-Square Value = 0.556, DF= 1 Not Significant at 0.05 Level
in the Index of CSR Profile with respect to the mode of MNCs entry in to Indian
markets, i.e. through joint ventures is 5 and 4 respectively. It is also found that
the high and low Index of CSR Profile with respect to the mode of MNCs entty
in to Indian markets, i.e. through ‘Other mode’(M&A) is 4 and 5 respectively.
And the Chi Square Value against Equality Hypothesis is found to be 0.556,
which is found not to be significant at 0.05 levels with DF-1. Hence it can be said
that there is no relationship between Mode of MNCs’ Entry in to Indian Market
and CSR Profile of the organization.
300
Table-78 Index of CSR Profile of Organisation & Size of th tnisation
%K
Y
■y
Intensity /
High Low Total
No. of Employees
Less than 500(small)
2 4 6
Observed
Expected 3.00 3.00
More than 500(Big)

7 5 12
Observed
Expected 6.00 6.00
Total 9 9 18
Chi-Square Value= 1.167, DF= 1 Not Significant at 0.05 Level
in the Index of CSR Profile with respect to the size of the organization, i.e. small
with less than 500 employees is 2 and 4 respectively. It is also found that the
high and low Index of CSR Profile with respect to the size of the organization, i.e
‘Big’ with more than 500 employees, is 7 and 5 respectively. And the Chi Square
Value against Equality Hypothesis is found to be 1.167, which is found not to be
significant at 0.05 levels with DF-1.
Hence it can be said that there is no relationship between Size of the
301
Table-79 Index of CSR Profile of Organisation & Nature of Business
Intensity /
High Low Total
Nature of Business
Engineering
3 5 8
Observed
Expected 4.00 4.00
‘Others’
6 4 10
Observed
Expected 5.00 5.00
Total 9 9 18
Chi-Square Value = 1.463, DF= 1 Not Significant at 0.05 Level
in the Index of CSR Profile with respect to the nature of business i.e. Engineering
is 3 and 5 respectively. It is also found that the high and low Index of CSR
Profile with respect to the nature of business i.e ‘others’ is 6 and 4 respectively.
And the Chi Square Value against Equality Hypothesis is found to be 1.463,
which is found not to be significant at 0.05 levels with DF-1.
Hence it can be said that there is no relationship between Nature of Business and
CSR Profile of the organization.
> Above tables 75 to 79 suggest that the Corporate Social Responsibility

Profile Index and the organisation variables do not have any significant
association.
302
Table-80 Profile Indices of Variables
Sr. No. of Dist Max. Min.

Indices Mean SD SE
No. ribution Score Score
CSR Profile
1 Index of 18 124 25 72.22 27.14 6.58
Organisation
CSR Practice
2 105 237 40 20.75 5.931 0.578
Index
CSR Process
3 105 426 160 342.76 43.34 4.229
Index
CSR
Regulations
4 105 201 92 153.96 21.889 2.136
Adherence
Index
International
Social
5 105 104 58 73.37 11.49 1.122
Responsibility
Index
There are five indices derived for the purpose of measuring intensity of
commitments for CSR Undertakings by the MNCs of Gujarat. These indices are:
1. CSR Profile Index of Organisation- This is drawn by ranking the
categories considering physical aspects such as structure, staff, meetings
held, programmes undertaken by the company etc. that is vital in reference
to CSR.
2. CSR Practice Index- CSR Practice Index is drawn by ranking the categories
of employees’ perceptions about present Social Responsibility practices
adapted by their respective companies.
3. CSR Process Index- It is drawn on five point scales of the perceptions of
the employees about the CSR processes involved in undertaking Social
Responsibility at their respective companies.
303
4. CSR Regulations Adherence Index- It is drawn on three point scales of the
perceptions of the employees of their companies’ levels of adherence to
twelve regulations commonly mentioned under number of CSR Global
Guidelines.
5. International Social Responsibility Index - Irrespective of their
companies’ practices, the respondents own opinion on Social Responsibility
with special reference to Multinational companies. The index is drawn on
five point scale.
304
In the following tables the results are based on the respondents’ (MNCs’
employees) perceptions about CSR Undertakings of their respective
companies.
9. Organisation Variables and Perception Indices.
Table- 81 Location of Organisation and CSR Practice Index
Uncorrelated T-Test
Dep. Variable: Index of CSR Practice
Indep. Variable: Location of Organisation
Sr. Location Number Mean SD SE T-Value DF
No.
.1 Rural 43 20.16 6.41 0.98 0.83 103
2 Urban 62 21.16 5.54 0.70
From the above table it is found that 43 respondents are from Rural and 62
respondents are from Urban Industry. The mean and SD for Index of perception
about CSR Practice are found to be 20.16 and 6.41, and 21.16 and 5.54
respectively for Rural and Urban Industries. The SE for the same respectively for
Rural and Urban group is found to be 0.98 and 0.70. The T-Value is found to be
0.83 which is found ‘not significant at 0.05 probabilities with DF-103. This
indicates that there is no significant difference in the means of Index of CSR
Practices of the rural and urban based companies.
305
Table-82 Location of Organisation and CSR Process Index
Uncorrelated T-Test
Dep. Variable: Index of CSR Processes
No.
1 Rural 43 345.67 45.49 6.94 0.57 103
2 Urban 62 340.71 41.67 5.29
From the above table it is found that, 43 respondents are from Rural and 62
about CSR Processes are found to be 345.67 and 45.49, and 340.71 and 41.67
respectively for Rural and Urban Industries. The SE for the same respectively for
Rural and Urban group is found to be 6.94 and 5.29. The T-Value is found to be
0.57 which is found ‘not significant at 0.05 probabilities with DF-103. This
Processes of the rural and urban based companies.
306
Table- 83 Location of Organisation and CSR Regulations Adherence
Index
Uncorrelated T-Test
Dep. Variable: Index of CSR Regulations Adherence
No.
1 Rural 43 158.19 23.58 3.60 1.62 103
2 Urban 62 151.03 20.12 2.56
about Adherence to CSR Regulations are found to be 158.19 and 23.58, and
151.03 and 20.12 respectively for Rural and Urban Industries. The SE for the
same respectively for Rural and Urban group is found to be 3.60 and 2.56. The
T-Value is found to be 1.62 which is found ‘not significant at 0.05 probabilities
with DF-103. This indicates that there is no significant difference in the means of
Index of CSR Regulations of the rural and urban based companies.
307
Table- 84 Location of Organisation and International Social
Responsibility Index
Uncorrelated T-Test
Dep. Variable: Index of International Social Responsibility
No.
1 Rural 43 80.07 11.03 1.68 0.53 103
2 Urban 62 78.89 11.79 1.50
respondents are from Urban Industry. The mean and SD for Index of
International Social Responsibility are found to be 80.07 and 11.03, and 78.89
and 11.79 respectively for Rural and Urban Industries. The SE for the same
respectively for Rural and Urban group is found to be 1.68 and 1.50. The T-
Value is found to be 0.53 which is found ‘not significant at 0.05 probabilities
with DF-103. This indicates that there is no significant difference in the means of
Index of opinions about International Social Responsibility from the employees
of the rural and urban based companies.
> From the tables 81,82,83,& 84 it can be said that the means in Indices of the
employees of rural and urban based industries do not differ significantly in
the case of CSR Practices, CSR Process Performance, Adherence to CSR
Regulations and their opinion about International Social Responsibility, and it
reflects that there is no significantly different observations regarding CSR
Undertakings by the employees of rural and urban based companies.
308
Table- 85 Nature of Business and CSR Practice Index
Uncorrelated T-Test
Indep. Variable: Nature o International Social Responsibility f Business
Sr. Nature of Number Mean SD SE T-Value DF
No. Business
1 Engineering 56 21.84 5.39 0.72 2.03 103
2 Others 49 19.51 6.27 0.90
From the above table it is found that, 56 respondents are from Engineering
Industries and 49 respondents are from ‘Others’ Industries. The mean and SD for
Index of perception about CSR Practice are 21.84 and 5.39, and 19.51 and 6.27
respectively for Engineering and Other Industries. The SE for the same
Engineering and Other Industries is found to be 0.72 and 0.90 respectively. The
T-Value is found to be 2.03 which is found significant at 0.05 probabilities with
DF-103. This indicates that there is a significant difference in the means of Index
of CSR practices of Engineering and ‘Other’ group of companies.
309
Table- 86 Nature of Business and CSR Process Index
Uncorrelated T-Test
Indep. Variable: Nature of Business
Sr. Nature of Number Mean SD SE T-Value DF
No. Business
1 Engineering 56 347.48 39.70 5.30 1.19 103
2 Others 49 337.33 46.58 6.65
Index of perception about CSR Process are found to be 347.48 and 39.70, and
337.33 and 46.58 respectively for Engineering and Other Industries. The SE for
the same group is found to be 5.30 and 6.65 respectively. The T-Value is found
to be 1.19 which is found ‘not significant at 0.05 probabilities with DF-103 .This
Processes of MNCs that are grouped under Engineering and ‘Other’ group of
companies.
310
Table- 87 Nature of Business and CSR Regulations Adherence Index
Uncorrelated T-Test
Dep. Variable: CSR Regulations Adherence Index
Sr. Nature of Business Number Mean SD SE T-Value DF
No.
1 Engineering 56 151.38 18.99 2.54 1.28 103
2 Others (Table-4) 49 156.92 24.46 3.49
Index of perception about CSR Regulations are found to be 151.38 and 18.99,
and 156.92 and 24.46 respectively for Engineering and Other Industries. The SE
for the same Engineering and Other Industries group is found to be2.54 and 3.49
respectively. The T-Value is found to be 1.28 which is found ‘not significant at
0.05 probabilities with DF-103. This indicates that there is no significant
difference in the means of Index of CSR Regulations Adherence of Engineering
and ‘Other’ group of companies.
311
Table- 88 Nature of Business and International Social Responsibility
Index
Uncorrelated T-Test
Sr. Nature of Business Number Mean SD SE T-Value DF
No.
1 Engineering 56 79.84 10.62 1.42 0.44 103
2 Others 49 78.84 12.40 1.77
Index of International Social Responsibility are found to be 79.84 and 10.62, and
78.84 and 12.40 respectively for Engineering and Other Industries. The SE for
the same respectively for Engineering and Other Industries group is found to be
1.42 and 1.77. The T-Value is found to be 0.44 which is found ‘not significant at
difference in the means of Index of Opinion about International Social
Responsibility of Engineering and ‘Other’ group of companies.
> From the tables 85, 86, 87 & 88 it can be said that the means in Indices of the
employees of engineering and ‘other’ group of industries do not differ
significantly in the case of CSR Process Performance, Adherence to CSR
Regulations and their opinion about International Social Responsibility,
Where as, there is a significant difference in the means of Index of CSR
Practices of engineering and ‘other’ group of companies and it reflects that
employees of engineering industries have more often observed their
companies undertake CSR practices in comparison to their counterpart in the
other group of companies.
312
Table- 89 Age of Organisation and CSR Practice Index
Uncorrelated T-Test
Indep. Variable: Age of Organisation
Sr. Age of Organisation Number Mean SD SE T-Value DF
No.
1 Before 2000 73 20.64 6.18 0.72 0.30 103
2 After 2000 32 21.00 5.30 0.94
From the above table it is found that, 73 respondents are from Old companies
and 32 respondents are from New Industries. The mean and SD for Index of
perception about CSR Practices are found to be 20.64 and 6.18, and 21.00 and
5.30 respectively for Old and New companies.
The SE for the same Old and New groups is found to be 0.72 and 0.94
difference in the means of Index of CSR Practices of Old and New companies.
313
Table- 90 Age of Organisation and CSR Process Index
Uncorrelated T-Test
Sr. Age of Number Mean SD SE T-Value DF
No. Organisation
1 Before 2000 (Old) 73 335.37 44.89 5.25 3.03 103
2 After 2000 (New) 32 359.56 34.08 6.02
From the above table it is found that, 73 respondents are from Old and 32
respondents are from New companies.
The mean and SD for Index of perception about CSR Process are found to be
335.37 and 44.89, and 359.56 and 34.08 respectively for Old and New
companies. The SE for the same Old and New group is found to be 5.25 and 6.02
respectively. The T-Value is found to be 3.03 which is found significant at 0.05
probabilities with DF-103. This indicates that there is a significant difference in
the means of Index of CSR Processes of Old and New companies.
314
t
Table- 91 Age of Organisation and CSR Regulations Adherence Index
Uncorrelated T-Test
Dep. Variable: CSR Regulations Adherence Index
Sr. Age of Number Mean SD SE T-Value DF
No. Organisation
1 Before 2000 (Old) 73 150.08 22.36 2.62 3.10 103
2 After 2000 (New) 32 162.81 17.86 3.16
respondents are from New companies.
The mean and SD for Index of perception about Adherence to CSR Regulations
are found to be 150.08 and 22.36, and 162.8land 17.86 respectively for Old and
New companies.
The SE for the same Old and New group is found to be 1.68 and 1.50
respectively. The T-Value is found to be 3.10 which is found ‘significant at 0.05
probabilities with DF-103. This indicates that there is a significant difference in
the means of Index of Adherence to CSR Regulations from old and New
companies.
315
Table- 92 Age of Organisation and International Social Responsibility
Index
Uncorrelated T-Test
Sr. Age of Organisation Number Mean SD SE T-Value DF
No.
1 Before 2000 (Old) 73 78.44 11.25 1.32 1.24 103
2 After 2000 (New) 32 81.50 11.77 2.08
respondents are from New Industries. The mean and SD for Index of Opinion
about International Social Responsibility are found to be 78.44 and 11.25 and
81.50 and 11.77 respectively for Old and New Industries. The SE for the same
respectively for Old and New group is found to be 1.68 and 1.50. The T-Value is
found to be 0.53 which is found ‘not significant at 0.05 probabilities with DF-
103. This indicates that there is no significant difference in the means of Index of
Opinion about International Social Responsibility of Old and New companies.
> From the tables 89, 90, 91,& 92 it can be said that there is no significant
difference in the means of Indices of the employees of old and new industries
in the case of CSR Practices, and their opinion about International Social
Responsibility, Where as, there is a significant difference in the means of
Index of Adherence to CSR Regulations of old and new companies and it
reflects that employees of new companies have more often observed their
companies having sound performance in carrying out CSR Processes and
more often adhering to CSR Regulations in comparison to their counterpart in
the old companies.
316
Table- 93 Mode of Entry and CSR Practice Index
Uncorrelated T-Test
Indep. Variable: Mode of Entry
Sr. Mode of Entry Number Mean SD SE T-Value DF
No.
1 Joint Venture 61 22.07 4.93 0.63 2.64 103
2 Others (Table-6) 44 18.93 6.68 1.01
From the above table it is found that, 61 respondents belong to Joint Ventures
and 44 respondents belong to ‘Others’ category of companies. The mean and SD
for Index of perception about CSR Practice are found to be 22.07 and 4.93, and
18.93 and 6.68 respectively for Joint Ventures and ‘others’ companies. The SE
for the same respectively for JVs and ‘Others’ group is found to be 0.63 and
1.01. The T-Value is found to be 2.64 which is found significant at 0.05
probabilities with DF-103. This indicates that there a significant difference in the
means of Index of CSR Practice between the joint ventures and other group of
companies.
317
Table- 94 Mode of Entry and CSR Process Index
Uncorrelated T-Test
No.
1 Joint Venture 61 347.72 40.18 5.15 1.37 103
2 Others 44 335.84 46.50 7.01
and 44 respondents belong to ‘Others’ category of companies.
The mean and SD for Index of perception about CSR Process are found to be
347.72 and 40.18, and 335.84 and 46.50 respectively for Joint Ventures and
‘Others’ companies.
The SE for the same respectively for JVs and ‘Others’ group is found to be 5.15
and 7.01. The T-Value is found to be 1.37 which is found ‘not significant at 0.05
probabilities with DF-103. This indicates that there is no significant difference in
the means of Index of CSR Processes of joint ventures and other group of
companies.
318
Table- 95 Mode of Entry and CSR Regulations Adherence Index
Uncorrelated T-Test
Dep. Variable: Index of Adherence to CSR Regulations
No.
1 Joint Venture 61 153.44 21.24 2.72 0.28 103
2 Others 44 154.68 22.74 3.43
and 44 respondents belong to ‘Others’ category of companies.
The mean and SD for Index of perception about CSR Regulations are found to be
153.44and 21.24, and 154.68 and 22..74 respectively for Joint Ventures and
‘others’ companies.
The SE for the same respectively for JVs and ‘Others’ group is found to be 2.72
and 3.43. The T-Value is found to be 0.28 which is found ‘not significant at 0.05
probabilities with DF-103. This indicates that there is no significant difference in
the means of Index of Adherence to CSR Regulations of joint ventures and other
group of companies.
319
Table- 96 Mode of Entry and Index of International Social
Responsibility
Uncorrelated T-Test
No.
1 Joint Venture 61 78.90 11.55 1.87 2.05 103
2 Others 44 80.02 11.40 1.72
and 44 respondents belong to ‘Others’ category of companies. The mean and SD
for Index of Opinion about International Social Responsibility are found to be
78.90 and 11.55, and 80.02 and 11.40 respectively for Joint Ventures and
‘others’ companies. The SE for the same respectively for JVs and ‘Others’ group
is found to be 1.87 and 1.72. The T-Value is found to be 2.05 which is found ‘
significant at 0.05 probabilities with DF-103. This indicates that there is a
significant difference in the means of Index of Opinion about International Social
Responsibility between the employees of joint ventures and other group of
companies.
> From the tables 93, 94, 95, & 96 it can be said that there is no significant
$
difference in the means of Indices of the employees of joint Ventures and
other companies in the case of CSR Process Performance and Adherence to
CSR Regulations, Where as, there is a significant difference in the means of
Indices of CSR Practices and Opinion about International Social
Responsibility of the employees of joint ventures and other companies. The
result reflects that employees of joint ventures companies have more often
observed their companies undertaking CSR activities in comparison to their
counterpart in the other group of companies whereas employees from ‘other’
group of companies ’ are more optimistic in their opinions about Global CSR
than their counterparts in joint venture companies.
320
Table- 97 Size of Organisation and CSR Practice Index
Uncorrelated T-Test
Indep. Variable: Size of Organisation
Sr. Total no. of Employees Number Mean SD SE T-Value DF
No.
1 Less<=500 (Small) 40 20.18 6.55 1.03 0.75 103
2 More>=500 (Big) 65 21.11 5.49 0.68
From the above table it is found that, 40 respondents are from Small and 65
respondents are from Big companies. The mean and SD for Index of perception
about CSR Practices are found to be 20.18 and 6.55, and 21.11 and 5.49
respectively for Small and Big Industries. The SE for the same Small and Big
group is found to be 1.03 and 0.68 respectively. The T-Value is found to be 0.75
which is found ‘not significant at 0.05 probabilities with DF-103. This indicates
that there is no significant difference in the means of Index of CSR Practices of
Small and Big companies.
321
Table- 98 Size of Organisation and CSR Process Index
Uncorrelated T-Test
Sr. Total no. of Number Mean SD SE T-Value DF
No. Employees
1 Less<=500 (Small) 40 339.83 45.54 7.20 0.53 103
2 More>=500 (Big) 65 344.54 41.83 5.19
respondents are from Big companies.
The mean and SD for Index of perception about CSR Processes are found to be
339.83 and 45.54, and 344.54 and 41.83 respectively for Small and Big
companies.
The SE for the same Small and Big group is found to be 7.20 and 5.19
difference in the means of Index of CSR Processes of Small and Big companies.
322
Table- 99 Size of Organisation and CSR Global Guidelines Adherence
Index
Uncorrelated T-Test
No. Employees
1 Less<=500 (Small) 40 156.25 23.14 3.66 0.82 103
2 More>=500 (Big) 65 152.55 20.96 2.60
The mean and SD for Index of perception about CSR Regulations are found to be
156.25 and 23.14, and 152.55 and 20.96 respectively for Small and Big
companies.
The SE for the same Small and Big group is found to be 3.66 and 2.60
difference in the means of Index of CSR Regulations Adherence of Small and
Big companies.
323
Table-100 Size of Organisation and Index of International Social
Responsibility
Uncorrelated T-Test
No. Employees
1 Less<=500 (Small) 40 76.45 11.82 1.87 2.05 103
2 More>=500 (Big) 65 81.17 10.91 1.35
The mean and SD for Index of Opinion about International Social Responsibility
are found to be 76.45 and 11.82, and 81.17 and 10.91 respectively for Small and
Big companies. The SE for the same Small and Big group is found to be 1.87 and
1.35 respectively. The T-Value is found to be 2.05 which is found significant at
0.05 probabilities with DF-103. This indicates that there is a significant
difference in the means of index of International Social Responsibility employees
of Small and Big companies.
> From the tables 97, 98,99 & 100 it can be said that there is no significant
difference in the means of Indices in the employees’ perceptions of Small and
Big companies in the case of CSR Practices, CSR Process Performance and
Adherence to CSR Regulations, Where as, there is a significant difference in
the means of Index of Opinion about International Social Responsibility of
the employees of Small and Big industries. The result reflects that employees
of Big industries are more optimistic in their opinions about International
Social Responsibility than their counterparts in Small companies.
324
10. Respondents’ Variables and Perception Indices
Table-101 Education of Respondents and CSR Practice Index
Uneorrelated T-Test
Indep. Variable: Education of Respondents.
Sr. Qualification Number Mean SD SE T-Value DF
No.
1 Technical 41 20.45 5.93 0.94 0.20 103
2 Social-Sciences 64 20.96 5.62 0.70
From the above table it is found that, 41 respondents have Technical

qualification whereas 64 respondents are qualified in Social-Sciences . The mean
and SD for Index of perception about CSR Practice among the respondents
having technical and social science degrees are found to be 20.45 and 5.39, and
20.96 and 5.62 respectively. The SE for the same groups is found to be 0.94 and
0.70 respectively . The T-Value is found to be 0.20 which is found ‘not
significant at 0.05 probabilities with DF-103.
This indicates that there is no significant difference in the means of Index of CSR
Practice of the two groups of respondents having different education background.
325
Table-102 Education of Respondents and CSR Process Index
Uncorrelated T-Test
Dep. Variable: Index of CSR Processes.

No.
1 Technical 41 342.15 47.78 7.55 0.05 103
2 Social-Sciences 64 342.56 40.44 5.06
From the above table it is found that, on the basis of educational qualifications of
the respondents, 41 respondents have Technical qualification whereas 64
respondents are qualified in Social-Sciences . The mean and SD for Index of
perception about CSR Processes among the respondents having technical and
social science degrees are found to be 342.15 and 47.78, and 342.56 and 40.44
respectively. The SE for the same groups is found to be 7.55 and 5.06
respectively. The T-Value is found to be 0.05 which is found ‘ significant at 0.05
probabilities with DF-103.
Process Performance of the respondents having different education background.
326
Table-103 Education of Respondents and CSR Regulations Adherence
Index
Uncorrelated T-Test
No.
1 Technical 41 151.58 21.10 3.34 0.75 103
2 Social-Sciences 64 154.81 21.85 2.73

qualification whereas 64 respondents are qualified in Social-Sciences . The mean
and SD for Index of perception about CSR Global Guidelines among the
respondents having technical and social science degrees are found to be 151.58
and 21.10, and 154.81 and 21.85 respectively. The SE for the same groups is
found to be 3.34 and 2.73 respectively. The T-Value is found to be 0.75 which is
found ‘not significant at 0.05 probabilities with DF-103.
This indicates that there is no significant difference in the means of Index of
Adherence to CSR Regulations of the two groups of respondents having different
education background.
327
Table-104 Education of Respondents and Index of International Social
Responsibility
Uncorrelated T-Test
No.
1 Technical 41 77.73 11.95 1.89 1.23 103
2 Social-Sciences 64 80.61 11.03 1.38

qualification whereas 64 respondents are qualified in Social-Sciences. The mean
and SD for Index of Opinion about International Social Responsibility among the
respondents having technical and social science degrees are found to be 77.73
and 11.95, and 80.61 and 11.03 respectively. The SE for the same groups is
found to be 1..89 and 1.38 respectively. The T-Value is found to be 1.23 which
is found ‘not significant at 0.05 probabilities with DF-103.
Opinion about International Social Responsibility of the two groups of
respondents from different age groups.
> The results from the tables 101-104 indicate that the means in Indices of the
respondents/employees having different Education Background do not differ
significantly in the case of CSR Practices, CSR Process Performance,
Adherence to CSR Regulations and their opinion about International Social
Responsibility, and it reflects that there is no significantly different
observations regarding CSR Undertakings of their respective companies by
these employees.
328
Table-105 Age of Respondents and CSR Practice Index
Uncorrelated T-Test
Indep. Variable: Age of Respondents (Mean=38.12)
Sr. Age Number Mean SD SE T-Value DF
No.
1 Young<=Mean Age 60 20.87 5.13 0.66 0.22 103
2 01d>=Mean Age 45 20.60 6.85 1.02
In the above table the 105 respondents are grouped on the basis of mean age
among respondents, wherein 60 respondents are Young and 45 respondents are
Old. The mean and SD for Index of perception about CSR Practice among the
respondents of old and young age groups are found to be 20.87 and5.13, and
1.02 respectively . The T-Value is found to be 0.22Opinion about Global CSR
which is found ‘not significant at 0.05 probabilities with DF-103.
Practice of the two groups of respondents from different age groups.
329
Table- 106 Age of Respondents and CSR Process Performance Index
Uncorrelated T-Test
No.
1 Young<=Mean Age 60 341..10 42.86 5.53 0.45 103
2 01d>=Mean Age 45 344.93 49.89 6.54
Old. The mean and SD for Index of perception about CSR Processes among the
respondents of old and young age groups are found to be 341.10 and 42.86, and
344.93 and 49.86 respectively. The SE for the same groups is found to be 5.53
and 6.54 respectively . The T-Value is found to be 0.45 which is found ‘not
Processes of the two groups of respondents from different age groups.
330
Table-107 Age of Respondents and CSR Regulations Adherence Index
Uncorrelated T-Test
No.
1 Young<=Mean Age 60 154.08 22.61 2.92 0.07 103
2 01d>=Mean Age 45 153.80 20.88 3.11
Old. The mean and SD for Index of perception about Adherence to CSR
Regulations among the respondents of old and young age groups are found to be
154.08 and 22.61 and 153.80 and 20.88 respectively. The SE for the same groups
is found to be 2.92 and 3.11 respectively. The T-Value is found to be 0.07 which
is found ‘significant at 0.05 probabilities with DF-103.
Adherence to CSR Regulations of the two groups of respondents from different
age groups.
331
Table-108 Age of Respondents and International Social Responsibility
Uncorrelate Opinion about International Social Responsibility d T-Test

No.
1 Young<=Mean Age 60 78.45 12.24 1.58 0.98 103
2 01d>=Mean Age 45 80.60 10.30 1.54
Old. The mean and SD for Index of Opinions about International Social
Responsibility among the respondents of old and young age groups are found to
be 78.45 and 12.24, and 80.60 and 10.30 respectively. The SE for the same
groups is found to be 1.58 and 1.54 respectively . The T-Value is found to be
0.98 which is found ‘not significant at 0.05 probabilities with DF-103.
International Social Responsibility of the two groups of respondents from
different age groups.
respondents/employees belonging to two age groups, Young and Old do not
differ significantly in the case of CSR Practices, CSR Process Performance,
these respondents/employees.
332
Table-109 Total Years of Work Experience and CSR Practice Index
Uncorrelated T-Test
Indep. Variable: Total Years of Work Experience (Mean= 14.41)
Sr. Work Exp. Number Mean SD SE T-Value DF
No.
1 Less<=Mean 53 20.30 5.29 0.37 0.79 103
2 More>=Mean 52 21.21 6.48 0.90
In the above table the 105 respondents are grouped on the basis of mean year of
total work experience, wherein 53 respondents are with less work experience and
52 respondents are with more work experience. The mean and SD for Index of
perception about CSR Practice among the respondents of less and more
experienced groups are found to be 20.30 and 5.29, and 21.21 and 6.48
respectively . The T-Value is found to be 0.79 which is found ‘not significant at
0.05 probabilities with DF-103.
Practice of the two groups of respondents having varying years of total work
experience.
333
Table- 110 Total Years of Work Experience and CSR Process Index
Uncorrelated T-Test
Indep. Variable: Total Years of Work Experience (Mean=14.41)
Sr. Years of Number Mean SD SE T-Value DF
No. Work Exp.
1 Less<=Mean 53 336.94 48.84 6.71 1.40 103
2 More>=Mean 52 348..6S 35.96 4.99
perception about CSR Process Performance among the respondents of less and
more experienced groups are found to be 336.94 and 48.84, and 348.65 and
35.96 respectively. The SE for the same groups is found to be 6.71 and 4.99
Processes of the two groups of respondents having varying years of total work
experience.
334
Table- 111 Total Years of Work Experience and CSR Regulations
Adherence Index
Uncorrelated T-Test
Sr. Years of Number Mean SD SE T-Value DF
No. Work Exp.
1 Less<=Mean 53 152.32 24.11 3.31 0.78 103
2 More>=Mean 52 155.63 19.22 2.67
perception about Adherence to CSR Regulations among the respondents of less
and more experienced groups are found to be 152.32 and 24.11, and 155.63 and
Adherence to CSR Regulations of the two groups of respondents having varying
years of total work experience.
335
Table-112 Total Years of Work Experience and Index of International
Social Responsibility
Uncorrelated T-Test
Sr. Years of Work Exp. Number Mean SD SE T-Value DF
No.
1 Less<=Mean 53 78.83 12.46 1.71 0.49 103
2 More>=Mean 52 79.92 10.40 1.44
Opinion about International Social Responsibility among the respondents of less
and more experienced groups are found to be 78.83 and 12.46, and 79.92 and
International Social Responsibility of the two groups of respondents having
varying years of total work experience.
respondents/employees having varying years of Work Experience do not
differ significantly in the case of CSR Practices, CSR Process Performance,
these employees.
336
Table- 113 Respondents’ Function and CSR Practice Index
Uncorrelated T-Test
Indep. Variable: Respondents’ Function/Department
Sr. Function Number Mean SD SE T-Value DF
No.
1 HR 31 20.48 5.61 1.01 0.31 103
2 Non-HR 74 20.86 6.06 0.70
In the above table the 105 respondents are grouped on the basis of their
departments/function, wherein 31 respondents are from HR department and 74
respondents are from other departments. The mean and SD for Index of
perception about CSR Practice among the respondents of HR and Non-HR
departments are found to be 20.48 and 5.61, and 20.86 and 6.06 respectively. The
SE for the same groups is found to be 1.01 and 0.70 respectively. The T-Value is
found to be 0.31 which is found ‘not significant at 0.05 probabilities with DF-
103.
Practice of the two groups of respondents from HR and Non-HR departments.
337
Table-114 Respondents’ Function and CSR Process Index
Uncorrelated T-Test
No.
1 HR 31 342.26 46.77 8.40 0.07 103
2 Non-HR 74 342.95 41.82 4.86
perception about CSR Processes among the respondents of HR and Non-HR
departments are found to be 342.26 and 46.77, and 342.95 and 41.82
Processes of the two groups of respondents from HR and Non-HR departments.
338
Table-115 Respondents’ Function and CSR Regulations Adherence
Index
Uncorrelated T-Test
/

No.
1 HR 31 154.26 23.13 4.15 0.09 103
2 Non-HR 74 153.84 21.35 2.48
perception about Adherence to CSR Regulations among the respondents of HR
and Non-HR departments are found to be 154.26 and 23.13, and 153.84 and
Adherence to CSR Regulations of the two groups of respondents from HR and
Non-HR departments.
339
Table-116 Respondents’ Function and Index of International Social
Responsibility
Uncorrelated T-Test
No.
1 HR 31 83.00 10.06 1.81 2.27 103
2 Non-HR 74 77.85 11.72 1.36
respondents are from other departments. The mean and SD for Index of Opinion
about International Social Responsibility among the respondents of HR and Non-
HR departments are found to be 83.00 and 10.06, and 77.85 and 11.72
respectively . The T-Value is found to be 2.27 which is found significant at 0.05
This indicates that there is a significant difference in the means of Index of CSR
Opinion about International Social Responsibility of the two groups of
respondents from HR and Non-HR departments.
respondents/employees handling various functions in the companies do not
differ significantly in the case of CSR Practices, CSR Process Performance
and Adherence to CSR Regulations and it reflects that there is no
significantly different observations regarding CSR Undertakings of their
respective companies by the respondents working in HR OR Non-HR
departments but respondents of the HR departments show more optimistic
Opinions about International Social Responsibility than the respondents
working with Non-HR departments.
340
Table- 117 Past CSR Experience and CSR Practice Index
Uncorrelated T-Test
Indep. Variable: Past Experience of CSR Work
Sr. CSR Exp. Number Mean SD SE T-Value DF
No.
1 Yes 40 23.10 4.96 0.78 3.50 103
2 No 65 19.31 6.02 0.75
In the above table the 105 respondents are grouped on the basis of whether they
have experience of working related to CSR in the past, wherein respondents who
have past experience are 40 and the respondents, not having past experience are
65. The mean and SD for Index of perception about CSR Practice among the
respondents having past experience are found to be 23.10 and 4.96 and 19.31
Practice between the two groups of respondents who have or do not have any
past CSR experience.
341
Table- 118 Past CSR Experience and CSR Process Index
Uncorrelated T-Test
Indep. Variable:Past experience of CSR Work
No.
1 Yes 40 355.13 38.36 6.06 2.44 103
2 No 65 335.12 44.46 5.51
65. The mean and SD for Index of perception about CSR Processes among the
respondents having past experience are found to be 355.13 and 38.36 and 335.12
and44.46 respectively. The SE for the same groups is found to be 6.06 and 5.51
Process Performance between the two groups of respondents who have or do not
have any past CSR experience.
342
Table-119 Past CSR Experience and CSR Regulations Adherence
Index
Uncorrelated T-Test
Indep. Variable: Past experience of CSR Work
No.
1 Yes 40 156.68 20.23 3.20 1.03 103
2 No 65 152.29 22.69 2.81
65. The mean and SD for Index of perception about Adherence to CSR
Regulations among the respondents having past experience are found to be
156.68 and 20.23 and 152.29 and 22.69 respectively. The SE for the same groups
is found to be 3.20 and 2.81 respectively. The T-Value is found to be 1.03 which
is found ‘not significant at 0.05 probabilities with DF-103.
Adherence to CSR Regulations between the two groups of respondents who have
or do not have any past CSR experience.
343
Table-120 Past Experience of CSR Work and International Social
Responsibility Index
Uncorrelated T-Test
Indep. Variable: Past Experience of CSR Work
Sr. No. CSR Exp. Number Mean SD SE T-Value DF
1 Have Past Exp. 40 76.85 10.04 1.59 1.87 103

2 Do Not Have 65 80.92 12.05 1.49
65. The mean and SD for Index of Opinion about International Social
Responsibility among the respondents having past experience are found to be
1.49 respectively . The T-Value is found to be 1.87 which is significant at 0.05
This indicates that there is a significant difference in the means of Index of
Opinions about International Social Responsibility between the two groups of
respondents who have or do not have any past CSR experience.
> The results from tables 117-120 indicate that there is a significant correlation
between perceptions of respondents’ having past CSR Experience and three CSR
Indices namely, CSR Practice Index, CSR Process Performance Index and with
Global CSR Opinion Index. Here it can be said that respondents who have
handled CSR in the past have perceived their companies CSR Practices and
Performance on CSR Processes more positively compared to the group of
employees who do not have past experience. Whereas the respondents who do
not have past experience of working on CSR show more optimistic Opinions
about International Social Responsibility than their counterparts. CSR
Regulations adherence Index has no correlation with the respondents’ past
experience of handling CSR function.
344
Table-121 Type of Organisation and CSR Practice Index
Uncorrelated T-Test
Indep. Variable: Type of Organisation (Mean=72.22)
Sr. Index of Org. Number Mean SD SE T-Value DF
No. Profile
1 Low Profile 52 19.56 5.92 0.82 2.09 103
Less < Mean
2 High Profile 53 21.92 5.70 0.78
More>&Above
This is the mean Index of CSR practice of the companies as perceived by the
employees of the organizations with different profile (high profiled and low
profiled) in term of CSR. The above table suggests that 52 respondents belong to
the companies having low profile and 53 respondents belong to the high profile
organisations in terms of their CSR. The mean and SD for Index of perception
about CSR Practice among the respondents of low and high profiled organisation
are found to be 19.56 and 5.29, and 21.92 and 5.70 respectively. The SE for the
same groups is found to be 0.82 and 0.78 respectively . The T-Value is found to
be 2.09 which is found ‘significant’ at 0.05 probabilities with DF-103.
This indicates that there is a significant difference in the population means of
high and low profiled companies in terms of their CSR Practices.
345
Table-122 Type of Organisation and CSR Process Index
Uncorrelated T-Test
No. Profile
1 Low Profile 52 347.56 42.31 5.87 1.13 103
Less < Mean
2 High Profile 53 338.02 43.83 6.02
More>&Above
This is the mean Index of Performance of CSR processes of the companies as

perceived by the employees of the organizations with different profile (high
profiled and low profiled) in term of CSR. The above table suggests that 52
respondents belong to the companies having low profile and 53 respondents
belong to the high profile organisations in terms of CSR . The mean and SD for
Index of perception about CSR Practice among the respondents of low and high
profiled organisation are found to be 347.56 and 42.31, and 338.02 and 43.83
respectively. The T-Value is found to be 1.13 which is found ‘ not significant at
This indicates that there is no significant difference in the means of index of CSR
Process Performance between the two groups employees of high and low
profiled companies in terms of their CSR.
346
Table- 123 Type of Organisation and CSR Regulations Adherence
Index
Uncorrelated T-Test
No. Profile
1 Less<Mean 52 154.87 19.16 2.66 0.42 103
2 More>Mean & above 53 153.08 24.23 3.33
This is the mean Index of Adherence to CSR Global Guidelines of the companies
as perceived by the employees of the organizations with different profile (high
profiled and low profiled) in term of CSR. The above table suggests that 52
respondents belong to the companies having low profile and 53 respondents
belong to the high profile organisations in terms of CSR . The mean and SD for
Index of perception about Adherence to CSR Regulations among the respondents
of low and high profiled organisation are found to be 154.87 and 19.16, and
153.08 and 24.23 respectively. The SE for the same groups is found to be 2.66
and 3.33 respectively. The T-Value is found to be 0.42 which is found ‘ not
This indicates that there is no significant difference in the means of index of
Adherence to CSR Regulations between the two groups employees of high and
low profiled companies in terms of their CSR.
347
Table-124 Type of Organisation and International Social Responsibility
Index
Uncorrelated T-Test
Sr, Index of Org. Number Mean SD SE T-Value DF
No. Profile
1 Less<Mean 52 80.02 10.47 1.45 0.57 103
2 More>Mean & above 53 78.74 12.39 1.70
This is the mean Index of the respondents Opinions about Global CSR from the
organizations with different profile (high profiled and low profiled) in term of
CSR. The above table suggests that 52 respondents belong to the companies
having low profile and 53 respondents belong to the high profile organisations in
terms of CSR. The mean and SD for Index of Opinions about Global CSR among
the respondents of low and high profiled organisation are found to be 80.02 and
10.47, and 78.74 and 12.39 respectively. The SE for the same groups is found to
be 1.45 and 1.70 respectively. The T-Value is found to be 0.57 which is found ‘
not significant at 0.05 probabilities with DF-103.
This indicates that there is no significant difference in the means of index of
Opinion about International Social Responsibility between the two groups
employees of high and low profiled companies in terms of their CSR.
> The results of the above four tables 121-124 indicate that among the four indices
of CSR only CSR Practice Index has significant relation with Organisation’s
CSR Profile Index. The respondents belonging to high profiled CSR Companies
have more often observed their companies’ positive CSR Practices than the
respondents belonging to low profiled CSR Companies. It also reflects that there
is no significantly different observations regarding CSR Process Performance,
Adherence to CSR Regulations and Opinions about International Social
Responsibility between the respondents of high and low profiled CSR
Companies.
348
Table-125 Type of Organisation with CSR Process Parameter
(A Comprehensive Table)
Sr. No. CSR Processes t-Values

1 CSR Philosophy 1.19
2 Business Ethics 0.93
3 Corporate Citizenship 0.89
4 CSR Communication 0.62
5 CSR Knowledge 0.57
6 Stakeholder Dialogue 1.00
7 Corporate Gain 2.28
8 Stakeholders Gain 0.37
9 Conflict Management 0.84
10 CSR Decision Making 0.88
11 CSR Review 3.27
12 CSR Audit 2.61
13 CSR Reporting 0.99
In the above table there appear t-values for each of the process parameter,
wherein the Independent variable is CSR Profile of the Organisation and Degree
of Freedom is 103 and with 0.05 probabilities. Among the twelve parameters,
three have significant difference in their population means as suggested by their
t-values. These three process parameters namely are, Corporate Gain with t-value
2.28, CSR Review with t-value 3.27 and CSR Audit with t-value 2.61. In all the
three, the respondents belonging to low profiled CSR Companies have more
often observed their companies’ Corporate Gain higher than the high profiled
CSR companies, CSR Review and Audit are more often used as corporate tool to
enhance the companies’ image.
> This suggests that the Companies that are low on their CSR Profile tend to
seek more benefits for the company from CSR.
349
Table-126 Performance of Corporate Social Responsibility Processes
on the Intensity Index (CSRPII)
Commitments of the companies to various Corporate Social Responsibility

processes is measured by drawing Intensity Index wherein each process’s
intensity value can be seen in reference to other processes and the overall
processes’ performance intensity value.
Sr. No. Processes Intensity Value
1 Business Ethics 4.20
2 CSR Philosophy 4.06
3 CSR Communication 3.96
4 Corporate Conflict 3.82
5 CSR Reporting 3.79
6 Corporate Gain 3.75
7 CSR Knowledge 3.71
8 Corporate Citizenship 3.67
9 CSR Audit 3.65
10 Stakeholder Gain 3.61
11 CSR Review 3.56
12 Stakeholder Dialogue 3.38
13 CSR Decision Making 3.37
Total CSRPII 3.73
The table indicates the Intensity value of each of the CSR Processes measured
under this study. The overall CSR Process Performance intensity value comes to
3.73, that is fairly good, (nearing to good) on a five point scale.
350
Performance of Business Ethics with 4.20 intensity value ^^'tjle top of
Intensity Index. This is interpreted as the most often observed feR process of
the MNCs business operations and CSR Decision Making witmS>37- intensity'^
value is the weakest CSR process of these MNCs. ''
As seen in the table some of the CSR Processes namely CSR Philosophy,
Business Ethics, CSR Communication, Conflict Management, CSR
Reporting and Corporate Gain have higher Intensity Values than the mean
value of total CSRPII. This suggests that the MNCs’ overall performance on
these processes is perceived better when compared with other CSR processes
namely, CSR Knowledge, Corporate Citizenship, CSR Audit, Stakeholder
Gain, CSR Review, Stakeholder Dialogue and CSR Decision Making having
lower Intensity Values than the mean value of CSRPII.
351
• Mean
High
Low
Business Ethics
CSR Philosophy
CSR Communication
Corporate Conflict
CSR PROCESS PERFORMANCE
CSR Reporting
Corporate Gain —
.2
‘E
CSRP1I a
te
QyJ
CSR Knowledge Uo
Cu
Corporate ^
n
Citizenship U
CSR Audit
Stakeholder Gain
CSR Review
CSR Decision
N\ \ \\ \ wx
CO LO
CM
CM LO
Making
Intensity Value
Table- 127 Adherence to Corporate Social Responsibility Regulations on
Intensity Index (CSRRAII)
Adherence levels of the companies to various Corporate Social Responsibility
regulations given by major CSR Global Guidelines for MNCs operations in
respective host country is measured by drawing Intensity Index wherein each
category of regulation’s intensity value can be seen in reference to other
regulations and the overall level of adherence intensity value.
Sr. No. Regulations Intensity Value
1 Consumer Interests 2.59
2 General Policy 2.53
3 Environment 2.50
4 Employment 2.48
5 Human Rights 2.42
6 Quality of Work Life 2.32
7 Industrial Relations 2.27
8 Disclosure 2.26
9 Training 2.24
10 Corporate Governance 2.21
11 Corruption 2.15
12 Direct Contribution to Local Community 2.11
Total CSRRAII 2.34
On Corporate Social Responsibility Global Guidelines Adherence Intensity Index

(CSRRAII) Intensity values of Adherence to the Regulations mentioned under
CSR Global Guidelines by MNCs. are measured and presented in the above
table. It gives comprehensive understanding of the level of commitment of the
352
MNCs towards various regulations of CSR guidelines that are voluntaiy in
nature. The value of the mean of Overall Adherence on Intensity Index is 2.34.
> On this Intensity Index, Consumer interest is at the top with 2.59 intensity
value. This suggests that the MNCs are most committed to regulations
mentioned under Consumer Interests whereas regulations under Direct
contributions to local communities with 2.11 intensity value suggests that
MNCs have shown least adherence to it.
> As seen in the table, some of the regulations namely, Quality of Work Life,
Industrial Relations, Disclosure, Training, Corporate Governance, Corruption
and Direct Contribution to Local Community have intensity values lower
than the mean value of CSRGGAII. This reveals that the MNCs pay less
attention to adhere to the above regulations of Global CSR Guidelines. The
regulations having higher Intensity Values than the mean value are Consumer
Interests, General Policy, Environment, Employment and Human Rights
showing higher adherence by these MNCs.
> This again shows that in laying policies and statutory compliances MNCs
performance is better than the most of the non statutory regulations.
353
ADHERENCE TO CSR REGULATIONS
Table- 128 Opinion on International Social Responsibility Intensity Index
(ISROII)
Sr. Meaning Intensity Conditions Intensity Speculations Intensity

No. of CSR Value for CSR Value about CSR Value
1 M-l 4.46 P-1 4.27 S-l 3.63
2 M-2 4.31 P-2 4.12 S-2 3.56
3 M-3 4.21 P-3 4.09 S-3 3.40
4 M-4 4.14 P-4 3.84 S-4 3.28
5 M-5 3.92 P-5 3.80 S-5 3.27
6 M-6 3.85 P-6 3.78 S-6 3.21
7 M-7 3.83 P-7 3.32 S-7 3.09
Total 4.10 3.88 3.34
Total ISROII 3.78
The table above shows Intensity Values on respondents Opnions about three
different aspects of CSR.
1. Meaning of CSR,
2. Conditions for CSR, and
3. Speculations about CSR
The Mean Value on Intensity Index of Meaning of CSR is 4.10, and for
conditions for CSR is 3.88 whereas for Speculations about CSR it is 3.34. These
values when compared to overall ISROII(total) value of 3.78 suggests that the
respondents more often agree to the meaning and conditions of CSR as
mentioned here but they do not necessarily agree on Speculations of CSR as
raised and put in the social responsibility debate for MNCs.
This helps to infer that the respondents who are from MNCs possess positive
image of MNCs in terms of Social Responsibility.
354
INTERNATIONAL SOCIAL RESPONSIBILITY
□ Speculations
■ Mean
□ Conditions
Intencity Value
□ Meaning
V
01
O
ea
c
Meaning
Speculations
Opinion Variables
11. Product Moment Coefficient of Correlations between the Respondents’
Perception Indices
1. Index of CSR Practice and Index of CSR Process
N Of Group 105
Coefficient of Correlations 0.49
There is a fair degree of positive correlation exists. When the respondents’

perception are positive towards CSR Practice, they tend to be positive towards
CSR Process Performance of their companies.
2. Index of CSR Practice and Index of Adherence to CSR Regulations
N Of Group 105
Here the correlation between the two indices is just fair as it is little higher than
0.25.
3. Index of CSR Practice and Index of Opinion about CSR
N Of Group 105
Coefficient of Correlations - 0.14
The value indicates no correlation between the two indices.
4. Index of CSR Process and Index of Opinion about International Social

Responsibility
N Of Group 105
355
5. Index of CSR Process and Index of Adherence to CSR Regulations
N Of Group 105
There is a positive correlation exists between CSR Process Performance Index

and Adherence to CSR Regulations index
6. Index of Adherence to CSR Global Guidelines and Index of Opinion

about International Social Responsibility
N Of Group 105
There is a positive correlation exists between Adherence to CSR Regulations

index and International Social Responsibility opinion Index.
7. Index of CSR Profile of the Organisation and Index of CSR Practice
N Of Group 105
The value indicates very little or no correlation between the two indices.
8. Index of CSR Profile of the Organisation and Index of CSR Process
N Of Group 105
Coefficient of Correlations - 0.04
356
9. Index of CSR Profile of the Organisation and Index of Adherence to CSR
Regulations
N Of Group 105
10. Index of CSR Profile of the Organisation and Index of Opinion about
International Social Responsibility
N Of Group 105
357
CHAPTER-7
Findings, Conclusions, Suggestions and Action Plan
On the basis of previous chapter of data analysis and interpretation the findings,
conclusions, implications and suggestions are drawn and presented here.
Conclusions of the study reflect present environment of Corporate Social
Responsibility Undertakings in the Multinational Companies of Gujarat.
Implications of the present state of CSR at MNCs are discussed in light of what
is expected from business in the global economy. Suggestions are made and an
attempt has been made to develop a mechanism in the form of Corporate Social
Responsibility Matrix to bring more accountability to CSR Commitments.
The findings and conclusions are discussed under the major headings of;
1. Organisation Profile
2. Corporate Social Responsibility Profile of the Companies.
3. Corporate Social Responsibility for Social Sector Investment
4. Respondents’ Profile
5. Corporate Social Responsibility Practices
6. Corporate Social Responsibility Process Performance
7. Adherence to Corporate Social Responsibility Regulations
8. International Social Responsibility and MNCs
9. Relationship among Variables.
10. Respondents’ Profile and Perception Indices
11. Correlations among various Indices
358
Organisation Profile
> Among the responding 18 MNCs, 9 (50%) are located in urban and another 9
(50%) are located in rural areas. Majority i.e. 12 (66.76%) of the MNCs in
Gujarat were established before the year 2000 and are considered old
industries and remaining 06 (33.34%) industries are comparatively new as
their presence in India is after year 2000. Based on its strength of employees,
11 (61.11%) are small industries having less than 1000 employees and
07(38.89%) are big industries, having more than 1000 employees.
> Out of 18 Industries, 09 (50%) have entered Indian market through Joint
Ventures, 05 (27.78%) through M & A and 04 (22.22%) are Greenfield
projects. Among them 10 (55.56%) are 100%-(voting shares) owned
subsidiary of the parent company and 08 (44.44%) have above 50%
investment in the form of FDI. Out of these 18 MNCs 07 (38.89%) industries
do not have any permanent expatriate employees based in Gujarat and o7
(38.89%) have less than five expatriate presently. Then 03 (16.67%)
industries have 6 to 10, and 01 (05.55%) of industries have more than 11
expatriate employees located in Gujarat. Across the 18 industries, there are
188 members in the board of governance overseeing Indian Operations and
so naturally having some decision making power. Out of these 188 members,
118 (62.77%) are expatriate, that is not of Indian origin, where as only 27
(37.23%) are of Indian origin.
359
Corporate Social Responsibility Profile of the Companies
> Out of 18 MNCs, 12 (66.67%) MNCs do not have any separate CSR Board or
Committee either at international or national level. Majority MNCs, that is 12
(66.67%) do not have any special /separate meetings called only to discuss
CSR agenda. Out of which 04 (22.22%) have it once in a year and 02
(11.11%) have the CSR meetings twice in a year.
> None of the industry has employed a single employee to carry out specifically
CSR function. There are 16 (88.89%) industries where employees who
handle CSR, shoulder it over and above their regular duties. In most of the
industries, that is, 14 (77.78%) Human Resource Department coordinates
CSR and 3 (16.67%) MNCs have identified a cross- functional team across
the organization to carry out CSR. None of the MNC has given their CSR to
be handled directly by any outside NGO. Further in 08 (44.45%) MNCs the
employees having professional qualification relevant to work on CSR are
involved in CSR activities. In 06 (33.33%) industries, employees learn while
working on CSR and in 04 (22.22%) industries, some guidance or formal
training is provided to equip the employees to carry out CSR work smoothly.
> ‘Employees’ as one of the stakeholders are identified by most MNCs that is,
14 (77.77%), Customers as stakeholders are identified by 11 (61.11%)
industries, 09 (50.00%) have identified Suppliers, Communities and
Company’s Shareholders as stakeholders. Environment as a stakeholder is
identified by 08 (44.44%) of the industries, Government and Competitors are
360
the least identified as stakeholders respectively by 03 (16.66%) and 02
(11.11%) of the industries.
> The company’s business conduct is based on the written statement known as
Code of conduct, and majority of the companies, 12 (66.67%) have their own
company’s code of conduct, 03 (16.67%) industries have adopted
Intergovernmental codes and their CSR conduct emerges out of it, 02
(11.11%) have adapted Multi Stakeholder Code, and 01 (05.55%) has its code
of conduct based on the Model Code and that is the source of their CSR
conduct. None of the industries has adopted Trade Association Code.
Similarly, there are various International CSR Standards or Guidelines to
regulate conduct of MNCs in the host countries. Out of 18, majority i.e. 07
(38.89%) industries are not aware about their company’s adherence to any
such standards. 05 (27.78%) adhere to the Global Compact-1999 declared by
United Nations, 03 (16.76%) adhere to the ILO Declaration, 02 (11.11%)
adhere to the OECD Declaration and 01 (05.55%) adhere to the Global
Sullivan Principles.
> Majority of the industries, that is 14 (77.77%) MNCs CSR designing is as per
the stakeholders’ needs and other 04 (22.22%) industries CSR designing is in
reference to the host country’s government guidelines. The same numbers of
industries respectively say that their company’s CSR has linkages with the
performance of Business and receiving community support. Then for 09
(50%) industries, CSR is a Feel Good factor only and 02 (11.11%) industries
361
feel that CSR has its linkages with customer loyalty. None of the industry
could see the linkages between CSR and employee retention.
Corporate Social Responsibility Undertakings for
Social Sector Investment.
> In the economic function area, Paying fair wages and Ensuring Employees’
safety are most common direct measures that are undertaken by14 (77.77%)
industries. But there is no contribution made by these MNCs in the areas of
Assistance for Capacity building of poor people in the communities and any
other direct measures for Poverty Eradication in the host country.
> In the area of Education, 03 (16.67%) industries have undertaken the tasks of
School Enrollment, Sponsorship to needy students and Merit awards to good
students (among the two groups of stakeholders, those are employees’
children and children of local nearby communities). Only 01(05.55%)
industry has built up its own educational institution that is a school in the
rural area.
> Extending help for the betterment of Health, contributing through Maternal
and child health care program and providing lifesaving drugs to needy is
undertaken by 04 (22.22%) industries. Undertaking the cause for HIV/ AIDS
is by 02 (11.11%) industries. The other three areas, Family
welfare/Population control program, Training to healthcare providers and any
particular disease control is undertaken by 01 (05.55%) each. None of the
362
industry has contributed, for building and running own hospitals and
rehabilitation of disabled till now.
> Contributing for the development of Infrastructure, From the 18 (100%)
industries, 04 (22.22%) have looked into safe drinking water facilities in the
local/nearby communities. Provision of housing facilities, Building
transportation facilities and providing any other civic amenities in form of
community latrines are the three other areas where 01 (05.55%) industries
have made direct contributions. Creating communication services is the most
neglected area among the 18 MNCs under this study. 07 (38.88%) have not
made any contributions in the development of infrastructure.
> In another area of social development, that is constructive leisure time, most
of the facilities are for the internal stakeholder, employees and 02 (11.11%)
industries have created and maintained recreation services within the factory
and 02(11.11%) industries support sports/ cultural events of the employees
and their families. Entertainment facilities in the form of group picnics and
self- development activities are undertaken by 01(05.55%) industry
occasionally.
> Contributions in Polity, is strictly in reference to the activities within the
factory and with the employees on occasional basis only. From the 18 (100%)
MNCs, only 02 (11.11%) industries say, they support human right
perspective. Participation in civic activities, involvement in Citizenship
363
training, Generating political awareness and encouraging
volunteerism/volunteers’ training are rarely addressed by these MNCs.
> The MNCs that involve themselves with stakeholders issues and address
problems of neighbourhood community is 06 (33.33%), issues of gender
equality is addressed by 03 (16.67%), needs of the vulnerable groups and its
abuse, awareness campaigns on relevant issues and rehabilitation of socially
stigmatized is addressed by only 01 (05.55%) industries, whereas substance
abuse is a totally neglected area.
> Major efforts made to improve quality of life of various stakeholders through
CSR Undertakings are in the form of fair dealings with employees and
customers that is by 10 (55.56%) industries, 08 (44.45%) industries produce
high quality of goods and help in natural disaster and, 06 (33.33%) work for
protection of environment.
> At the time of VRS, all 18 (100%) MNCs under the study extend help in
terms of financial security (VRS Package) at this unnatural exit of the
employee, but extending help beyond that, in any form of non financial
support is negligible.
364
Respondents’ Profile
The information on total 105 employees (respondents) across the 18 MNCs
of Gujarat under the study is presented here.
> From total 105 (100%) respondents majority i.e.60 (57.14%) respondents are
young, 64 (60.96%) are having social sciences’ educational background.
Then 74 (70.48%) respondents are presently carrying out Non-HR Function
and majority i.e. 79 (75.23%) respondents belong to middle management. Out
of 105 respondents, nearly equal number of respondents i.e.53 (50.47%)
respondents are with less than 14.41 (Mean) years of work experience and
52(49.53%) are with more than 14.41 years of work experience and among
them 82 (78.10%) have not worked on any CSR related functions in the past.
> From total 105 (100%) respondents 82 (78.10%) are presently not associated
with CSR related work, and 23 (21.90%) are presently associated with CSR
related work from that. 16 (15.23%) are working on CSR in the capacity of
Planner, Advisor or Evaluator and 7 (6.67%) respondents are actual
implementers. Among those who are presently involved only 01(0.95%) has
received monetary incentive, and 01(0.95%) received award for community
development work. Other 103 (98.10%) have not received/ heard of any such
incentive.
365
Corporate Social Responsibility Practices
> From total 105 (100%) respondents 61 (58.10%) perceive their companies
manage CSR as an investment while 11 (10.47%) perceived their company
manages CSR as a cost.
> Among various CSR Drivers for their respective companies, ‘a deep sense
of social responsibility is perceived as the most important driver by 60
(57.14%) respondents. Pressure from the stakeholders is least perceived
CSR driver by, 8 (7.61 %) respondents.
> Among the methods used for undertaking CSR, majority of respondents 39
(37.14%) perceived that their company contributes in CSR through
volunteerism of its employees and this corresponds with 56 (53.33%) of the
respondents perceived that CSR outcome is generation of feeling of
volunteerism among its employees.
> Barriers to CSR :Lack of visible results and long gestation period’ are major
barriers in motivating company to undertake CSR as both are perceived by
33 (31.43%) respondents and ‘willingness of the leaders’ as a barrier is also
perceived by 27 (25.71%).
> Undertaking CSR or not undertaking CSR, positively or negatively affects
various factors of Corporate Governance. Among them corporate reputation
and goodwill is at the top of the list as 85 (80.95%) of respondents
366
perceived it as the most affected factor. Company’s relations with
Government comes next affected factor as perceived by 78 (74.28%) of
respondents. To 49 (46.66%) respondents the state of CSR affairs has its
effects on stockholders’ future response, 44 (41.90%) feel CSR undertaken
or not undertaken has an impact on long term profitability and 43(40.95%)
perceived that it influences the scope for survival for their company. Then
23 (21.90%) of respondents perceived that CSR, if undertaken or not
undertaken affects acquiring better managerial talent and 21 (20.0%) of
respondents perceive that the state of CSR has something to do with job
satisfaction among the employees and the socio economic system in which
company operates.
> Among 105 (100%) respondents majority, i.e. 48 (45.71%) perceived that
their company is more into fulfilling statutory and legal compliances, and
this is the first stage of CSR, that is, Social Obligation approach based on
business having primarily economic function. The same is true for the seven
stage process of Social Responsibility. Here, majority, i.e. 34 (32.38%)
perceived that their company’s CSR efforts is restricted to the first stage of
social responsibility, that is, empowerment of individuals and various
groups and other stages follow in descending order. The most confounded
finding is, 30 (28.57%) respondents are indifferent to the company’s CSR
activities as it does not matter personally.
367
The respondents’ perception on five different aspects under each of the
thirteen social responsibility processes is given. Along with that, the intensity
value of that process on Corporate Social Responsibility Process Intensity Index
with its position on the index is given to get holistic idea about how the
performance of that process is perceived by 105 respondents.
CSR Philosophy
Majority of the respondents have perceived the presence of various philosophical
aspects in their respective companies’ day to day conduct. Out of 105 total
respondents, from highest 99 (94.28%) who perceived that their companies’
conduct reflect industries as agents of social change, to lowest 69 (65.72%)
perceived that their companies social conduct do not get guided only by laws and
market forces.
Compared to this, less number of respondents that is 04(3.81%) to 15(14.28%)
remained undecided on their companies’ conduct on the above aspects whereas
01(0.95%) to 21(%) of respondents perceived absence of these aspects in their
companies’ day to day conduct.
Among the thirteen CSR Processes, CSR Philosophy’s performance is at the
second position on the CSRPI Index with Intensity Value of 4.06.
Business Ethics
In response to whether ethical considerations in business operations concerning
various groups of stakeholders are evident at their company, out of 105 (100%)
368
respondents, highest number of respondents that is 102 (97.14%) perceived their
respective companies’ ethical conduct most often reflect in the issues concerning
shareholders and employees. Then in the descending order, 95 (90.47%)
perceived business ethics get reflected in the issues concerning customers, 88
(83.81%), perceived environmental issues are dealt ethically, 86 (81.91%) of
respondents perceived that ethical practices of the suppliers are preferred over
the business motives in their selection and lastly, 85 (88.58%) respondents
perceived their companies being ethical with competitors.
Compared to the above majority who agreed, less number of respondents that is 0
to 09 (8.57%) could not decide on their companies’ ethical conduct with various
stakeholders whereas 0 to 15(14.28%) of respondents perceived absence of
ethical aspects in their companies’ conduct with stakeholders.
Among the thirteen CSR Processes with Intensity Value 4.20, performance of
Business Ethics is at the first position on the CSRPI Index.
More than eighty percent of the respondents have perceived their companies as
‘Corporate Citizen’. As out of 105 (100%) total respondents. 101(96.19%)
agreed that their companies contribute to protects and improve environment for
sustainable development, 86 (81.91%) agreed that the company does support
employment of differently able people, 83 (79.04%) and 81 (77.14%)
respectively see their companies efforts to eliminate corruption, and keeping out
of coercion and avoidable litigation and. The least perceived corporate
citizenship aspect is incorporation of national policy objectives in the company’s
corporate planning and, its implementation as only 74 (70.47%) agree to it.
369
could not decide on their companies’ conduct on corporate citizenship issues
whereas 0 to 21(20%) of respondents perceive absence of these aspects in their
companies’ conduct.
Among the thirteen CSR Processes with Intensity Value of 3.67, performance of
Corporate Citizenship is at the eighth position on the CSRPI Index.
CSR Communication
Performance of CSR Communication Process is positively perceived by the
respondents as out of 105 (100% ) total respondents majority that is 97(92.38%)
and 94 (89.53%) of respondents respectively perceived their companies being
honest and open in sharing rightful information and disclosing relevant and true
information to its stakeholders, 90 (85.72%) perceived communication as
transparent and proactive, 82(78.09%) perceived their company holds direct
communication with the key audiences whereas, only 37(35.23%) perceived their
companies consider it irresponsible business practice when commercial
information is acquired through unethical means.
The presence or absence of various aspects of Communication process in their
companies could not be decided by 03(2.86%) 15 to (14.28%) respondents
whereas 05(4.76%) to 54(51.43%) of respondents perceived absence of these
aspects in their companies.
CSR Communication is at the third position on the CSRPI Index.
370
CSR Knowledge
It is found that the companies do make efforts to generate knowledge regarding
CSR among its stakeholders and integrate various stakeholders by this common
knowledge as out of total 105 (100%) respondents, highest 86 (81.91%) to
lowest 66 (62.86%) respondents have perceived this in its various forms.
19(18.09%) could not decide on their companies’ conduct on CSR Knowledge
whereas 09(08,57%) to 23 (21.90%) of respondents perceived absence of these
aspects of CSR Knowledge in their companies.
CSR Knowledge is at the seventh position on the CSRPI Index.
Stakeholders’ Dialogue.
Continuous interaction and dialogue with the stakeholders are essential for
effective CSR Undertaking. The findings of the 105 respondents’ perceptions
indicate that, MNCs do indulge into dialogue with various stakeholders as out of
total 105 respondents, majority of respondents that is, 72 (68.58%) perceived that
their companies hold regular meetings with various group of stakeholders
69(65.72%) perceived their companies working in collaborations with
government and NGOS, 68 (64.77%) perceived their companies are interactive
with various stakeholders to understand the culture of the customers and then
integrate it into marketing and products offered. 66 (62.86%) perceived their
companies invite stakeholders, suggestions and act upon it. At the same time, 72
(68.58%) of respondents have perceived that most of the CSR strategies get
articulated at management level only.
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could not decide on their companies’ conduct on various aspects of Stakeholder
Dialogue whereas 20(19.05%) to 39(37.14%) of respondents perceived absence
of these aspects in their companies.
Stakeholders’ Dialogue is at the twelfth position on the CSRPI Index.
Corporate Gain.
Corporate uses CSR as a tool to gain mileages in business is a known fact. This
is largely confirmed here as out of total out of 105 total respondents, highest
number of respondents that is, 76 (72.38%) perceived that their companies have
undertaken CSR as it helps to gain reputation and brand equity in the market. 74
(70.47%) perceived it helps to gain public acceptance and community support
and 73 (69.52%) perceived it that it strengthens management-stakeholder
relations. 71(67.62%) respondents perceived CSR as a means to profit
maximization in the long run and, 62 (59.05%) respondents perceived that their
companies attract and retain its employees on the name of CSR.
There are no respondents who could not decide the purpose of their companies’
CSR undertakings but 29(27.62%) to 43(40.95%) of respondents perceived that
their companies do not undertake CSR for Corporate Gain.
Corporate’s Gain is at the fifth position on the CSRPI Index.
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Stakeholders’ Gain
CSR when undertaken by any company society at large and stakeholders in
particular are benefited. The intention of the company to undertake CSR for the
benefit of the society is perceived by many. Out of total 105 respondents, 78
(74.28.%) of respondents agreed that the company undertakes CSR to build
human and social capital 69 (65.72%) perceived that CSR is to improve quality
of life of people, 65 (61.90%) perceived that ethical business operation and CSR
safeguard larger societal interests, 60 (57.14%) perceived that CSR restores
people’s faith in industrial development and the least number of respondents that
is 58 (55.23%) perceived that CSR is undertaken to deal with some
developmental issues like alleviation of poverty.
On the issues of Stakeholders’ Gain no respondents were unable to decide
whereas 27(25.72%) to 47(44.77%) of respondents perceived that their
companies’ CSR is not undertaken with the purpose of Stakeholders’ Gain.
Stakeholders’ Gain is at the tenth position on the CSRPI Index.
Conflict Management
The companies adapt ways that may be proactive or reactive to manage conflicts
arising out of their business operations but the Socially Responsible Companies
are understood to manage conflicts proactively to the satisfaction of its varied
stakeholders. It is found that out of total 105 (100%) respondents highest number
of respondents, 88 (83.81%) perceived that their company proactively manages
conflicts by providing better working conditions for the employees, 84 (80%)
perceived by avoiding discriminatory practices at all levels of business
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operations, 79 (75.23%) of respondents perceived that their company listens and
acts on stakeholders’ suggestions/ ideas to their satisfaction and that helps to
manage conflict, 76(72.38%) perceived their company’s institutional concern for
social and ethical issues avoid conflict. Lastly 67 (63.81%) perceived that the
company engages itself in negotiation with stakeholders in their interest helps
managing conflict.
30(28.57%) could not decide on their companies’ conduct on various aspects of
Conflict management whereas 07(6.66%) to 23(21.90%) of respondents
Conflict Management is at the fourth position on the CSRPI Index.
CSR Decision Making
CSR Decision making involves various aspects. Consideration or negligence of
these aspects helps to understand how the processes of CSR Undertakings are
addressed by a company. Out of total 105 (100%) respondents, CSR Decisions
taken by Participatory appraisal in their companies is perceived by 66 (62.86%)
of the respondents. CSR Decisions taken only by corporate board (without
consulting stakeholders) by 60 (57.14%) of respondents, CSR Decisions taken
based on available extra deployable resources is perceived by 57 (54.28%) of
respondents. CSR Decisions taken based on its success story in some other
country rather than its relevance in local context is perceived by 48 (45.72%) of
the respondents. National/local people’s involvement to make decisions on CSR
is perceived by 40 (38.10%) of respondents only.
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The less number of respondents that is, 11(10.47%) to 30(28.57%) could not
decide on their companies’ conduct on the above aspects Of Decision Making
process whereas 09(8.57%) to 54(51.42%) of respondents perceived absence of
these aspects in their companies.
CSR Decision Making is at the last thirteenth position on the CSRPI Index.
CSR Review
Reviewing of CSR may help to manage CSR activities. There are various
purposes for which it is undertaken. Out of 105 (100%) total respondents 74
(70.47%) perceived that their companies undertake reviewing of CSR
regularly.,69 (65.71%) perceived that CSR Review is for measuring its impact on
the companies’ financial performance, 63 (60%) perceived that systematic
reviewing exercise is for monitoring and strengthening CSR, 60 (57.14%)
perceived that the impact assessment of CSR is undertaken to expand its social
benefits and 60 (57.14%) of respondents perceived that reviewing is for acting
upon suggestions made by stakeholders.
Compared to this majority, less number of respondents that is 03(2.85%) to
11(10.47%) could not decide on their companies’ conduct on the aspects of CSR
Reviewing, whereas 28(26.66%) to 41(39.05%) of respondents perceived
absence of these aspects in their companies.
CSR Reviewing is at the eleventh position on the CSRPI Index.
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CSR Audit
CSR Audit helps in measuring performance against the set objectives of CSR. It
is found that out of total 105 (100%) respondents, 82 (78.10%) respondents
perceived that CSR Audit is undertaken by their companies with a view to
strengthen corporate accountability, 81 (77.14%) perceived that their companies
undertake CSR Audit as it helps improve the strategic planning, 78 (74.28%)
perceived that it allows to report on company’s achievements based on verified
evidence, 62 (59.04%) perceived that CSR Audit is for the investors and
stakeholders to judge if it is achieving the values it set out in the beginning for
the social cause, 60 (57.14%) respondents perceived that their companies
consider third party certification of voluntary actions is a better tool to judge
company’s CSR Performance.
The process of CSR Auditing remained undecided by 01(0.95%) to 20(19.05%)
of respondents whereas 19(18.09%) to 42(20%) of respondents perceived
absence of aspects of CSR Auditing in their companies.
CSR Auditing is at the ninth position on the CSRPI Index.
CSR Reporting.
CSR Reporting is done either with a genuine purpose of honest disclosure of
company’s activities or for achieving business motives. The finding reveals that
out of total 105(100%) respondents majority that is 89 (84.77%) perceived that
CSR reporting is a management tool to build corporate image, 79 (75.23%)
perceived that CSR reporting is for creating creditability among various groups
of stakeholders, 71 (67.62%) perceived that CSR reporting is used to avoids
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people’s (media)speeulations on the company intentions., 69 (65.72%) perceived
that their companies take CSR Reporting as a genuine responsible corporate
activity, 55 (69.14%) of the respondents perceived that their companies
undertake CSR Reporting along with financial reporting as a routine activity.
Compared to these, 05(04.76%) to 40(38.09%) number of respondents could not
decide on their companies’ conduct on the aspects of CSR Reporting whereas
10(9.52%) to 26(24.76%) of respondents perceived absence of these aspects in
their companies.
CSR Reporting is at the fourth position on the CSRPI Index.
As the Corporate Social Responsibility Process Intensity Index (CSRPII),
measures and indicates intensity of commitment to all thirteen various CSR
Processes by MNCs under this study, the average intensity value for commitment
to CSR Processes comes to 3.73 that is, fairly good on five point scale.
Twelve major regulations are talked about in the CSR Global Guidelines given
for Multinational Enterprises while operating in other countries. Under each of
the regulation several issues/ concerns are mentioned. The findings under each of
these regulations are presented in range of high, moderate and low level on the
basis of the employees’ perception of adherence to it.
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General Policy Framework
The number of respondents who have perceived Adherence to Regulations on
General Policy Framework at high level ranged between 52 (49.52%) to 72
(68.57%), at moderate level the number of respondents ranged between 31
(29.52%) to 49 (46.67%) and at low adherence level it ranged between
02(1.90%) to04 (3.81%).
Among the twelve CSR Regulations with Intensity Value of 2.53, adherence to
General Policy Framework is at the second position on the CSRRAI Index.
Quality of Work Life
The number of respondents who perceived Adherence to Regulations on Quality
of Work Life at high level ranged between 32 (30.48%) to 71(67.62%), at
moderate level the number of respondents ranged between 31 (29.52%) to 57
(54.29%) and at low adherence level it ranged between 03 (2.86%) to
16(15.24%).
Quality of Work Life is at the sixth position on the CSRRAI Index.
The number of respondents who perceived Adherence to Regulations on
Employment Conditions at high level ranged between 46 (43.81%) to 85
(17.14%) to 48(45.71%) and at low adherence level it ranged between 02(1.90%)
to 11 (10.48%).
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Regulations on Employment Conditions is at the fourth position on the CSRRAI
Index.
Industrial Relations
Industrial Relations are at high level ranged between 33(31.43%) to 58 (55.24%),
at moderate level the number of respondents ranged between 47 (44.76%) to 57
(54.29%) and at low adherence level it ranged between 0 tol 5 (14.29%).
Regulations on Industrial Relations is at the seventh position on the CSRRAI
Index.
Human Rights
The number of respondents who perceived Adherence to Human Rights
regulations at high level ranged between 56 (53.33%) to 65 (61.90%), at
(38.10%) and at low adherence level it ranged from 0 to 11 (10.48%).
Human Rights Regulations is at the fourth position on the CSRRAI Index.
Environment
The number of respondents who perceived Adherence to Environment
regulations at high level ranged between 54 (51.43%) to 68 (64.76%), at
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(47.62%) and at low adherence level is only 01 (0.95%) of respondents.
Environment Regulations is at the third position on the CSRRAI Index.
Consumer Interest
The number of respondents who perceived Adherence to regulations on
Consumer Interest at high level ranged between 56(53.33%) to 78 (74.29%), at
(34.29%) and at low adherence level it ranged between 0 (0.00%) to 13
(12.38%).
Regulations on Consumer Interest is at the first position on the CSRRAI Index.
Direct Contribution to Community
The number of respondents who perceived Regulations on Adherence to Direct
Contribution to Community are at high level ranged between 31 (29.52%) to 39
(43.81%) to 52 (49.52%) and at low adherence level it ranged between 20
(19.05%) to 22 (20.96%).
Direct Contribution to Community is at the twelfth position on the CSRRAI
Index.
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Training
The number of respondents who perceived Adherence to Training regulations at
high level ranged between 28 (26.67%) to 57 (54.29%), at moderate level the
number of respondents ranged between 39 (37.14%) to 49 (46.67%) and at low
adherence level it ranged between 09 (8.57%) to 28 (26.67%).
Training Regulations is at the ninth position on the CSRRAI Index.
Disclosure
Disclosure at high level ranged between 27 (25.71%) to 40 (38.1%), at moderate
level the number of respondents ranged between 61 (58.1%) to 70 (66.67%) and
at low adherence level it ranged between 04 (3.81%) to 08 (7.62%).
Disclosure is at the eighth position on the CSRRAI Index.
Corruption
The number of respondents who perceived Adherence to Corruption Regulations
at high level ranged between 32 (30.48%) to 54 (51.43%), at moderate level the
number of respondents ranged between 39(37.14%) to 64(60.95%) and at low
adherence level it ranged between 09(8.57%) to 12 (11.43%).
Corruption is at the eleventh position on the CSRRAI Index.
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Corporate Governance
Corporate Governance at high level ranged between 29 (27.62%) to 38 (36.19%),
at moderate level the number of respondents ranged between 41 (39.05%) to 55
(52.38%) and at low adherence level it ranged between 21(20.0%) to 26
(24.70%).
Corporate Governance is at the tenth position on the CSRRAI Index.
As the Corporate Social Responsibility Regulations Adherence Intensity Index
(CSRRAII), measures and indicates intensity of adherence of all twelve CSR
Regulations by MNCs under this study, the average intensity value for
Adherence to CSR Regulations comes to 2.34 that is, moderately well on three
point scale.
Respondents’ Opinions on International Social Responsibility
Opinions of the respondents on International Social Responsibility with
special reference to MNCs are given below..
Majority, 99 (94.28%) of respondents opined that CSR is a link to sustainable
development, and it is a strategy for accelerating economic growth is opined by
81(77.14%) of the respondents. Some of the respondents that is 72(68.58%)
opined that CSR is not an ‘add on’ to core business activity and 98(93.33%) of
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respondents opined that it is a means through which business can address the
impact of their operation.
Majority of 96 (91.42%) respondents opine that education and training of CSR to
managers and others is a pre-requisite. Then in 87 (82.86%) respondents’ opinion
a constant communication between business and society is very necessary. Then
78(74.28%) respondents opined that CSR requires transparency and credibility
and 75 (71.42%) opined that credibility requires involvement of Stakeholders.
Compared to this, small number of 53 (50.47%) respondents share an opinion
that profit is a pre-requisite for CSR and 33 (31.43%) opine that thinking of short
and long term social consequences of all its operations is not a prerequisite of
global business.
Business has a responsibility for helping society’s problems is firmly opined by
69 (65.72%) of respondents, and there are 54 (51.42%) respondents in whose
opinion the cost of CSR should not be passed on to consumers. As 45 (42.86%)
respondents feel that CSR is forced activity on MNCs by the critics of LPG
policy, 38 (36.19%) also opined that MNCs are not interested in creating benefits
without being paid for it and 33 (31.42%) confirms that MNCs’ major concern is
only returns on their investment on social activities. Here 28 (26.67%)
respondents opined that MNCs are complacent in Human Right issues and this
needs attention.
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Organisation Variables and Perception Indices.
The T-Value of Location of Organization with CSR Practice Index is
found to be 0.83, with CSR Process Performance Index it is 0.57, with CSR
Regulations Adherence Index t-value is 1.62 and with the International Social
Responsibility Opinion Index 0.53 which are found ‘not significant at 0.05
probabilities with DF-103.The results indicate that the population means are
same and so there is no relationship between various CSR Indices and Location
of the Organisation.
> The T-Value of Nature of Business with CSR Practice Index is found to be
2.03 which are significant at 0.05 probabilities with DF-103. This indicates
a significant difference in the population means and reflects that employees
of engineering industries have more often observed their companies
undertake CSR practices in comparison to their counterpart in the other
group of companies. At the same time T- Values of other three indices that
is CSR Process Index is 1.19, CSR Regulations Adherence Index t-value is
1.28 and the International Social Responsibility Opinion Index it is 0.44
which are found ‘not significant at 0.05 probabilities with DF-103. This
indicates that Nature of Business does not show significant relationship with
the other three indices.
> On the basis of T-Values of Age of Organisation with Various CSR Indices
it can be said that there is no significant difference in the population means
of old and new industries in the case of CSR Practice Index, and
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International Social Responsibility International Social Responsibility
Opinion Index as their T-Values are 0.30 and 1.24 respectively, Where as,
there is a significant difference in the means of population of CSR Process
Index of old and new industries as its T-Value is 3.03 and it reflects that
employees of new industries have more often observed their companies
having sound performance in carrying out CSR Processes. Similarly T-
Value of CSR Regulations Adherence Index is 3.10 suggesting its
significant relationship with Age of the Organisation.
> For the relationship of various CSR Indices with Mode of Entry of the
organization in the Indian markets, it can be said that there is no significant
difference in the population means of Indices of the employees of joint
Ventures and other companies in the case of CSR Process Index and CSR
Regulations Adherence Index as their respective T-Values are 1.37 and
0.28, Where as, there is a significant difference in the population means of
CSR Practice Index and International Social Responsibility Opinion Index
of the employees of joint ventures and other companies as their respective
T-Values are 2.64 and 2.05 at 0.05 probabilities with DF-103. This indicates
significant relationship of CSR Practices and International Social
Responsibility Opinion Index with Mode of Entry of the organization.
The relationship of Size of Organisation with three CSR Indices, namely,
CSR Practice Index, CSR Process Index and CSR Regulations Adherence Index
is not significant as the respective T-Values are 0.75, 0.53 and 0.83 indicate not
significant difference in the population means at 0.05 probabilities with DF-
103.The T-Value of International Social Responsibility Opinion Index is 2.05
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that indicates that the population means are significantly different and so there is
a relationship between International Social Responsibility Opinion Index and
Size of the Organisation.
Respondents’ Profile and Perception Indices
The respondents’ Educational Background and various CSR Indices do
not show any correlation as the T-Values of respondents Educational
Background with CSR Practice Index is found to be 0.20, with CSR Process
Index it is 0.05, with CSR Regulations Adherence Index t-value is 0.75 and with
the International Social Responsibility Opinion Index 1.23 which are found ‘not
significant at 0.05 probabilities with DF-103.The results indicate that there is no
significant difference between population means and so there is no relationship
between various CSR Indices and Educational Background of the respondents..
The respondents’ Age and various CSR Indices do not show any correlation as
the T-Values of respondents Age with CSR Practice Index is found to be0.22,
with CSR Process Index it is 0.45, with CSR Regulations Adherence Index t-
value is 0.07 and with the International Social Responsibility Opinion Index 0.98
which are found ‘not significant at 0.05 probabilities with DF-103.The results
indicate that there is no significant difference between population means and so
there is no relationship of respondents’ perceptions on various CSR Indices with
their Age.
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> There is no correlation between respondents’ Total years of Work
Experience and various CSR Indices as the T-Values of respondents’ Years
of Experience with CSR Practice Index is found to be 0.79, with CSR
Process Index it is 1.40, with CSR Regulations Adherence Index t-value is
0.78 and with the International Social Responsibility Opinion Index 0.49
which are found ‘not significant at 0.05 probabilities with DF-103 .The
results indicate that there is no significant difference between population
means and so there is no relationship of respondents’ perceptions on various
CSR Indices with their Total years of Work Experience.
> There is no correlation between respondents’ Function/Department and
three CSR Indices as the T-Values of respondents’ Function/Department
with CSR Practice Index is found to be0.31, with CSR Process Index it is
0.07, with CSR Regulations adherence Index t-value is 0.09 which are
found ‘not significant at 0.05 probabilities with DF-103 but, with the
International Social Responsibility Opinion Index, the T-Value comes to
2.27 .The results indicate that there is no significant difference between
population means of Practice, Process and Adherence Indices but there is a
correlation of respondents’ Opinions about International Social
Responsibility with the Function handled by these respondents.
> There is a significant correlation between respondents’ having past CSR
Experience and three CSR Indices as the T-Values of respondents’ Past
CSR Experience with CSR Practice Index is found to be 3.50, with CSR
Process Index it is 2.44 and with International Social Responsibility
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Opinion Index it is 1.87 which are found significant at 0.05 probabilities
with DF-103 meaning, there is a significant difference between population
means of Practice, Process and Opinion Indices of CSR with respondents
past experience of CSR whereas with CSR Regulations Adherence Index t-
value is 1.03 that indicates there is no correlation of respondents’ perception
of their companies’ Adherence to CSR Regulations with their past
experience of handling CSR function handled by these respondents.
> There is no correlation between Organisation Profile and three CSR Indices
as the T-Values of respondents’ belonging to high and low profiled CSR
Companies with CSR Process Index is 1.13, with CSR Regulations
Adherence Index t-value is 0.42 and with the International Social
Responsibility Opinion Index it is 0.57, which are found ‘not significant at
0.05 probabilities with DF-103, but the T-Value of Organisation Profile
with CSR Practice Index comes to 2.03. which is significant at 0.05
> The results indicate that there is no significant difference between
population means of Organisation Profile with Process, Adherence and
Opinion Indices but there is a correlation between Organisation Profile and
CSR Practice Index. Among the thirteen CSR Processes, three have
significant difference in their population means as suggested by their t-
values. These three processes are, Corporate Gain with t-value 2.28, CSR
Review with t-value 3.27 and CSR Audit with t-value 2.61. In all the three,
the respondents belonging to low profiled CSR Companies have more often
observed their companies intention to gain more from CSR. CSR Review
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and Audit are more often used as corporate tool to enhance the companies’
image.
Correlations among various Indices
On Product Momentum Coefficient of Correlation the correlation between
Adherence to CSR Regulations with CSR Processes and Opinion about
International Social Responsibility is strong and positive with coefficient
correlation value of .72.
The correlation between CSR Practice Index and Index of Adherence to
CSR Regulations is just fair as its coefficient correlation value is little higher
than 0.25.
Coefficient of Correlations value of 0.72 suggests that there is a positive
correlation exists between CSR Processes Index and Adherence to CSR
Regulations index and also between Adherence to CSR Regulations index and
International Social Responsibility Opinion Index.
At the end, it can be said that, Adherence to CSR Regulations is
positively related with company’s performance on CSR Processes and the
employees’ opinion about International Social Responsibility. The study suggests
that at these MNCs higher adherence to CSR Regulations reflects positively on
CSR Process undertakings and in the opinion of the employees of these MNCs
issues of International Social Responsibility are managed responsibly by the
MNCs.
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CONCLUSIONS
In the CSR literature CSR overlaps with other concepts such as corporate
citizenship, business ethics and sustainable development etc. These concepts are
also continuously undergoing change at practice level by the companies. They
are interpreted differently with convenient meanings attached to all of them.
Corporate philanthropy and environment policies most often represent CSR. This
lack of consistency in the use of the term CSR has made companies name any
form of ‘tokenism’ as CSR.
Under the Company Code of Conduct, there are well written policy
frameworks that take care of Business Ethics, CSR Philosophy and its principles.
Still, the common understanding about CSR is prevailing more often in its most
traditional form of ‘charity’, in other words, occasional contributions to
community and community level involvement by the industries. There are
indication of new waves, such as attention to socially responsibly products,
protecting consumer interest, human rights, environment compliances and
occasional socially responsible employee and industrial relations under CSR. In
spite of wide acceptance of CSR Reporting in these MNCs, knowledge about
existence of International Voluntary Corporate Social Responsibility Standards
for MNCs is limited even among the top management officials.
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Corporate Social Responsibility Profile and Practices
CSR Structure and Functioning.
MNCs operating in Gujarat do not have any separate CSR structure in
terms of a Board or a Committee that especially take care of companies’ CSR
related activities. Holding periodical discussion on the issues pertaining to CSR
is not a regular feature at these MNCs. There is absolute absence of separate
functional department for CSR hence Human Resource Departments of the
companies, in most of the cases are made responsible to carry out CSR and
related activities. The HR department functionaries having more of social science
educational background are given CSR related responsibilities over and above
their regular work. On the job training to equip these employees to undertake
CSR and carry it out effectively, is negligible at the MNCs under this study.
CSR Planning
Employees and Shareholders are the most often identified groups as
stakeholders, followed by Customers, Suppliers, Community and Government
Most of the industries claim to have their CSR Undertakings based on their
stakeholders’ needs but planning of CSR is done at the parent company’s top
management level indicating process of decision making is from top to bottom.
This makes involvement of local stakeholders of the host country minimal or
rather nil in decision making and makes it indicative that MNCs undertake CSR
that goes with the company’s global image with available extra deployable
resources, and not to meet development requirements of the host country and
local/immediate stakeholders.
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Investment in Social Sector
The CSR Undertakings for the benefits of local community and society at
large seem very limited as these MNCs have not involved themselves much for
various developmental activities required for the cause of Social/Human
Development. These MNCs are most often consistent in undertaking
responsibilities within the internal orbit that is, in the forms of paying fair wages,
taking utmost measures for the employees’ safety at work place and better
returns on shareholders’ investment etc. compared to being consistently
responsible for developing and implementing social/human development
measures on the outside, for the local communities or society at large. This is
seen as these MNCs do not show any such perceptible efforts or investment that
has contributed to improve the social conditions of the locals. In Gujarat MNCs’
contributions to strengthen the social parameters of the host country’s local
communities seem to be superficial and insignificant.
Majority of the MNCs in Gujarat are joint ventures and Mergers.
Historically, these are the two business conditions where downsizing is a reality
of the entire reengineering process. Now in the global business conditions
Voluntary Retirement Scheme (VRS) is a business reality which most often turn
out to be a Compulsory Retirement Scheme (CRS). The company supports the
outgoing employees through financial VRS Package only. In most of the cases,
relevant non-financial help in its various forms may prove to be very crucial in
stabilising exiting employees and their families in a long run. This approach
indicates MNCs’ concern, dignity and respect for the employees against harsh
business decisions.
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CSR Linkages
The results/outcomes of CSR are linked more often with company’s
reputation and generating goodwill among various stakeholders that improves
business conditions. For most of these MNCs, CSR for better business
performance heavily outweighs its linkages with either receiving community
support or customer loyalty. CSR helps in employee retention is not observed at
all. This suggests two things. One is that MNCs do not face problems in retaining
customers and employees so that they need to use CSR as a retention tool.
Secondly, the customers, while buying products are more concerned with the
brand name and, the employees, when working with MNCs are more concerned
with comparatively higher packages and benefits, better working facilities etc.
and do not bother to judge them on their social responsibility conduct. This may
be a typical feature of developing country.
The ‘Social Obligation’ approach is the most observed approach across
these MNCs. This approach is based on business having primarily economic
concern and so statutory and legal compliances are the only priorities. The case
with these MNCs is long gestation period and lack of visible results emerges as
the strongest barriers to undertake CSR. This fact, contradicts as ‘a deep sense of
social responsibility’ emerges as the most considered driver of CSR. It is also a
matter of concern that in the liberalized economy, MNCs’ Social Responsibility
is still restricted to its first stage of empowerment of identified individuals and
groups rather than working towards broader social responsibility objectives.
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> In each of these areas the stronger relationship between CSR and
mainstream business activity is suggestive of CSR for better business.
MNCs, as business organisations possess resources and expertise and at
times due to its sheer size enjoy social power; which comes from this very
society where it operates. As per the Social Contract Theory, “legal
constraints alone are insufficient to ensure a minimum acceptable level of
socially responsible behaviour by firms. They must be supplemented by
constraint on corporate behaviour that is built into the implicit “contract”
between the firm and society” and so should be held responsible for helping
society to solve its problems. In light of the above discussion, CSR
Undertakings of MNCs makes more of a Business case of CSR than a Moral
case as it has been discussed in the introduction chapter of this study.
> MNCs’ are in agreement to CSR Principles and that is captured in their
Social Policy framework. The policy view industries, as a social change
agent and CSR beyond administrative and legal compliance to internal rules
and regulations. They incorporate business ethics wherein respect and
dignity of their shareholders and employees are paramount to them.
> At MNCs, communication in reference to CSR is a two way process that
contradicts with CSR in principle. The company does share relevant
information with those groups of stakeholders who have the legitimate right
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to access it. At the same time, as ‘business’ is their priority, the company
seeks necessary information for accelerating their business by all means.
> Most of the MNCs in Gujarat as a good corporate citizen, render
environmental concerns, consider employment of differently able and, try to
keep away from corruption and unnecessary litigations High standards of
working conditions with fair employment practices and willingness to act
ethically in negotiations help to avoid and manage conflict with
stakeholders.
> There is an effort to generate common knowledge among various
stakeholders regarding companies efforts directed towards CSR. It is also
seen that these MNCs employ scientific measures to gather knowledge
about needs of the local communities, share this knowledge, and educate
and train managers to cater these needs of communities. At the same time it
is revealed that the CSR strategies are formed more at the top management
level where the scope of interaction with local stakeholders is minimal.
Planning and decision making of CSR at MNCs seem less likely to
incorporate social objectives of the host country. The decisions about
socially responsible undertakings for the local communities are most often
taken by corporate board members. These decisions depend largely on the
available extra, deployable resources with the company. This indicates ‘top
to bottom’ approach to CSR, more to suit corporate needs rather than
generating ‘common good’ by meeting peoples’ needs. More number of
395
expatriates in the governing body for India Operation of these MNCs might
be an important factor affecting CSR decision making.
> In the array of CSR undertakings, whose gain is intended, society or
corporate? In answer to this, it is largely felt that, CSR processes through
which corporate gains in terms of alleviating brand equity, image and profits
for the business in the long run, are more often observed compared to CSR
processes that improves quality of life of common people, and benefits the
society at large. Whatever socially benefiting processes visualised they help
to restore people’s faith in industrialisation processes and liberalisation of
the economic boundaries but more so it helps companies to gain public
acceptance and support of the local communities.
> Most often CSR Reviewing, Auditing and Reporting are used as a corporate
tool as it helps enhancing image of accountability of the company in the
public eye and avoids media speculation on the business intentions. CSR
Reviewing also helps companies assess the impact of CSR on the financial
results of the company and rarely used for enlarging the scope of social
benefits through these corporate processes.
> When we talk about the intensity of commitment with which these
processes are carried out at MNCs, out of total thirteen CSR processes,
seven processes’ performance is lower than the average expected
performance. These seven CSR processes are Decision Making,
396
Stakeholders Dialogue, Stakeholders’ Gain, Corporate Citizenship, CSR
Knowledge, Review and Audit. MNCs’ CSR performances on these
processes reflect weaker commitments and need further rectification.
> The MNCs show very high adherence to CSR Principles at the policy level.
Within the issues under general policy framework, the statutory and legal
compliances are taken utmost care of, followed by the issues concerning
direct stakeholders’ interests and adherence to purely voluntary
development issues seem to take the backseat. MNCs’ show higher
adherence to the issues of consumers than to the local communities’
development issues. Under various Training regulations, statuary training is
more often adhered to than purely voluntary training that can contribute in
the development of indirect/extemal stakeholders.
> The MNCs highly adhere to high standards of safety at work place and fair
employment practices that are appropriate to the laws of the host country.
MNCs provide equal employment opportunities to many and strongly
believe in harmonious, co-existence of trade union and management but
seem to hold back when there is a question of conceding ‘freedom’ in
collective behaviour.
> High adherence to practice of using human right language and spirit is
observed at these MNCs. Their approach to environmental concerns is more
397
reactive as they are more in to monitoring and controlling ‘environment
safety’ arising out of their business operations rather than proactively
meeting environmental challenges.
> The MNCs keep away from indulging in to local politics, makes employees
aware about the company’s anti-corruption policy, but it seems that
controlling flow of bribe for retaining business and fostering a culture of
ethics in the company do not come easily.
> At these MNCs financial outcomes are accurately disclosed with
transparency compared to the disclosure or communication of activities
influencing sustainable development outcomes. Accountability in non-
financial issues, overall business ethics and all other issues related to CSR
Governance are observed to be adhered more at moderate level at these
MNCs.
>. When we see in totality these MNCs’ intensity of adherence to the twelve
regulations commonly mentioned under international guidelines on CSR,
their adherence to seven regulations seem below the average expected level.
These regulations are Quality of Work Life, Industrial Relations,
Disclosure, Training, Corruption, CSR Governance and Direct Contribution
to Local Communities.
398
International Social Responsibility and MNCs
There is a debate going on ‘WHY and WHAT’ of CSR in all the
economies, be it developed or developing or not so developing. As the
businesses have become global in its true sense, CSR becomes a critical and vital
approach to equate development of economy for meeting social objectives.
> It is largely accepted that for MNCs, CSR should be an effective strategy to
address business as well as social goals. It is also true that CSR is not to be
viewed merely as legal and statutory compliances but is to be considered as
a core business activity that helps business to payback to the society in a
benefiting way.
> It is strongly believed that for the MNCs while operating in the host
country, profit should not be the only important condition for business,
accountability and transparency on non-financial matters, managerial ethics
in all the business operations and professionalism in undertaking CSR and
its training to various actors are equally important factors of CSR.
> The more realistic image of MNCs is emerging as abuser of human rights as
their foremost interest lies in financial returns and CSR remains a forced
activity by the critics of LPG policy.
399
Relationship among CSR Indices and other variables
> There is a significant relationship exists between the nature of business and
GSR Practices of the MNCs. This suggests that engineering companies’
sheer size, heavy operations and their prominence since long in Gujarat
have driven them to adapt more conducive CSR ideology that is reflecting
in to their practices.
> Age of the organization that is presence in India, shares significant
relationship with MNCs’ performance on CSR Processes and Adherence to
CSR Regulations. MNCs entering the state after year 2000 are
comparatively newer and smaller and show higher commitments and
adherence to CSR processes and CSR regulations.
> Mode of entry has significant relationship with CSR Practices of MNCs.
The companies that entered as joint ventures seem to take up social
responsibility undertakings better may be due to existing platform to
continue and develop social responsibility undertaking of the old
companies.
> Size of the organization and mode of entry share significant relationship
with employees’ opinions on International Social Responsibility issues.
Employees from bigger and acquired/green field MNCs, give more
affirmative and realistic opinions about all the International Social
Responsibility issues with special reference to MNCs.
400
> Age, Education and Total years of work experience of the r®igt>n$j§nfs
no significant relation with Multinational companies’

|\C$R
* ‘ lH?iactiee£
(' - , '!:
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commitment to CSR Processes, Adherence to CSR Regulatidbjâad;-diep^
opinions on International Social Responsibility. In other words, the
respondents’ perceptions on CSR Undertakings by MNCs of Gujarat have
not varied according to their age, education and years of work experience.
> There is a significant relationship between the respondents’ Function and
past experience of working on CSR with International Social Responsibility
issues. Employees of HR departments and employees who are presently
handling CSR in their companies share and reflect more clarity about the
International Social Responsibility issues with reference to MNCs. It is the
same with the employees who have not worked on CSR in the past.
> The respondents who had past experience of working on CSR show
significant relationship with their companies’ CSR practices and their
commitments to CSR Processes. This suggests that actual working on the
issue generate better knowledge and exposure to various facet of CSR. And
this helped the respondents to identify and understand their companies’
CSR practices and performance on process better.
> CSR Practices of these MNCs can be seen through CSR Profile of the
organization. The relationship between Type of Organisation and CSR
Practices is positive as the Multinational companies with low CSR Profile
401
are low on CSR Practices’ index and the companies with higher CSR
Profile show higher CSR Practices on its index.
> Among thirteen CSR Processes considered for the present study, Type of
organization has significant relationship with Corporate Gain, CSR Review
and Auditing. The low CSR profiled Multinational companies seek to gain
more from CSR and CSR reviewing and auditing without third party
verification done is used more as a management tool to enhance corporate
image.
> In general, there is a positive relationship among Multinational companies’
commitments to CSR Processes, their level of adherence to CSR
Regulations of Global Guidelines and International Social Responsibility
issues. The positive relationship among these three indices suggests that
when commitment to CSR is higher, adherence to CSR Regulations is also
higher among the Multinational Companies. At the same time, broad
understanding of International Social Responsibility issues that need to be
handled by MNCs’ also reflect better among the employees of these
MNCs.
SUMMARY
> MNCs operating in Gujarat are strong at framing pro CSR Policy, more
concerned with compliances where legality is involved, and they reflect
weaker commitments on purely voluntary issues. This leads to conclude that
402
though, Corporate Social Responsibility has gained acceptance as both a
principle and a practice, but its implementation for Multinational
corporations has remained inconsistent. The ability to achieve real results
lies in bringing more accountability in CSR undertakings and working
closely not only with immediate stakeholder groups but extending it to civil
society groups and governments together.
> MNCs’ present corporate profile is weak to support CSR Undertakings and
their practices till date amounts to mere ‘tokenism’. There is no such
evidence in their practice that echoes that CSR Undertaking is a serious
activity and through which they contribute to the holistic development of
the host country.
> Commitments towards Corporate Social Responsibility that is reflected
through these Multinational Companies’ performance on CSR Processes
thoroughly gives a mix picture. Looking closely to it suggests that, CSR is
more of a business case than a moral case for these MNCs.
> Though, from the researcher’s view, MNCs’ CSR undertaking in
developing countries is a jumble of legal compliances. It is driven by charity
and minimum of social responsibility so that it keeps them away from major
controversies that can harm their global business image. Higher
commitments and better performance on CSR is expected from the MNCs
when corporations of developed countries operate in a developing country
403
as they are well versed with higher standards of CSR in their country of
origin. The major challenges to Multinational Companies in this respect are:
> Limited understanding about facets of Corporate Social Responsibility and
its inherent value to business.
> Weak Corporate Structure(CSR) at international and national level
> Lack of sustained commitments resulting into stakeholders’ engagement and
poor decision making process
> Lack of vision and support to CSR by senior management
> Difficulties in measuring economic outcomes of social inputs.
> It is evident that the MNCs are better in capturing and revealing the spirit of
CSR more at policy level and they reflect minimum of ‘Social
Responsiveness’. These Multinational companies’ partnership with host
country to contribute for improving quality of life of the local communities
through humanitarian relief and sustainable development approaches is
minimal. Their accountability in non-financial matters raises serious
questions. Their intentions to share responsibility in the host country to
generate ‘common good’ are open to discussion. This leads to conclude:
1. Multinational companies of Gujarat need to look beyond financial objectives
of their business operations to become a responsible corporate citizen of the
host country.
2. There is an urgent need to find out measures that would gear up MNCs to act
more as a ‘Contributor’ and less as an ‘Exploiter’ in the host country.
404
Implications
> Corporate Social Responsibility(CSR) has moved, in the past twenty years,
from a theory to a more common practice. This is attributed to two factors.
1. A growing awareness among businesses that corporate responsibility is
good for business. Business leaders understand that "practicing" corporate
responsibility affects their corporate reputation, brand image and profit.
2. The growing influence of stakeholders and civil society actors like NGOs,
Media etc. Human rights and labour campaigns have turned the spotlight
on corporate practices in recent years. The questions raised were, whether
and how far a corporate is responsible for the social consequences of its
business operations. In response many companies have developed
successful corporate responsibility programs or participated in efforts to
meet humanitarian needs.
As CSR tends to be voluntary in nature, most often is approached from top-
down: a company decides what issues it wishes to address. It may be,
contributing to community education, healthcare or the wildlife, or donating to
disaster relief, or to encourage staff diversity or reduce pollution. These
voluntary initiatives should be welcomed. But accountability to CSR approach is
different. It is not top-down, but bottom-up, with the stakeholders at the centre,
and not the corporation. Setting higher CSR accountability standards
Corporations world wide will be able to......
405
> Identify and prioritize the stakeholders’ interests at an international and
national level.
> Identify critical issues of CSR within the commercial framework, i.e.
achieving business goals, through adapting corporate codes of conduct,
monitoring and compliance, training and capacity building and many other
stakeholder engagement processes.
> Measure implications of CSR for corporate governance as well as for
human resources in a highly competitive and complex business environment
> Evaluate the results of legal versus voluntary measures from the
perspectives of a range of stakeholders, and its impact on the business.
This is vital for any corporate existence as globalisation does not simply means
economics, but the cultural, social, and political equation are equally important.
Corporate social responsibility touches on each of these facets of civil society.
Where CSR is integrated within the core business strategy, it is likely to remain
strong, whereas, CSR as a philanthropic add-on is vulnerable to cost cutting.
Ultimately, the long-term success of CSR will be based on its ability to be
positioned within the core of business strategy and development, thereby
becoming part of ‘business as usual’.
> The global market demands appropriate guidelines and policies on the
responsibilities of corporations. There is an ongoing debate on CSR to be
left as self-regulated or be regulated by law. Media is always ready with
406
stories of corporations and its social responsibilities if one wish to go by
that only, but it would be more responsible to judge today’s corporations
and their business implications through information backed by substantial
data on the same.
As, all most all the CSR Definitions suggest that Corporate social
responsibility (CSR) encourages organisations to be accountable for their social
and environmental impact beyond profit or legal obligations, many organizations
have responded with defensive CSR initiatives, often disconnected from
everyday business reality. The issues that often need to be judged internationally
are, whether, CSR is just a bandwagon response for public relations; or an extra
curricular activity for staff; or a glossy ‘feel good’ sustainability brochure for
shareholders; or just a politically correct stick for activists to flog ‘non
believers’. If so, the most pertinent question is, ‘Are CSR regulations required
for MNCs while operating abroad? Looking in to the literature, there are
basically three historical viewpoints on this.
Neoliberal point of view: No regulation because any interference with the market
should be avoided (Friedman, Hayeck, Lucas, and so on)
Updated liberalism: Regulation by law must be restricted to externalities and
monopolistic practices while maximization of shareholders value takes care in
the best possible way of the interests of all the other stakeholders (Friedman,
Hayeck, Lucas, Jenssen and so on as cited in Prakash Sethi, 2003, Setting Global
Standards, Wiley, Hoboken, N.J).
407
Theory of stakeholders: Yes to self-regulation. Because it is the only way to
avoid market distributive distortions induced by the market and maximisation of
shareholder value.
It is true that, when regulation by law ensures minimal standards, in the
process ‘conviction’ gets lost to ‘compliance’ and that spoils the value behind
Social Responsibilty. At the same time, no one should have doubts that, there is a
need for demonstrated consistency between CSR claims and actual behaviour in
all the developing countries where the MNC operates. The stakeholders here
have different characteristics and resultant bearings. The demographic realities
are peculiar and Governments also play very limited role to protect adequate and
long term social security of people. In light of these realities, if, CSR is regulated
through supportive legislative measures that are apt for the country specific
conditions can confer sustained CSR Outcomes.
> Globalisation is associated with massive increases in cross-national flows of
capital, labour, technological know-how, goods and services, and it has
correspondingly important effects on employment, economic development,
political institutions, and social Development. Secondly, Corporations are
key agents of globalization as they are laboratories of innovation and
repositories of resources and talent. They are like people; each has a unique
personality and character. Just as people recognise each of us by the way we
communicate and the way we behave, so a company also reflects its own
unique character to the world. Hence, globalization presents major
408
challenges to social scientists and policy makers at many different levels of
scale. Academics and research provide significant paraphernalia to cultivate
a holistic and intellectually flexible understanding and approach in future
business leaders towards critical multi-sector social dilemmas facing today’s
world. CSR is one approach that can ensure that, future managers become
responsible decision makers. It prepares them to analyse business impact,
means recognising the business benefits and the wider social impact of
business policies. When the curriculum at business schools does not cover
only the traditional areas of recruitment, remuneration, training etc. but also
covers the growing global concerns like social and environmental impact of
business and opportunities of issues such as cultural diversity, equal
opportunities, social investments etc. it offers a framework that helps future
leaders and through them, organisations move toward responsible business
practices. It is important for today’s students and tomorrow’s leaders
to understand the role of each player in society -government, business, trade
unions, non-governmental organisations and civil society etc for building
capacity and getting prepared for creating strategic networks and
alliances. In this direction, the education and corporate sectors partnerships
is necessary for restructuring social and sustainable goals in local and global
communities
409
Suggestions
1. Identify performance measures and set measurable targets.
The first and foremost issue in CSR Undertaking among MNCs is to
make them accountable in some way to its stakeholders, and responsible to
provide corporeal mechanisms to ensure that the CSR yields measurable results.
CSR is a long and complicated process that influences overall business
decisions and so old patterns of working and taking decisions on it become
obsolete and insufficient to have measurable outcomes. As seen in the study, all
of the CSR instruments are voluntary, adherence to them rarely requires
verification and by definition also CSR is away from the enforceable by law.
Voluntary approaches, by design or default, serve to by-pass or undermine some
of the key forces that promote corporate responsibility, namely government or
international regulation, trade unionism, and more confrontational forms of NGO
activism. As a result, whatever initiatives undertaken, build on the self-interest of
companies and proves more to be a business case. To enable companies initiate
CSR more for addressing stakeholders’ issues, effective management of CSR
demands monitoring, measuring and reporting of performance against socially
accepted indicators. In light of this, CSR processes deserve good and
professional facilitation as it requires a transition from a 'routine and occasional'
activity to a sustainable and ethically important activity, if not through voluntary
than through statutory measures.
410
On the basis of the researcher’s observations and experiences during this
study, the researcher has listed certain areas of social responsibility that are
important and possible to measure from stakeholders’ perspective. For the
purpose, the researcher has developed a 'Corporate Social Responsibility Matrix'
with Key Performance Indicators of CSR. The companies can adopt 360 degree
Performance Analysis approach and get feedback of their actual performance on
various aspects of CSR by the respective stakeholders. This analysis and
feedback from it only, should allow the companies to document, measure, and
report on their social responsibility-performance. The same approach can be
adapted to measure each of the Social Responsibility Undertakings and projects,
bearing in mind that financial and social objectives are complementary, rather
than mutually exclusive.
Managers can use this CSR Matrix as a means to articulate strategy,
communicate its details, motivate people to execute plans, and enable executives
to monitor results. Perhaps the prime advantage is that a broad array of indicators
can improve the decision making that contributes to strategic success. Non-
financial measures enable managers to consider more factors critical to long-term
performance
411
Corporate Social Responsibility Matrix
Here the ranking suggests achievements against the commitments
made/no commitments in particular area on the scale of 1 to 10 wherein, 1
suggests 10% and 10 suggests 100% achievement. CSR Processes involved are
listed by the company and the judgment left to the stakeholders.
The other important suggestions are:
2. MNCs should develop an integrated CSR decision-making structure. All
the MNCs’ CSR can go to higher graph if the companies constitute a CSR
committee comprising a member of the Board, senior management,
representatives from each of the stakeholders group, an expert from outside the
company, instead of attaching CSR activities to the HR departments only. Given
that CSR is fundamentally concerned with transparency, accountability and
performance, it is important for the CSR decision-making structure to be an
integral component of the firm's governance activities and remain visible.
Assigning CSR responsibilities to board members ensures that CSR issues will
receive the attention they deserve, and as a result forms a strong basis for an
effective chain of CSR accountability within the organization — all of which
supports the board's corporate governance function. A senior official or
committee responsible for overall CSR implementation within the firm should be
identified and given the resources to do the job. CSR responsibilities should be
built into employees' job descriptions and performance evaluations.
412
3. Design CSR Training. A comprehensive approach to training will ensure
employees have information on the firm's CSR commitments, programs and
implementation. Studies suggest that the most successful training addresses
knowledge, skills and attitudes. In order to strengthen MNCs’ corporate social
responsibility practices, the most important step to be taken is the raising of
awareness of various facets of CSR itself. As most of the time CSR is
perceived only as either charity for good cause or community development
projects. Regular discussions between companies and its stakeholders, as well
as among the stakeholders allow to create socially and culturally relevant
understanding and undertakings of corporate responsibility.
4. The overall success of CSR depends on the leaders within the
organization. The right mix of motivation-and technical knowledge of CSR
among the leaders is of prime importance to raise the standards of CSR as, the
how’s and why’s of corporate responsibility affect the policies undertaken, its
implementation and success.
5. The MNCs should be encouraged to initiate volunteer schemes or
partnerships with civil society groups, who can provide policy guidance,
procedural support and technical advice. MNCs need to work more closely with
civil society, national and international organisations and governments to gain
momentum for more responsible business practice and the best framework in
which this can happen.
413
6. Reforming labour legislation at the national level is just one area that
would improve corporate social responsibility Undertakings. Similarly, improved
adherence to national and international guidelines can be achieved through
legislative measures. The introduction of tax benefits is another way in which to
promote corporate responsibility. Corporate Social responsibility if in a frame of
Statutory measures, requires companies to mainstream labour related and human
rights issues throughout their operations in a meaningful manner. Governments
worldwide should support meaningful corporate social responsibility and genuine
accountability for any violations. To encourage initiatives such as to expose
abuses and provide guidelines to protect the rights of stakeholder groups, country
specific recommendation and measures need to be welcomed.
7. Introduction of CSR as an action programme in management curriculum
in business schools and operationalising it at the industry level can change the
scenario of CSR in coming years.
8. The researcher also suggests that during the course of business, as a part
of business ethics, the companies continuously need to seek answers of few
questions.
> As business is primarily an economic activity, the first question is: How
does the company contribute in the economic well-being of not only their
shareholder but all other stakeholders?
414
> The second question that needs to be asked is: How to get rid of constraints
in achieving higher standards of social responsibility undertakings?
> The third question that can be raised is: Where, there is a scope to improve
people’s quality of life within ethical business framework?
> The fourth question is: What measures will be more suitable for meeting
larger development objectives of the local land? Where and at what level
interventions would be more appropriate?
> The fifth and the last question is: How does the company meet the local and
global goal of Sustainable Development?
Further Scope of Enquiry in Corporate Social Responsibility (CSR)
1. Mainstreaming Corporate Social Responsibility (CSR) teaching and
research in business curriculum.
2. Social Investments and Involvement by MNCs.
3. Corporate Social Responsibility (CSR) Reporting.
4. Corporate Social Responsibility (CSR) and MNC Decision Making.
5. Multinational Companies and ISO Standard for CSR.
6. Voluntary VS Regulatory CSR
7. Social Impact/Consequences of Business
415
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WEBPAGES
Wikipedia, the free encyclopedia as cited in ‘The Bell System Technical Journal,
Vol. 27, p.379, (July 1948)..
http://www.Weforum.org/corporatcitizenship>
http://www.lblf.org>.
http://www.csrforum.com/csr/csrwebassist.nsfrcontent/fd/2b3aj4.htm/>
http://commerceflienders.edu.aU/researchpaper.//0023/html
http://www.corpgov.net/forums/commentary/entine.html
http://www.Weforum.org/corporatcitizenship>
http://www.lblf.org>.
http://www.corpgov.net/forums/commentary/entine.html
428
ANNEXURE-I
QUESTIONNAIRE
Organization Profile
1. Name of the organization.

1.1. Original name of the domestic company^
1.2. Original name of the foreign companycountry of
origin.
2. Address (Local):
Rural / Urban (Location)
3. Nature of Business: Engineering/CheMcal/Pharma./IT/ .etc.

4. Year of Establishment (as MNC in India)
5. Ownership /Share holding Pattern
5.1. Domestic Industry£%)
5.2. Foreign Industry(%).
6. Mode of entry:
6.1. Greenfield project
6.2. Acquisition
6.3. Joint ventures
6.4. Partial Acquisition
7. Total number of employees.
7.1. Top Management
7.2. Middle Management
7.3. Others
8. Total number of members in Board of Governance:
8.1. Expatriate-
8.2. Indians-
429
Respondent’s Profile
1. Number of the Respondent (as a respondent to the researcher).

2. Name of the present Organisation:
3. Age:
4. Education : pi. specify
4.1. 1st degree
4.2. 2nd degree
4.3. Additional degree
5. Total No. Of Working Experienceyears
6. No. of years spent in present Organisation:
7. Place of Residence (Present): "
8. Native place:
9. Designation:
10. Department: _____________
11. Have you worked on any socially relevant activity in the past?
11.1. Yes
11.2. No
If yes, Area of work
12. Are you working on any of the CSR project
12.1. Yes
12.2. No.
If yes, name the project
13. Incentive (Rs.) : . (If receiving for working on CSR
Projects)
14. The capacity in which you are working on CSR
14.1. Strategic planner
14.2. Advisor
14.3. Implementer/- Functionary
14.4. Evaluator
14.5. Any other Please specify.
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II CSR Profile Of The Organization
0
1. Launching year of CSR programme in India.
2. Launching year of CSR programme in original country ______ .Major
CSR programmes outside India.
1.
2.
3. Do you have any separate CSR Board
3.1. Yes
3.2. No,
3.3. If yes
3.3.1. For international operation on CSR
3.3.2. National operations on CSR
3.3.3. Do not have any separate Board
3.3.4. Any other management structure Please specify.
(Please put V against the applicable answer/s)
4. Frequency of formal Meetings held in a year to discuss CSR agenda.

4.1. Agenda includes
4.1.1. Reviewing
4.1.2. Monitoring
4.1.3. Expanding CSR Activities
4.1.4. Any other
5. CSR programmes in. India are implemented / coordinated through
5.1. Human Resource Department
5.2. Public Relation / administrative department
5.3. A cross-functional team is identified
5.4. OutsideNGO
5.5. Any other pis. specify
6. The employees involved in CSR programme are:
6.1. Exclusively working on it
6.2. rotated on their willingness for volunteering
431
6.3. Shoulder dual responsibility
7. The employee involved in CSR program are
7.1. Professionally qualified
7.2. On the job training is given
7.3. Self learning expected
7.4. Any other Please specify____ .
8. Did the company reduce no. of employees in the past
8.1. Yes
8.2. No If yes
8.2.1. In which year.
8.2.2. Number of employees in each category
8.2.2.1. Top mgt.
8.2.22. Middle mgt.____________
8.2.2.3. Shopfloor
9. The Company helped the outgoing employees
9.1. By giving good financial security
9.2. Imparted training to equip for other job
9.3. Counseling services for personal adjustment
9.4. Counseling to family members
9.5. Any other Please specify
10. CSR is designed strictly in reference to ...
10.1. Community needs
10.2. Government guideline
10.3. Company’s global CSR framework
10.4. Success stories of CSR leaders
10.5. Any other Please specify__________ .
11. The company’s SR agenda is benchmarked on
11.1. Management system
11.2. Stakeholders’Engagement
11.3. Reporting
11.4. Wider accessibility
11.5. None of the above
432
12. Which of the following CSR Code of Conducts the company has adopted
12.1. Company code of conduct
12.2. Trade Association code
12.3. Multistakeholder code
12.4. Model codes
12.5. Intergovernmental codes
13. The CSR Regulation Guidelines adopted by the company is
13.1. The OECD declaration
13.2. The ILO Tripartite declaration
13.3. The Global Compact - 1999
13.4. Any other Please specify______ ______.
14. Major stakeholders identified by the company for CSR
14.1. Employees
14.2. Customers
14.3. Suppliers
14.4. Competitors
14.5. Shareholders
14.6. Communities
14.7. Government
14.8. Environment
15. The management has been able to identify linkages between ...
15.1. CSR & business performance
15.2. CSR & employee retention
15.3. CSR & community support
15.4. CSR & customer loyalty
15.5. CSR& ‘FEELGOOD’ factor
15.6. Any Other
16. Has the company undertaken socially responsible activities in the following
areas
(V against all the applicable answers)
16.1. The economics function area

16.1.1. Producing goods & services that people need.
433
16.1.2. Creating jobs for society and local communities
16.1.3. Paying fair wages
16.1.4. Ensuring employees’ safety
16.1.5. Financing needy for capacity building
16.1.6. Vocational / entrepreneur training
16.1.7. Undertaking measures for poverty eradication
17. The quality of life area.
17.1. Producing high quality of goods.
17.2. Dealing fairly with employees & customers.
17.3. Making an effort to preserve the natural environment
17.4. Supporting local communities for agricultural development
17.5. Helping in natural disaster
17.6. Undertaking family based interventions
17.7. Hardcore business ethics
18. The social investment area
18.1. Education
18.1.1. School enrollment
18.1.2. Sponsorship to needy
18.1.3. Merit awards
18.1.4. Creating own educational institution
18.2. Health
18.2.1. Building and running own hospitals
18.2.2. Maternal and child healthcare program
18.2.3. Family Welfare/Population control program
18.2.4. Providing lifesaving drugs to needy
18.2.5.HIV AIDS
18.2.6. Any particular disease control
18.2.7. Training to healthcare providers
18.2.8. Rehabilitation of disabled
18.3. Infracture
18.3.1. Provision of housing facilities
18.3.2. Safe drinking water
18.3.3. Building transportation facilities
18.3.4. Creating communication services
434
18.3.5. Other civic amnities
18.4. Recreational Facilities
18.4.1. Creating and maintaing recreation services
18.4.2. Entertainment facilities
18.4.3. Supporting sports/cultural events
18.4.4. Arranging self development activities
18.5. Polity
18.5.1. Citizenship training
18.5.2. Participation in civic activities
18.5.3. Support to Human Right perspective
18.5.4. Generating political awareness
18.5.5. Encouraging volunteerism / volunteers’ training
19. The problem solving area
19.1. Problem of neighborhood community
19.2. Gender equality
19.3. The vulnerable groups and its abuse
19.4. Substance abuse
19.5. Rehabilitation of socially stigmatized
19.6. Awareness campaigns on relevant issues
435
CSR Practices
Put Tickmark() against appropriate answer / answers. Some may have more
than one answer.
1. Social Responsibility is effectively treated as

1.1. An investment
1.2. A cost
1.3. Charity
1.4. Any other Please specify .
2. The company has undertaken CSR to comply with
2.1. Stakeholders’ awareness
2.2. Direct pressure from the stakeholder
2.3. Congruence between economies and ethics
2.4. A deep sense of social responsibility
3. The company believes in CSR Investment in the form of....
3.1. Direct financial contributions to charitable & civic projects.
3.2. Raising funds for social cause
3.3. Volunteerism through employees involvement
3.4. Utilisation of organizational resources for development work
4. The company’s CSR policy has been able to ..
4.1. Great more jobs for the locals
4.2. Has created feeling of volunteerism among employees
4.3. Induce loyalty into stakeholders
4.4. Shift ethics paradigm
4.5. Any other Please specify
5. Major barriers to CSR for the Company
5.1. National policy regulations
5.2. NGOS / Medias attention
5.3. Willingness of leadership
5.4. Community’s resistance
436
5.5. Lack of visible results
5.6. CSR investment has long gestation period
6. CSR of the company aims to achieve
6.1. Empowerment of Individuals and various groups
6.2. Resolving conflict in existing social structure
6.3. Building stronger social institutions
6.4. Community building
6.5. Nation building
6.6. Region building
6.7. World building
7. According to you the Company...
7.1. Fulfils all the statutory and legal obligations.
7.2. Has grown from this first stage & meets some of the social issues.
7.3. Has adapted a pro-active approach towards development of the society in
which it operates
7.4. Any other pi. specify
8. Present CSR environment in the company is
8.1. Most satisfying
8.2. Inadequate to stakeholders’ needs
8.3. Inadequate to business needs
8.4. Doesn’t matter personally
9. CSR undertaken / not undertaken till date has its impact on following
components of Corporate Governance of the company...
9.1. Corporate reputation and goodwill
9.2. Job satisfaction among all employees
9.3. Scope for survival for the firm
9.4. Attracting better managerial talent
9.5. Long term profitability
9.6. Strengthning diversity of Indian society
9.7. Price for consumers
9.8. Stockholders’/ Future investors’ response
9.9. Relationship with Government
9.10. Socio economic system in which company operates
437
A
Please give your views on CSR as practiced in your present company in India
The following statements are to be put on a 5 point scale as mentioned. Here all
the statements are to be perceived in relation to your company’s corporate Social
Responsibility (CSR) practices and then tick mark (*) which is most
appropriately observed / experienced by you. Here,
SA - Strongly Agree, A-Agreed, UD - Undecided, D-Disagree, SD-
Strongly Disagree
Sr. SA A UD D SD
HERE IN THE COMPANY WE BELIEVE....
No *
1 That Industries are powerful agents of positive
social change.
2 In Responsibilities and respect for the dignity and
interest of its stake holders
3 That law and market forces are necessary but not
sufficient to guide organizations social conduct
4. In contributing to the prosperity and social
cohesion of the communities in which we operate.
5 Recognize and support (Indian) government’s
policies and programmes that promise human
development
THE COMPANY IS DETERMINED FOR
6 Effective and prudent use of resources,

organizations can contribute to economic and
social development.
7 Highest quality products and consistent services
are must for our organisation.
8 Seek fairness and truthfulness in all the activities
like pricing, licensing and right to sell etc.
9 Encouraging and assisting employees in
438
developing transferable and relevant skills and
knowledge is good for the employees.
10 Ethical practices of the supplies are preferred over
the business motives in their selection.
11 Fair and competitive returns on owner’s /
investor’s assets.
THROUGH OUR OPERATIONS WE ...

12 Protect and improve environment for sustainable
development
13. Promote employment of differently able people
where they can be genuinely useful
14. Have incorporated national policy objectives in the
company’s corporate planning and sees to it that
they are being implemented
15. Seek cooperation with other stakeholders to
eliminate corruption, corporate crimes etc.
16. Ensure that the business activities can free from
coercion and avoidable litigation.
MY COMPANY...
17. Is being honest in communications with employees

and open in sharing information on which they
have a right
18. Discloses relevant and true information to its
owners / investors
19. Considers acquiring commercial information by
unethical means irresponsible business practice
20. Communicates directly with the key audiences to
influence them decision for the company and its
products.
21. Has achieved higher credibility through pro-active
and transparent communication to all its
stakeholders.
439
MY COMPANY PUTS CONSISTENT EFFORTS....
22. To keep all the employees informed about the
ethical issues in the business operation
23. To integrate various departments at the company
through CSR ‘strategies’ education
24. To seek guidance and support from local
communities to identify ‘needs’ and ‘key
communities’ to be considered under S.R.
Activities.
25. To plan specific CSR model for particular region
and community after making scientific inquiry into
their socio-cultural environment.
26. Educate and train managers, workers and other
actors on CSR.
THE COMPANY...
27. Holds regular meetings with various group of
stakeholders at different stages of its CSR
programmes (planning, implementing, evaluating
etc.)
28. Collaborates with government and NGOS for the
endorsement of CSR programmes and practices
29. Interacts with various stakeholders to understand
the culture of the customers and then integrate it
into marketing and products offered.
30. Articulates the CSR programmes more at the
management level than community level.
31. The stakeholders suggestions are invited and acted
upon.
THE COMPANY HAS ADOPTED CSR PROGRAMME...
32. Since it helps in profit maximization in the long
run
33. With a view to strengthen management -
stakeholder (labour) relationship
440
34. As it helps in building brand equity and corporate
reputation in the market
35. To attracts and retains key employees for the
company.
36. And that is helping public acceptance and support
of the local communities.
THE COMPANY UNDERTAKES CSR AS IT...
37. Builds human and social capital

38. Safeguards larger societal interests through ethical
business operation
39. Is an organized effort which improves quality of
life of people
40. Tackles some of the national developmental issues
like alleviation of poverty
41. Restores peoples faith in industrial development
and business operations.
THE CONFLICTING ISSUES AT THE COMPANY ARE DEALT 3Y
42. Engaging in good faith negotiations with

respective stakeholder
43. Proactively providing working conditions that
respect each employees health and dignity.
44. Avoiding discriminatory practices at all the levels
of business operations.
45. Listening and acting on the stakeholders
suggestions and ideas to their satisfaction
46. Reflecting institutional concern for social and
ethical issues and working responsibly towards it.
IN MY COMPANY...
47. All the decisions concerning CSR are undertaken

by the corporate board without understanding local
requirements.
48. The national and local teams are deployed to
441
strategies CSR programmes
49. The participatory appraisal of community needs is
a regular feature
50. The present CSR is modelled on the management’s
past successful CSR model in some other country.
51. The CSR programme is designed on the available
extra, deployable resources of the company.
IN MY COMPANY...
52. The periodical review of its CSR programme is a

regular feature.
53. The local communities seem to influence future
CSR strategies
54. The CSR review is taken with a view to measure
its impact on financial performance of the
company.
55. The social impact assessment of CSR programme
is undertaken to Expand its benefits.
56. The systematic reviewing exercise has helped
monitoring and strengthening CSR programme.
THE CSR AUDIT OF THE ...
57. Involves the third party certification of voluntary
actions
58. Allows to report on its achievements based on
verified evidence rather than an unsubstantiated
claims.
59.' Permits the investors and stakeholders to judge if it
is achieving the values it set out in the beginning
for the social cause.
60. Helps improve the strategic planning by
identifying potential problems before they comp
up.
61. Strengthens corporate accountability and corporate
442
governance.
THE COMPANY UNDERTAKES CSR REPORTING...
62. Responsibility of reporting all the CSR activities at

regular intervals.
63. CSR reporting with total transparency to build
creditability among various groups of stakeholders
64. Reporting of CSR as a management tool to build
corporate image.
65. Reporting of the CSR programme without
involving any outside agency (media) to avoid
people’s speculations on the company intentions.
66. CSR reporting along with financial reporting as a
routine.
443
B
Please tickmark (/) Tickmark response based on your observations for your
present organizations Level of Adherence to CSR Regulations as given in
Global Guidelines.
Sr. CSR REGULATIONS High Moderate Low

No.
1 General Policy
1. Respect for Sovereign rights of the state in
which your company operates.
2. Obeying national laws and regulations
3. Giving due considerations to local practices
4. Respecting relevant international standards.
5. Honoring commitments made to various
stakeholders.
6. Undertaking activities in harmony with
development priorities, social aim and
structure of the host country.
2 Quality of Work Life
7. Comparable wages, benefits and conditions of
work observed in the host country.
8. Equal remuneration for equal work to men
and women.
9. Procedures followed in collective lay offs. Or
dismissals resulting from merges/takeover.
10. Income protection to workers whose
employment has been terminated.
11. Incorporating highest standard of health &
safety at work place.
12. Ensuring benefits to poorest of poor/lower
income group as much as possible.
3 Employment Conditions
444
13. Effective abolition of child labour
14. Non Discrimination in employment and
occupation in terms of opportunities &
practices
15. Elimination of all forms of forced &
compulsory labour.
16. Using technologies which generate
employment.
17. Manpower planning harmony with national
social development policies.
18. Empowering Employment stability & social
security.
4 Industrial Relations \
19. Obsessing comparable standards of Industrial \

relations.
20. Freedom of Associations & Right to
organization.
21. Support to Representative employers
organization.
22. Freedom to consultation with national and
international organization by employer.
23. Right to collective bargaining.
24. Right to Submit Grievances without suffering
prejudices.
25. Objectivity in examining grievances.
26. Attempting, harmonious, co-existence of
trade union and management.
5 Human Rights
27. Supporting & Respecting the internationally
proclaimed human rights.
28. Making sure that company is not complicit in
human right abuses.
29. Consideration for employment rights of the
445
disabled.
30. Communication of all types includes human
right language and sprit.
6 Environment.
31. Adapting a precautionary approach to
environmental challenge.
32. Reflecting greater understanding of the
environmental impact of the product
accounting human health & safety.
33. Encouraging the development & diffusion of
environmentally friendly & meaningful public
policy
34. Your company’s actual environmental
performance.
35. Regular monitoring and verification of
progress toward environmental safety &
controlling objectives or targets.
36. Maintain contingency plans for serious
environmental and health damages in
emergencies i.e. accidents etc.
7 Consumer Interests
37. Product Ensure all legally required standards

far health & Safety of Consumers.
38. Accurate & Clear Information regarding
content safe use, storage etc.
39. Effective & Transparent procedure to address
& resolve consumers complaints without
under cost or burden.
40. Not Engaging in any unfair, misleading or
fraudulent practices which an against
consumers interest.
8 Direct Contribution to local Communities.
446
41. Has Developed mechanism for community
partnership.
42. Supporting and Handling community issues.
43. Liasioning with local governance.
44. Community involvement for capacity
building of the needy.
45. Community investment for social
development.
9 Training
46. Imparting relevant training appropriate to

company’s needs and national development
policy.
47. Training for self employment &
entrepreneurship.
48. Leadership Training.
49. Adequate Education & training in
environment health and safety matters.
50. Citizenship training to concerned
stakeholders.
10 Disclosure
51. Clear & Complete information an enterprises
operations to appropriate stakeholders.
52. Social, Environmental & Risk reporting.
53. Communicating of Their activities influence
on sustainable development outcomes.
54. Transparency & effectiveness of non
financial disclosure for independent
verification.
11 Corruption
55. Abstaining from improper involvement in
•
local political activities.
56. Flow of bribe for retaining business.
447
57. Compbating extortion and bribery and
making employees aware about company
policy.
58. Enhancing public awareness of the
probBems of corruptions & bribery.
59. Fostering a culture of ethics within the
enterprise.
12 Corporate Governance
60. Cross cultural stakeholders engagement
61. Accountability in non-financial issues.
62. Overall business conduct.
63. Humanitarian Relief.
64. Social & Sustainable development dialogue
with stakeholders.
65. Corporate partnership for national
development.
66. Emphasizing corporate citizenship.
67. Social Auditing and Reporting
448
€
Below are some issues of discussion on International Social Responsibility. Look

, them with special reference to MNCs and give your individual opinion on each
of the following sentences
Sr. International Social Responsibility SA A UD D SD

No
1. CSR is good and should be linked to the concept of
sustainable development
2. CSR means the recognition of the need for business
to address the social, economic and environmental
impact on their operations
3. CSR is not an “add on” to core business activities
4. CSR is not about shifting public responsibilities to
the private sector
5. CSR complements rather than replaces legislations
and social dialogue
6. CSR education and training of managers, workers,
and other actors is vital
7. CSR stands or falls on transparency and credible
validation tools
8. Profitability is a pre-condition for CSR
9. To be credible CSR practices cannot be developed,
implemented & evaluated unilaterally by
companies & stakeholders need to be involved
10. CSR is an effective strategy to accelerate economic
progress
11. CSR generates from the corporate orientation to
managerial ethics and professionalism
12. CSR is likely to spread costly regulations
worldwide which accelerates global poverty
13. CSR is forced by activist groups hostile /critical of
449
multinational operations and LPG policy
14. MNCs are often complacent in human rights abuse

& ought to be held accountable
15. MNCs are profit maximizing and thus naturally are
not interested in creating benefits for others without
being paid for it.
16. Social responsibility arises from social power
which a business organization enjoys in a society.
17. There must be an ongoing honest & open
communication between business and society
representatives.
18. 18. MNCS major concern is “returns” on social
program investments
19. 19. Business must insider long term & short term
social consequences of all business activities
20 If a business possesses expertise to solve a social
problem with which it may not be directly
associated, it should be held responsible for helping
society solve that problem.
21. The cost of maintaining socially desirable activities
within business should be passed on to consumers.
450
ANNEXURE - II
A’d 'i
Corporate Social Responsibility Global Guidelin«^r;
Multinational Companies.
Interest Groups - NGO Codes of Conduct
1. Caux round table Principles for Business

Origin. In its language and form, the document owes a substantial debt to The
Minnesota Principles, a statement of business behavior developed by the
Minnesota Center for Corporate Responsibility. The Center hosted and chaired
the drafting committee, which included Japanese, European, and United States
representatives. These principles are rooted in two basic ethical ideals: kyosei
and human dignity. The Japanese concept of kyosei means living and working
together for the common good enabling cooperation and mutual prosperity to
coexist with healthy and fair competition. "Human dignity" refers to the
sacredness or value of each person as an end, not simply as a mean to the
fulfillment of others' purposes or even majority prescription.
At the urging of Ryuzaburo Kaku, Chairman of Canon Inc., the Round Table has
focused attention on the importance of global corporate responsibility in reducing
social and economic threats to world peace and stability. The Round Table
recognizes that shared leadership is indispensable to a revitalized and more
harmonious world. It emphasizes the development of continuing friendship,
understanding and cooperation, based on a common respect for the highest moral
values and on responsible action by individuals in their own spheres of influence.
Purpose. Business behavior can affect relationships among nations and the
prosperity and well-being of us all. Business is often the first contact between
nations and, by the way in which it causes social and economic changes, has a
significant impact on the level of fear or confidence felt by people worldwide.
Members of the Caux Round Table place their first emphasis on putting one's
own house in order, and on seeking to establish what is right rather than who is
right.
451
The Caux Round Table believes that the world business community should play
an important role in improving economic and social conditions. Through an
extensive and collaborative process in 1994, business leaders developed the CRT
Principles for Business to embody the aspiration of principled business
leadership. The CRT Principles for Business are a worldwide vision for ethical
and responsible corporate behavior and serve as a foundation for action for
business leaders worldwide. As a statement of aspirations, The CRT Principles
aim to express a world standard against which business behavior can be
measured. The Caux Round Table has sought to begin a process that identifies
shared values, reconciles differing values, and thereby develops a shared
perspective on business behavior acceptable to and honored by all.
Section 1. Preamble The mobility of employment, capital, products and
technology is making business increasingly global in its transactions and its
effects.
• Law and market forces are necessary but insufficient guides for conduct.
• Responsibility for the policies and actions of business and respect for the
dignity and interests of its stakeholders are fundamental.
• Shared values, including a commitment to shared prosperity, are as
important for a global community as for communities of smaller scale.
For these reasons, and because business can be a powerful agent of positive
social change, we offer the following principles as a foundation for dialogue and
action by business leaders in search of business responsibility. In so doing, we
affirm the necessity for moral values in business decision making. Without them,
stable business relationships and a sustainable world community are impossible.
Section 2. General Principles
Principle-1 .The Responsibilities Of Businesses: Beyond Shareholders toward
Stakeholders
The value of a business to society is the wealth and employment it creates and
the marketable products and services it provides to consumers at a reasonable
price commensurate with quality. To create such value, a business must maintain
its own economic health and viability, but survival is not a sufficient goal.
Businesses have a role to play in improving the lives of all their customers,
employees, and shareholders by sharing with them the wealth they have created.
452
Suppliers and competitors as well should expect businesses to honor their
obligations in a spirit of honesty and fairness. As responsible citizens of the
local, national, regional and global communities in which they operate,
businesses share a part in shaping the future of those communities.
Principle-2. The Economic and Social Impact of Business: Toward Innovation,
Justice and World Community
Businesses established in foreign countries to develop, produce or sell should
also contribute to the social advancement of those countries by creating
productive employment and helping to raise the purchasing power of their
citizens. Businesses also should contribute to human rights, education, welfare,
and vitalization of the countries in which they operate.
Businesses should contribute to economic and social development not only in the
countries in which they operate, but also in the world community at large,
through effective and prudent use of resources, free and fair competition, and
emphasis upon innovation in technology, production methods, marketing and
communications.
Principle-3.BusinessBehavior: Beyond the Letter of Law Toward a Spirit of
Trust
While accepting the legitimacy of trade secrets, businesses should recognize that
sincerity, candor, truthfulness, the keeping of promises, and transparency
contribute not only to their own credibility and stability but also to the
smoothness and efficiency of business transactions, particularly on the
international level.
Principle 4. Respect for Rules
To avoid trade frictions and to promote freer trade, equal conditions for
competition, and fair and equitable treatment for all participants, businesses
should respect international and domestic rules. In addition, they should
recognize that some behavior, although legal, may still have adverse
consequences.
Principle 5. Support for Multilateral Trade
Businesses should support the multilateral trade systems of the GATT/World
Trade Organization and similar international agreements. They should cooperate
in efforts to promote the progressive and judicious liberalization of trade and to
453
relax those domestic measures that unreasonably hinder global commerce, while
giving due respect to national policy objectives.
Principle 6. Respect for the Environment
A business should protect and, where possible, improve the environment,
promote sustainable development, and prevent the wasteful use of natural
resources.
Principle 7. Avoidance of Illicit Operations
A business should not participate in or condone bribery, money laundering, or
other corrupt practices: indeed, it should seek cooperation with others to
eliminate them. It should not trade in arms or other materials used for terrorist
activities, drug traffic or other organized crime.
Section 3. Stakeholder Principles
We believe in treating all customers with dignity, irrespective of whether they
purchase our products and services directly from us or otherwise acquire them in
the market. We therefore have a responsibility to:
• provide our customers with the highest quality products and services
consistent with their requirements;
• treat our customers fairly in all aspects of our business transactions,
including a high level of service and remedies for their dissatisfaction;
• make every effort to ensure that the health and safety of our customers, as
well as the quality of their environment, will be sustained or enhanced by
our products and services;
• assure respect for human dignity in products offered, marketing, and
advertising; and respect the integrity of the culture of our customers.
Employees
We believe in the dignity of every employee and in taking employee interests
seriously. We therefore have a responsibility to:
• provide jobs and compensation that improve workers’ living conditions;
• provide working conditions that respect each employee's health and
dignity;
• be honest in communications with employees and open in sharing
information, limited only by legal and competitive constraints;
• listen to and, where possible, act on employee suggestions, ideas, requests
and complaints;
454
• engage in good faith negotiations when conflict arises;
• avoid discriminatory practices and guarantee equal treatment and
opportunity in areas such as gender, age, race, and religion;
• promote in the business itself the employment of differently abled people
in places of work where they can be genuinely useful;
• protect employees from avoidable injury and illness in the workplace;
• encourage and assist employees in developing relevant and transferable
skills and knowledge; and
• be sensitive to the serious unemployment problems frequently associated
with business decisions, and work with governments, employee groups,
other agencies and each other in addressing these dislocations.
Owners / Investors
We believe in honoring the trust our investors place in us. We therefore have a
responsibility to:
• apply professional and diligent management in order to secure a fair and
competitive return on our owners' investment;
• disclose relevant information to owners/investors subject to legal
requirements and competitive constraints;
• conserve, protect, and increase the owners/investors' assets; and
• respect owners/investors' requests, suggestions, complaints, and formal
resolutions.
Suppliers
Our relationship with suppliers and subcontractors must be based on mutual
respect. We therefore have a responsibility to :
• seek fairness and truthfulness in all our activities, including pricing,
licensing, and rights to sell;
• ensure that our business activities are free from coercion and unnecessary
litigation;
• foster long-term stability in the supplier relationship in return for value,
quality, competitiveness and reliability;
• share information with suppliers and integrate them into our planning
processes;'
• pay suppliers on time and in accordance with agreed terms of trade; and
455
• seek, encourage and prefer suppliers and subcontractors whose
employment practices respect human dignity.
Competitors
We believe that fair economic competition is one of the basic requirements for
increasing the wealth of nations and ultimately for making possible the just
distribution of goods and services. We therefore have a responsibility to:
• foster open markets for trade and investment;
• promote competitive behavior that is socially and environmentally
beneficial and demonstrates mutual respect among competitors;
• refrain from either seeking or participating in questionable payments or
favors to secure competitive advantages;
• respect both tangible and intellectual property rights; and
• refuse to acquire commercial information by dishonest or unethical
means, such as industrial espionage.
Communities
We believe that as global corporate citizens we can contribute to such forces of
reform and human rights as are at work in the communities in which we operate.
We therefore have a responsibility in those communities to:
• respect human rights and democratic institutions, and promote them
wherever practicable;
• recognize government's legitimate obligation to the society at large and
support public policies and practices that promote human development
through harmonious relations between business and other segments of
society;
• collaborate with those forces in the community dedicated to raising
standards of health, education, workplace safety and economic well
being;
• promote and stimulate sustainable development and play a leading role in
preserving and enhancing the physical environment and conserving the
earth's resources;
• support peace, security, diversity and social integration;
• respect the integrity of local cultures; and
456
• be a good corporate citizen through charitable donations, educational and
cultural contributions, and employee participation in community and civic
affairs.
2. Amnesty International Human Rights Principles for Business
Origin. The Principles were published in 1998 by Amnesty International, a
worldwide movement promoting human rights enshrined in the United Nations
Universal Declaration of Human Rights .They are rooted in a conviction that “the
silence of business interests in the face of injustice is not neutral.”
Purpose. The Principles are designed to help companies fulfill their
responsibility to promote and protect human rights. More specifically, they are
intended to help prepare companies to address circumstances in which human
rights have been violated, or where the potential for violation exists.
Critical Content. The Principles are predicated on a belief that companies must
protect human rights within their own operations, and the business community
has a moral and legal responsibility to use its influence to promote human rights
within society. They address the following issues:
1. Security Forces - Companies should ensure that any security arrangements
protect human rights and are consistent with international standards for law
enforcement;
2. Community Engagement - Companies should take reasonable steps to ensure
that their operations do not negatively affect human rights in the communities
where they operate.
3. Freedom from Discrimination - Companies should ensure their policies and
practices prevent discrimination based on ethnic origin, sex, color, language,
national or social origin, economic status, religion, political or other
conscientiously-held beliefs, birth, or other status.
4. Freedom from Slavery - Companies should ensure their policies and
practices prohibit the use of chattel slaves, forced labor, bonded child laborers, or
coerced prison labor.
5. Health and Safety - Companies should ensure their policies and practices
provide for safe and healthy working conditions and safe products. Also,
workplaces should be free from employee abuse, and mental or physical
coercion.
457
6. Freedom of Association and Right to Collective Bargaining - Companies
should ensure that employees, without penalty, can exercise their rights to free
expression, collective bargaining, and peaceful assembly and association.
7. Fair Working Conditions - Companies should ensure just and favorable
conditions of work, reasonable job security, and fair and adequate remuneration
and benefits.
Implementation. Responsibility for implementation lies with companies. The
Principles call for companies to establish (1) an explicit human rights policy; (2)
procedures to examine the human rights impact of operations; (3) safeguards to
prevent employee complicity in abuses; (4) mechanisms to monitor compliance;
and (5) a process to independently verify company compliance reports.
Companies also are called to promote adoption of the Principles by their
suppliers and business partners.
3. The Asian Pacific Economic Cooperation Forum Business Code of
Conduct
Origin. The Asia Pacific Economic Cooperation (APEC) forum Business Code
of Conduct resulted from a process initiated at the 1999 APEC CEO Summit in
Auckland, New Zealand.
Purpose: The APEC Business Code draws explicitly upon other sources - for
example, the Caux Round Table Principles for Business and the OECD
Guidelines for Corporate Governance - to create a model code a company can
use to supplement or strengthen its own code of conduct. The Business Code is
intended to (1) encourage corporate transparency and predictability, (2) challenge
APEC governments to maintain their commitment to enhanced transparency and
predictability within the public sector, and (3) develop a better match between
business practice and public expectations.
Critical Content. The Business Code articulates seven standards for corporate
conduct:
1. International and Local Communities - A company must recognize its
responsibilities toward the international and local communities within which it
operates and the individuals that make up those communities;
2. Respect for Laws - A company must respect international and domestic
rules and recognize that some behavior, although legal, may still have adverse
consequences;
458
3. Stakeholder Responsibility - A company must recognize the rights of
stakeholders as established by laws and encourage active co-operation between
companies and stakeholders in creating wealth, jobs, and the sustainability of
financially sound enterprises;
4. Responsibility for the Environment - A company must protect and, where
possible, improve the environment within which it operates, promote sustainable
development and prevent the wasteful use of natural resources;
5. Free and Fair Competition - A company must support free and fair
competition in our industries and avoid anti-competitive actions;
6. Company Governance - A company should implement a company
governance framework that ensures timely and accurate disclosure on all material
matters regarding the company;
7. Illicit Actions - A company must not participate in or condone extortion,
bribery, money laundering, or other corrupt practices.
Implementation. While intended to supplement company codes of conduct, it is
expected that the CEO of any enterprise using the APEC Business Code would
sign the Code and formally agree to uphold the moral obligations it expresses.
4. CERES Principles
Origin. The Coalition for Environmentally Responsible Economies (CERES)
was formed in 1989 to promote responsible corporate environmental conduct.
Shortly after the disaster of the Exxon Valdez , CERES announced the creation
of the Valdez Principles. Later renamed the CERES Principles, this statement
represents an environmental ethic for corporations.
Purpose. The CERES Principles are offered as a comprehensive statement of
environmental values for businesses within any industry sector. They are
intended to help companies formalize their dedication to environmental
awareness and accountability, and actively commit to an ongoing process of
continuous improvement in environmental performance, dialogue, and
comprehensive, systematic reporting.

Content. The Principles encompass ten broad, aspirational standards, covering
the following points:
1. Protection of the Biosphere 2. Sustainable Use of Natural Resources
3. Reduction and Disposable of Wastes
459
4. Energy Conservation 5. Risk Reduction 6. Safe Products and Services
7. Environmental Restoration 8. Informing the Public 9. Management
Commitment 10. Audits and Reports
Implementation. CERES encourages companies to endorse the Principles.
Endorsement is a two-way process, entailing both a company’s commitment and
CERES’ acceptance of this commitment. Endorsement also involves ongoing
dialogue with CERES. Through this process, companies are asked to publicly
demonstrate their commitment to the Principles, address concerns raised by
CERES coalition members and other stakeholders, and agree to report their
results annually.
Currently, over 70 companies have endorsed the CERES Principles, including
large multinational corporations, mid-sized companies, and small firms. The
endorsing companies are U.S -based in the main.
5. The Clarkson Principles of Stakeholder Management.
Origin and Purpose . The year after his retirement from the faculty of the
University of Toronto in 1988, Max Clarkson (1922-1998) founded the Centre
for Corporate Social Performance and Ethics in the Faculty of Management, now
the Clarkson Centre for Business Ethics & Board Effectiveness, or CC(BE) 2 .
Four conferences hosted by the Centre between 1993 and 1998 brought together
management scholars to share ideas on stakeholder theory, an emerging field of
study examining the relationships and responsibilities of a corporation to
employees, customers, suppliers, society, and the environment. The Alfred P.
Sloan Foundation funded the project, from which the Clarkson Principles
emerged.
Critical Content. After an introduction to the stakeholder concept with
comments on shareowners and the legal and moral duty of managers, seven (7)
principles of Stakeholder Management are set forth, each with a paragraph or
two expanding on its meaning. These principles represent an early stage general
awareness of corporate governance concerns that have been widely discussed in
connection with the business scandals of2002.
Principle 1 : Managers should acknowledge and actively monitor the concerns of
all legitimate stakeholders, and should take their interests appropriately into
account in decision-making and operations.
460
Principle 2: Managers should listen to and openly communicate with
stakeholders about their respective concerns and contributions, and about the
risks that they assume because of their involvement with the corporation.
Principle 3: Managers should adopt processes and modes of behavior that are
sensitive to the concerns and capabilities of each stakeholder constituency.
Principle 4: Managers should recognize the interdependence of efforts and
rewards among stakeholders, and should attempt to achieve a fair distribution of
the benefits and burdens of corporate activity among them, taking into account
their respective risks and vulnerabilities.
Principle 5: Managers should work cooperatively with other entities, both public
and private, to insure that risks and harms arising from corporate activities are
minimized and, where they cannot be avoided, appropriately compensated.
Principle 6: Managers should avoid altogether activities that might jeopardize
inalienable human rights (e.g., the right to life) or give rise to risks which, if
clearly understood, would be patently unacceptable to relevant stakeholders.
Principle 7: Managers should acknowledge the potential conflicts between (a)
their own role as corporate stakeholders, and (b) their legal and moral
responsibilities for the interests of all stakeholders, and should address such
conflicts through open communication, appropriate reporting and incentive
systems and, where necessary, third party review.
Implementation. In many ways, the Clarkson Principles are “meta-principles”
that encourage management to embrace specific stakeholder principles and then
to implement them in accordance with the norms listed above. Their current use
seems largely hortatory, unlike principles or codes that call for formal adoption
by managers or corporations.
6. Ethical Trading Initiative (ETI)
Origin. The ETI is an alliance of companies, NGOs and trade unions that share
a common interest in the labor issues associated with multinational supply
chains. ETI was founded to promote “ethical sourcing”, defined as “a company
taking responsibility to work with its suppliers to implement internationally
accepted labor standards in the workplace.”
Purpose. The purpose of ETI is to “identify, develop and promote good practice
with respect to implementing codes of labor practice.” ETI members share
461
experiences and promote learning about implementing international labor
standards. The ETI does not audit or certify companies.
Critical Content . ETI consists of a “Base Code” plus principles for
implementation. The Base Code, agreed upon in 1998, draws from the ILO
Conventions on worker and human rights. Companies are expected to adopt the
Base Code for their own operations, or develop a company-specific version of
the code. Companies are expected to require that suppliers meet the Base Code
in a reasonable amount of time; otherwise, business is withdrawn from non-
compliant suppliers. Rapid corrective action is required by compliant suppliers
that violate certain code sections. The ETI acknowledges that some parts of the
code may be (1) subject to constraints not controlled by the supplier, (2) in
contravention of national laws or (3) otherwise not realizable by the supplier. In
these cases, an ETI company may limit the scope of application of the code by
division or product line, or may set an alternative schedule for compliance. The
nine provisions of the ETI Base Code are:
1. Employment is freely chosen. 2. Freedom of association and the right
to collective bargaining are respected.
3. Working conditions are safe and hygienic. 4. Child labor shall not be
used. 5. Living wages are paid.
6. Working hours are not excessive. 7. No discrimination is practiced.
8. Regular employment is practiced.
9. No harsh or inhumane treatment is allowed.
Implementation . The Base Code (or the company’s version thereof) is to be
implemented systematically. Principles of implementation are offered to the
company “as general principles upon which to develop or refine their search for
best practice.” The ETI underscores that transparency about implementation is
as important as effective implementation. Notable among the principles for
implementation is the commitment to an annual report of progress relative to the
code. As of this review, the standards for such report are not yet agreed. The
implementation principles are as follows:
1. Commitment 2. Monitoring, independent verification, and
reporting 3. Awareness raising and training 4. Corrective actions
5. Management procedures, pricing and incentives
462
7. Social Accountability 8000
Origin. SA8000 is the product of Social Accountability International (SAI), an
organization founded in 1997. SAI is dedicated to addressing the growing
concern among consumers about working conditions in factories around the
world.
Purpose. SA8000 is intended to overcome the difficulties associated with
monitoring internal corporate codes of conduct. It offers (1) a standard for
workplace conditions, and (2) a system for independently verifying a factory’s
compliance with this standard.
Content . SA8000’s normative elements are based upon International Labor
Organization conventions and United Nations human rights standards, while its
verification system draws upon established business strategies and systems for
ensuring quality (e.g., ISO 9000). Its social accountability requirements address
nine areas:
1. Child Labor 2. Forced Labor 3. Health and Safety 4. Compensation
5. Working Hours 6. Discrimination 7. Discipline 8. Free
Association and Collective Bargaining 9.Management Systems
Implementation . SAI accredits firms to act as external auditors that certify
whether manufacturing facilities are in compliance with SA8000. Certification of
compliance with SA8000 means that a facility has been examined in accordance
with SAI auditing procedures and found to meet the standard’s requirements.
8. Draft U.N. Human Rights Principles and Responsibilities for

Transnational Corporations and Other Business Enterprises
Origin and Purpose . Taking note of global trends which have increased the
influence of transnational corporations and other business enterprises - and
particularly transnational corporations — on the economies of most countries and
in international economic relations; and the growing number of other business
enterprises which operate across national boundaries in a variety of arrangements
resulting in economic activities beyond the actual capacities of any one national
system,
Noting that transnational corporations and other business enterprises have the
capacity to foster economic well-being, development, technological
improvement, and wealth as well as have the capacity to cause deleterious human
463
rights impacts on the lives of individuals through their core business practices
and operations, including employment practices, environmental policies,
relationships with suppliers and consumers, interactions with governments, and
other activities,
Noting also that new international human rights issues and concerns are
continually emerging and that transnational corporations and other business
enterprises often are related to these issues and concerns, such that further
standard-setting and implementation are required at this time and in the future,
Acknowledging the universality, indivisibility, interdependence, and
interrelatedness of human rights, including the right to development, that entitles
every human person and all peoples to participate in; contribute to; and enjoy
economic, social, cultural, and political development in which all human rights
and fundamental freedoms can be fully realized,
Reaffirming those transnational corporations and other business enterprises, their
officers, and their workers have, inter alia, human rights obligations and
responsibilities and that these human rights norms will contribute to the making
and development of international law as to their responsibilities and obligations,
Solemnly proclaims these Norms on the Responsibilities of Transnational
Corporations and Other Business Enterprises with Regard to Human Rights and
urges that every effort be made so that they become generally known and
respected:
A. General Obligations
1. States have the primary responsibility to promote, secure the fulfilment of,
respect, ensure respect of, and protect human rights recognised in international as
well as national law, including assuring that transnational corporations and other
business enterprises respect human rights. Within their respective spheres of
activity and influence, transnational corporations and other business enterprises
have the obligation to promote, secure the fulfilment of, respect, ensure respect
of, and protect human rights recognized in international as well as national law.
B. Right to Equal Opportunity and Non-Discriminatory Treatment

2. Transnational corporations and other business enterprises shall ensure
equality of opportunity and treatment, as provided in the relevant international
464
instruments and national legislation as well as international human rights law, for
the purpose of eliminating discrimination based on race, colour, sex, language,
religion, political opinion, national or social origin, social status, indigenous
status, disability, age (except for children who may be given greater protection),
or other status of the individual unrelated to the inherent requirements to perform
the job, or complying with special measures designed to overcome past
discrimination against certain groups.
C. Right to Security of Persons. Business enterprises shall not engage in nor
benefit from war crimes, crimes against humanity, genocide, torture, forced
disappearance, forced or compulsory labor, hostage-taking, abuses in internal
armed conflict, and other international crimes against the human person.
D. Rights of Workers. Business enterprises shall not use forced or
compulsory labor, shall respect the rights of children to be protected from
economic exploitation, shall provide a safe and healthy working environment,
and shall compensate workers with remuneration that ensures a lifestyle worthy
of human existence for workers and their families in the context of their
circumstances. They shall also ensure freedom of association and effective
recognition of the right to collective bargaining.
E. Respect for National Sovereignty and Local Communities. Business
enterprises shall recognize and respect applicable laws and authority of the
countries in which the businesses operate, in so far as they do not conflict with
international human rights standards. They shall not engage in bribery or
seek/give improper advantage from/to any government, government official, or
candidate for elective post. In addition, businesses shall respect a community’s
rights to health, adequate food, and adequate housing, and refrain from actions
that obstruct the realization of those rights. Businesses shall also respect other
rights, such as rights to education, rest and leisure, and participation in the
cultural life of the community. Also civil and political rights, such as freedom
of movement; freedom of thought, conscience, and religion; and freedom of
opinion and expression.
F. Obligations with regard to Consumer Protection. Business enterprises shall
act in accordance with fair business, marketing, and advertising practices and
should take all reasonable steps to ensure the safety and quality of the goods and
services they provide.
465
G. Obligations with regard to Environmental Protection. Business
enterprises shall carry out their activities in accordance with laws and policies
relating to the preservation of the environment of the countries in which they
operate and shall generally conduct their activities in a manner contributing to
the wider goal of sustainable development.
Implementation. The Draft calls for business enterprises to be subject to
verification of compliance with these Principles in a manner that is independent,
transparent, and includes input from relevant stakeholders. Each company shall
adopt, disseminate, and implement its own code of conduct or shall take other
adequate measures to afford at least the protections set forth in these Principles.
Business enterprises shall assess their major activities to determine their human
rights impact in light of these Principles and such assessments shall be subject to
verification in a manner that is independent, transparent, and includes input from
relevant stakeholders.
9. The Global Sullivan Principles
Origin. The Global Sullivan Principles were formulated by Reverend Leon
Sullivan in 1997.
Purpose. The Global Sullivan Principles seek to support economic, social and
political justice by companies where they do business; to support human rights
and encourage equal opportunity at all levels of employment, including racial
and gender diversity on decision making committees and boards; to train and
advance disadvantaged workers for technical, supervisory and management
opportunities; and to assist with greater tolerance and understanding among
peoples, thereby improving the quality of life for communities, workers, and
children.
Critical Content. The Global Sullivan Principles articulate eight general norms
for companies, requiring them to:
A. Support universal human rights, particularly those of employees, the
communities within which they operate, and the parties with whom companies
do business.
B. Provide equal opportunity for employees at all levels with respect to color,
race, gender, age, ethnicity or religious beliefs, and prevent unacceptable worker
treatment such as the exploitation of children, physical punishment, abuse of
women, involuntary servitude, or other forms of abuse.
466
C. Respect employees' right to freedom of association.
D. Provide compensation that enables employees to meet basic needs, and afford
them opportunity to improve their skills and capabilities in order to increase their
social and economic opportunities.
E. Provide a safe and healthy workplace, protect human health and the
environment, and promote sustainable development.
F. Promote fair competition, respect intellectual and other property rights, and
not offer, pay or accept bribes.
G. Work with governments and communities to improve the quality of life —
educational, cultural, economic and social well being—and provide training and
opportunities for workers from disadvantaged backgrounds.
H. Promote the application of these Principles by those with whom they do
business.
Implementation. Companies that ascribe to the Global Sullivan Principles are
♦
called to implement policies, procedures, and internal reporting structures that
help ensure commitment to these aspirations. Endorsing companies and
organizations are asked to take part in an annual reporting process, to document
and share their experiences.
10. Draft U.N. Human Rights Principles and Responsibilities for
Transnational Corporations and Other Business Enterprises
Origin and Purpose. This document, which is in the drafting process, was
commissioned by the UN as an addendum to the UN Universal Declaration of
Human Rights. Its purpose is to indicate that there are some rights that can and
should be provided for by business organizations “as organs of society,” although
governments have the primary responsibility to promote and protect human
rights.
Critical Content. The Draft consists of seven broad rights principles, followed
by a set of implementation guides and definitions. Each of the broad rights
principles are further articulated by sub-paragraphs and commentaries aimed at
making the principles clearer and more specific.
A. General Obligations. While governments have the primary obligation to
promote internationally recognized human rights, transnational corporations and
other business enterprises also have the obligation to promote international
human rights within their respective spheres of activity and influence.
467
B. Right to Equal Opportunity and Treatment. Business enterprises shall
pursue policies which ensure equality of opportunity and treatment, for the
purpose of eliminating discrimination based on race, color, sex, religion, political
opinion, nationality, social origin, social status, indigenous status, disability, age
(over the age of majority), marital status, capacity to bear children, pregnancy,
sexual orientation, genetic features, or other status of the individual unrelated to
the individuaTs ability to perform his/her job
C. Right to Security of Persons. Business enterprises shall not engage in nor
benefit from war crimes, crimes against humanity, genocide, torture, forced
disappearance, forced or compulsory labor, hostage-taking, abuses in internal
armed conflict, and other international crimes against the human person.
D. Rights of Workers. Business enterprises shall not use forced or
compulsory labor, shall respect the rights of children to be protected from
economic exploitation, shall provide a safe and healthy working environment,
and shall compensate workers with remuneration that ensures a lifestyle worthy
of human existence for workers and their families in the context of their
circumstances. They shall also ensure freedom of association and effective
recognition of the right to collective bargaining.
E. Respect for National Sovereignty and Local Communities. Business
enterprises shall recognize and respect applicable laws and authority of the
countries in which the businesses operate, in so far as they do not conflict with
international human rights standards. They shall not engage in bribery or
seek/give improper advantage from/to any government, government official, or
candidate for elective post. In addition, businesses shall respect a community’s
rights to health, adequate food, and adequate housing, and refrain from actions
that obstruct the realization of those rights. Businesses shall also respect other
rights, such as rights to education, rest and leisure, and participation in the
cultural life of the community. Also civil and political rights, such as freedom
of movement; freedom of thought, conscience, and religion; and freedom of
opinion and expression.
F. Obligations with regard to Consumer Protection. Business enterprises shall
act in accordance with fair business, marketing, and advertising practices and
should take all reasonable steps to ensure the safety and quality of the goods and
services they provide.
468
G. Obligations with regard to Environmental Protection. Business
enterprises shall carry out their activities in accordance with laws and policies
relating to the preservation of the environment of the countries in which they
operate and shall generally conduct their activities in a manner contributing to
the wider goal of sustainable development.
Implementation. The Draft calls for business enterprises to be subject to
verification of compliance with these Principles in a manner that is independent,
transparent, and includes input from relevant stakeholders. Each company shall
adopt, disseminate, and implement its own code of conduct or shall take other
adequate measures to afford at least the protections set forth in these Principles.
Business enterprises shall assess their major activities to determine their human
rights impact in light of these Principles and such assessments shall be subject to
verification in a manner that is independent, transparent, and includes input from
relevant stakeholders.
Note. The Draft is under review by the Sub commission on the Promotion and
Protection of Human Rights, a subsidiary body of the U.N. Commission on
Human Rights. At the time of writing, the Draft will next be considered during
the Subcommission’s fifty-fourth session, to be held on July 30-31 in Geneva,
Switzerland.
11. Accountability 1000

Origin. The Institute of Social and Ethical Accountability (ISEA) facilitated the
development of AccountAbility1000 (AA1000) through work with individuals
and organizations from business, government, and civil society. The standard
first appeared in 1999.
Purpose. AA1000 is intended to improve the accountability and overall
performance of business firms by enhancing the quality of social and ethical
accounting, auditing and reporting. The AA1000 standard can be used in two
ways: (1) as a common currency to underpin the quality of existing and emerging
specialized accountability standards, or (2) as a stand-alone system and process
for managing and communicating social and ethical accountability and
performance.
Contents. AA1000 specifies the process an organization should follow to account
for its performance, rather than performance levels an organization should
achieve. Under AA1000, corporations define and declare their governing values
469
and ethical principles. The process standards contained within AA1000 link these
values and principles to the development of performance targets and to the
assessment and communication of organizational performance. An organization
gradually enhances its performance by capitalizing on experience from previous
improvement cycles.
Implementation. Utilization of AA1000 standard proceeds through five stages:
1. Planning: The organization commits to the process, and defines and reviews its
values and social/ethical objectives and targets.
2. Accounting: The scope of the process is defined, information is collated and
analyzed, and performance targets and improvement plans are developed.
3. Auditing and Reporting: A report on the organization’s systems and
performance is prepared, the overall process is externally audited, reports are
made accessible to stakeholders, and stakeholder feedback is obtained.
4. Embedding: Structures and systems are developed to strengthen the process
and integrate it within the organization’s activities.
5. Stakeholder Engagement: Stakeholder participation is sought and engaged in
stages (1) through (4).
12. International Confederation of Free Trade Union (ICFTU) and

International Trade Secretariats (ITS)
Basic Code of Labor Practice
Origin. The 111th meeting of the ICFTU Executive Board (Brussels, December
1997) adopted a "Basic Code of Conduct covering Labor Practices". The Code’s
text was developed by the ICFTU/ITS Working Party on Multinational
Companies in a process that entailed extensive consultations with various trade
union organizations, as well as other individuals and groups.
Purpose. The Basic Code seeks to establish a set of minimum standards that
should be included in all codes of conduct addressing labor practices. It promotes
the primacy of international labor standards and respect for trade union rights. A
central idea behind the Code is that labor exploitation and abuse cannot be
separated from the repression of workers and therefore codes of conduct must
incorporate freedom of association and the right to collective bargaining. The
Basic Code can assist trade unions that are negotiating with companies or
470
working with NGO’s in campaigns involving codes of conduct. The Code’s
provisions also may be adopted by a company doing business internationally.
Critical Content. The Basic Code requires a company and its contractors,
subcontractors, principal suppliers and licensees/franchise holders to ensure that:
1. All employment is freely chosen - bonded or involuntary prison labor is
prohibited;
2. There is no discrimination in employment;
3. Child labour is not used;
4. Freedom of association and the right to collective bargaining are
respected;
5. Workers are paid a living wage;
6. Working hours are not excessive;
7. Working conditions are decent; and
8. The employment relationship is established - that is, obligations to
employees under labor or social security laws/regulations are not be
circumvented.
Implementation. Implementation and monitoring requires a company to apply
the Basic Code to its own operations and the operations of its contractors,
subcontractors, principal suppliers and licensees. This means:
• Contractors, subcontractors, principal suppliers and licensees must
provide the company with operational information, permit inspection at
any time, maintain complete worker records, inform workers of the Code
provisions, and refrain from discriminating against any worker for
providing information concerning observance of the code.
• The company will terminate contractors, subcontractors, principal
suppliers and licensees that breach the terms of the Basic Code.
The company must establish a procedure to resolve questions about the Code’s
meaning and its implications
13. Business Principles for Countering Bribery

Published in December 2002, the Business Principles for Countering Bribery
were developed through a multi-stakeholder dialogue, including trade unions,
companies, non-governmental organisations (NGOs) and academics from many
471
countries. The conveners of the dialogue are Transparency International and
Social Accountability International (SAI). Transparency International was
founded in 1993 to build coalitions to fight corruption. Companies are
encouraged to apply (rather than adopt) the Business Principles by initiating their
own internal process of setting policies and procedures within the company
through consultation with stakeholders.
14. Ethical Trading Initiative: Base Code

The Ethical Trading Initiative (ETI) seeks to improve the lives of workers in
global supply chains by creating a forum to identify and promote good practice
in the implementation of codes of conduct. The initiative is tripartite, consisting
of membership groups from three sectors: companies, NGOs and trade unions.
The ETI is funded by the UK government’s Department for International
Development and by its members, who pay dues. In pursuit of its aims, the ETI
conducts experimental projects into aspects of code implementation, hosts
seminars, events and conferences and has a research and publications
programme.
15. Fair Labor Association: Workplace Code of Conduct

The Fair Labor Association (FLA) is a network of companies, human rights and
labour organisations, colleges and universities seeking to improve working
conditions. The FLA accredits independent monitors to inspect factories. It
works with companies to improve internal monitoring systems. Companies are
expected to implement systems to ensure that the FLA Workplace Code of
Conduct is upheld
throughout their supply chains. The FLA accredits, selects, hires and pays
monitors to conduct independent and external monitoring visits in 5% of
participating company factories.
16. ICC Business Charter for Sustainable Development

Launched in 1991, the International Chamber of Commerce (ICC) Business
Charter was developed by business leaders. The Charter includes 16 principles
which focus on how to make the environment a corporate priority. Among the
472
key issues are: integrated management, education, research, prior assessment,
precautionary approach, transfer of technology, compliance, reporting and
emergency preparedness.
17. ISO 14001

ISO 14001 is the key element in a family of standards for creating environmental
management systems (EMSs). An EMS is ‘the part of the overall management
system that includes organisational structure, planning activities, responsibilities,
practices, procedures, processes and resources for developing, implementing,
achieving, reviewing and maintaining the environmental policy’.2 The
International Organisation for Standardisation (ISO) has developed over 13,000
standards, working with standard-setting bodies in 145 countries. As with all ISO
standards, companies that have successfully undergone an ISO 14001 audit by a
trained auditor receive an ISO 14001 certificate. Elements of the ISO series—
particularly ISO 14001—can also be used internally, without external auditors.
18. Marine Stewardship Council’s Principles and Criteria for

Sustainable Fishing
Founded in 1997 by Unilever, the Marine Stewardship Council (MSC) became
an independent organisation in 1999. The MSC is a multi-stakeholder
organization that promotes environmentally responsible stewardship of the
world’s most renewable food source. The MSC accredits certifiers to ensure that
fish are harvested in a sustainable manner. Facilities that pass the audit receive
the MSC certificate and can use the MSC product label on their products.
19. OECD Convention for Combating Bribery of Foreign Officials in

International Business Transactions
Launched in 1997, the OECD Convention on Combating Bribery is a landmark
agreement, defining key terms and developing a legal framework for addressing
bribery. The Convention has been ratified by all 30 members of the OECD and
by a growing number of non-members as well. The Convention applies to
bribery of foreign government officials anywhere, regardless of where the
incident takes place.
473
20. Rio Declaration on Environment and Development
The Rio Principles enshrined in the declaration define the right of people to
development and gives signatories the responsibility to safeguard the
environment for future generations.
21. Social Accountability 8000

Social Accountability 8000 (SA8000) is a global and verifiable standard
designed to make workplaces more humane. The standard combines key
elements of the International Labour Organisation (ILO) conventions with the
management systems of ISO. SA8000 is a certification standard developed,
overseen and updated through multi-stakeholder dialogue with trade unions,
companies, NGOs and academics.
^ 4. 4* +1* 4* *1* 4. 4* 4f 4* 4* *1* vj.
474

Corporate Social Responsibility: by Selected Multinational Companies in Gujarat

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Corporate Social Responsibility

By Selected Multinational Companies in Gujarat.

Faculty of Social Work

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INFORMATION TO ALL USERS

All rights reserved.

A Summary of Thesis submitted to

Ph.D. Guide : Researcher:

Faculty of Social Work

(A study of 105 Employees’ perceptions of 18 Multinational

Faculty of Social Work

Corporate Social Responsipil

Ph.D. Guide : Researcher :

Faculty of Social Work

‘This is to certify that the thesis submitted By Smt.

ShaiCaja Sarvadaman Rgijada on ‘Corporate SociaC

ResponsiSiCity (By Selected (MuCtinationaC Companies in

(jujarat(A study of 105 UmpCoyees’ perceptions of 18

MuCtinationaC Companies’ SociaC ResponsibiCity "Undertakings)

contains originaCdata. The thesis is the originaf worh^and

incorporates the resuCts of independent investigations

carried out By Smt. ShaiCaja S. Raijada.

She has worked under my direct guidance andsupervision.

The content of this worh^ is not submitted anywhere in

India and outside of India to any other universityfor the

awardofother degree or diploma.

Vadodara (Prof. Dr. JLruna KjiasgiwaCd

Date: August2008 Dh.D. ()uide

Globalization, economic liberalization, political transition and

technological transformation have created fundamental and rapid changes in

society. These have changed the expectations of business behaviour in terms of

influencing changes that will eliminate economic inequality, environmental

On the International scenario, governments and their international arms including

they like it or not, corporations have to be involved in development and should

be seen as agents of development. Large corporations, with their power and

responsibility and need to recognise their obligations.

The concept of Corporate Social Responsibility (CSR) as a postulate for

by academics and commentators, including faculty members in business schools

where it is increasingly struggling to find an honoured place in the curriculum.

by ‘public interest’ non-governmental organisations (NGOs), many of which are

leading and forceful critics of businesses in general and multinational

corporations (MNCs) in particular.

It is the highly centralized nature of multinational corporations that is

branch/plants abroad in times of economic downturn than to close plants at

home. Logically, they tend to establish subsidiaries in countries where conditions

governments do have some bargaining power, but, particularly in developing

important economic actors in global affairs than are many states.

At the same time, any business including MNCs is not development

agencies. They are profit-seeking organizations which have particularly made

them object of great controversy. Over the evidences of large-scale corporate

command resources that are so large, often larger as compared to smaller/poorer

power (and size), comes great responsibility.

regulating business in response to liberalisation and globalisation of trade and

commerce. Moreover, globalization has also weakened regulation at the national

cuts have resulted in the non-enforcement of existing regulations.

In addition, increasing focus is being placed on the growth of corporate

At the same time, internationally, different societies have become more

demanding in terms of expecting ‘right behaviour’ from the corporations.

Integrating interests of host country’s development issues and local communities

operating revenues. In addition to higher revenues, environmental protection and

business and society. Corporate Social Responsibility has been demanded by

various stakeholders as one response to these challenges, that refers to business

relating to labour conditions, environmental impacts, human rights compliance etc.