INTRODUCTION:

“Corporate Social Responsibility should not be defined by tax planning strategies alone. Rather it should be defined within the framework of a corporate philosophy which factors the need of the community and the regions which a corporate entity functions. This part of our cultural heritage, Mahatma Gandhi called it trusteeship… I invite corporate India to be a partner in making ours a more humane and just society. We need a new partnership for Inclusive Growth based on what I describe a Ten Point Social Charter, first, we need to have healthy respect for your workers and invest in their welfare.”

-Indian Prime Minister, Mr. Manmohan Singh in 2007.¹

A growing number of writers over the last few decades have recognized that the activities of an organization impact upon the external environment and have suggested that such an organization should therefore be accountable to a wider audience than simply its shareholders. Such a suggestion probably first arouse in the 1970s and a concern with a wider view of company performance is taken by some writers who evince concern with the social performance of a business, as a member of society at large. This concern was stated by Ackerman (1975)² who argued to a new social climate of community accountability, but that the orientation of business to financial results inhabited social responsiveness. McDonald and Puxty (1979)³ on the other hand maintain that companies are no longer the instruments of shareholders alone but exist within society and so therefore have responsibilities to that society, and that there is therefore a shift towards the greater accountability of companies to all participants.

Every business Organization has, mainly two fold objectives- Economic and Social. The economic objective deals with the profits while social objectives refer to its dealing with employees, public and stakeholders. The Company is accountable to its stakeholders not only for its financial, economic and operational activities but also on all issues having social or Corporate Social Responsibility (CSR). The concept of corporate social responsibility means that organizations have moral, ethical, and philanthropic responsibilities in addition to their responsibilities to earn a fair return for investors and comply with the law. A traditional view of the corporation suggests that its primary, if not sole, responsibility is to its owners, or stockholders. However, CSR requires organizations to adopt a broader view of its responsibilities that includes not only stockholders, but many other constituencies as well, including employees, suppliers, customers, the local community, local, State and Central governments, environmental groups, and other special interest groups. Collectively, the various groups affected by the actions of an organization are called "stakeholders." Corporate social responsibility is related to, but not identical with, business ethics. While CSR encompasses the economic, legal, ethical, and discretionary responsibilities of organizations, business ethics usually focuses on the moral judgments and behavior of individuals and groups within organizations. Thus, the study of business ethics may be regarded as a component of the larger study of corporate social responsibility.

Traditionally, the role of the corporate was clear- with its roots in agency principles, a corporate’s responsibility lay towards its principals. Its only responsibility towards stakeholders other than its principals was what society had established through various environmental, labour, and other societal- protection legislation. In today’s world, however, corporate for reasons ranging from the business case to philanthropic considerations are recognizing a responsibility to stakeholders that goes beyond their legal responsibilities. As corporate increasingly recognize and act upon this Corporate Social Responsibility (CSR), policy-makers are also searching for innovative ways in which corporates contribute to a country’s sustainable development agenda.

It is readily apparent that any actions which an organization undertakes will have an effect not just upon itself but also upon the external environment within which that organization resides. In considering the effect of the organization upon its external environment it must be recognized that this environment includes both the business environment in which the firm is operating, the local societal environment in which the organization is located and the wider global environment. This effect of the organization can take many forms such as:

· The utilization of natural resources as a part of its production process,

· The effects of competition between itself and other organization in the same market,

· The enrichment of a local community through the creation of employment opportunities,

· Transformation of the landscape due to raw material extraction or waste product storage, and

The distribution of wealth created within the firm to the owners of the firm (via dividends) and the workers of that firm (through wages) and the effect of this upon the welfare of individuals.

It can be seen therefore from these examples that an organization can have a very significant effect upon its external environment and can actually change that environment through its activities. It can also be seen that these different effects can in some circumstances be viewed as detrimental to the environment. Indeed the same actions can be viewed as beneficial by some people and detrimental to others.

The modern scenario is no longer based upon the ethics of past, the competitive revolution among the organizations has changed the perception of employees. The technology savvy producers have kept many welfare options infront of the employees, which have attracted employees to work and to adopt the culture. The options which got created by the employees or by the organizations set a benchmark infront of them to practice the similar for all other organizations. Government and different Government bodies discovered the reliable ways by keeping the welfare aspect as the motivation factor. In other terms if we say then, the concept of corporate social responsibility is not new to Indian companies. Corporate social Responsibility activities have their advantages. The benefits are in terms of building a positive image and encouraging social involvement of employees, which in turn develops a sense of loyalty for the organization. The companies have understood that the retention of market depends upon productivity, goodwill, quality of their product, which can be expected from the people associated to them. Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia, descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with non-economic social values.

Evolution and Development of Corporate Social Responsibility

Almost everyone today, whether student, managers, or employees have heard something about the notion of CSR, whether in business community, from media, or even within popular circle. But despite the pervasiveness of CSR, what CSR means and whether it is actually important to the business world in any real way can be quite varied. What one quickly realizes is that a magnitude of different definitions exist for CSR, as well as a range of views on the appropriate scope and nature of a firm’s social responsibility.⁴ Of course, before one can even attempt to discuss the notion of CSR, the initial starting point might be to reflect on what exactly the nature of corporations as a legal entity is and how corporations are distinct from other types of business organization (e.g., sole proprietorships, partnerships etc.). This the leads to important initial question over whether corporations as legal organizational entities are even capable of being held morally responsible for their actions.⁵ For example , if one believes that only individuals (as opposed to corporations) can be held morally responsible, the result may be that it is impossible to even discuss or debate on CSR⁶. Assuming, then, that firms can be held responsible for their actions or inactions, how might one respond when asked what CSR means. The appropriate definition and scope of CSR become much more problematic when ral business case examples are considered.

The need for social responsibility among business is not new concept. Ancient Chinese, Egyptian, Sumerian writers often delincated rules for commerce to facilitate and ensure that the wider public’s interest were considered. Ever-since, public concern about the interaction between business and society has grown in proportion to the growth of corporate activity. Concerns about the excesses of East India Company were commonly expressed in the 17^th centuary. There has been a tradition of benevolent capitalism in the United Kingdom for over 150 years. Quakers, such as Barclays and the Cadbury, as well as socialists, such as Engles and Morris experimented with socially responsible and value based forms of business. And Victorian philanthropy could be said to be responsible for considerable portions of the urban landscape of older town centers today.

Evidence of social activism in response to organizational actions also stretches back across the centuaries, mirrioring the legal and commercial development of companies. Although wealthy industrialists have long sought to balance the mercantile actions of their firms with personal or corporate philanthropy as a response to social activism or other demands, CSR ultimately originated with leaders who view their roles as stewards of resources owned by others. Leaders such as Anderson face a balancing act that addresses the tradeoffs between the owners (shareholders) that employ them, the society that enables their firms to prosper, and the environment that provides them with raw materials to produce products and services of value. When specific elements of society view leaders and their firms as failing to meet social needs, activism results. This was true of 18^th century.

However end of 19^th centuary, restrictions around incorporation had all but disappeared. A series of legal ruling in 1800s essentially freed corporations from restrictions imposed by state charters and the rules of incorporation , creating first privately owned corporations free from state control and possessing private property rights. The landmark decision of the United States Supreme Court that removed corporations from state was Dartmouth vs. Woodward in 1819. The court’s ruling had two immediate effect: first, it effectively put an end to the argument that the corporation was a creature of the state thus limiting public representation. Second, by conferring private rights on corporations, rights normally held by individuals, the court automatically guaranteed a system that would protect those rights.

As a field of study in management, CSR probably emerged in the 1950s in the United States. Business practices on the 1900s that could be termed socially responsible took different form: philanthropic donations to charity, service to the community, enhancing employee welfare and promoting religious conduct. Early proponents were CEOs and business leaders from the big oil and energy companies, telecommunication corporations and automobile manufacturers of the 1920s.

The ideology of CSR in the 1950s was primarily based on an assumption of the obligation of business to society. This obligation arouse because some scholars and practitioners saw business as an instrument of society and managers as public trustees whose main job was to balance often completing demands of employees, customers, suppliers, communities and shareholders. Most of the academic research over next few years, described CSR as the ways and means by which corporations could meet their social obligations without losing sight of their main shareholders’ value⁷. Again, there was a shift in the concept of CSR, in 1990 from fulfilling societal obligations through philanthropy to a more strategic level that attempted to tie corporate societal initiatives to corporate objectives.

According to an article by Frederick (2006), it stated that the power of business overcomes the weak reed of voluntary social responsibility. The social responsibility concept is of minimal effectiveness. However, if we do believe in the general argument that because business is an instrument of society, then we must consider societal interests then we need to understand what social, economic and political forces created the modern corporations.

In the last twenty years, there has been a change in the nature of the triangular relationship between companies, the state and the society. No longer can firms continue to act as independent entities regardless of the interest of the general public. The evolution of the relationship between companies and society has been one of slow transformation from a philanthropic coexistence to one where the mutual interest of all the stakeholders is gaining paramount importance.⁸ Companies are beginning to realize the fact that in order to gain strategic initiative and to ensure continued existence, business practices may have to be molded from the normal practice of solely focusing on profits to factor in public goodwill and responsible business etiquettes. An examination of some of the factors which have led to the development of the concept of corporate social responsibility (CSR) would be ideal starting ground for the conceptual development of suitable corporate business practices for emerging markets.⁹

The current trend of globalization has brought a realization among the firms that in order to compete effectively in a competitive environment; they need clearly defined business practices with a sound focus on the public interest in the markets. The increase in competition among the multinational companies to gain first mover advantage in various developing countries by establishing goodwill relationships with both the state and the civil society is ample testimony to this transformation. Secondly, The state with its duty of protecting the interests of the general public would naturally be inclined to give preference to companies which take care of the interests of all the stakeholders.¹⁰

Corporate Social Responsibility (CSR) has been debated and practiced in one form or another for more than 4,000 years. For example, the ancient Vedic and Sutra texts of Hinduism and the Jatakas of Buddhism include ethical admonitions on usury (the charging of excessive interest) and Islam has long advocated Zakat, or a wealth tax.

The modern concept of corporate social responsibility can be more clearly traced to the mid-to-late 1800s, with industrialists like John H. Patterson of National Cash Register seeding the industrial welfare movement and philanthropists like John D. Rockerfeller setting a charitable precedent that we see echoed more than a hundred years later with the likes of Bill Gates.

In the 1990s, corporate social responsibility was institutionalized with standards like ISO 14001 and SA 8000, guidelines like GRI and corporate governance codes like Cadbury and King. The 21^st century has been mostly more of the same, spawning a plethora of corporate social responsibility guidelines, codes and standards (there are more than 100 listed in The A to Z of Corporate Social Responsibility), with industry sector and climate change variations on the theme.¹¹

Corporate Social Responsibility in India

Today, the world is coming round full circle in emphasizing this concept through an articulation of the principle of social responsibility of business and industry. And this trend is no different in India either. Mahatma Gandhi, the charismatic visionary leader who brought the cause of India's independence from British colonial rule, was a person who in several respects was ahead of his time.¹² His view of the ownership of capital was one of trusteeship, motivated by the belief that essentially society was providing capitalists with an opportunity to manage resources that should really be seen as a form of trusteeship on behalf of society in general.

Given India’s long tradition in this field, its corporate social responsibility agenda continues to be characterized mainly by philanthropic and community development activities. On the other hand, the survey also revealed that Indian companies and stakeholders are beginning to adopt some aspects of the mainstream agenda, such as the integration of corporate social responsibility into their business processes and engagement in multi-stakeholder dialogues.

Some Cases of CSR Initiatives in India

Reliance Industries Ltd.- Reliance Industries Ltd. launched a countrywide initiative known as “Project Drishti”, to restore the eye-sights of visually challenged Indians from the economically weaker sections of the society.

Hero Moto Corp- Hero Moto Corp takes considerable pride in its stakeholder relationships, especially ones developed at the grassroots. The Company believes it has managed to bring an economically and socially backward region in Dharuhera, Haryana, into the national economic mainstream.

Infosys Technology Limited- Infosys promoted, in 1996, the Infosys Foundation as a not-for-profit trust to which it contributes up to 1% PAT every year. Additionally, the Education and Research Department (EandR) at Infosys also works with employee volunteers on community development projects.

4) ITC Limited- ITC partnered the Indian farmer for close to a century. It is now engaged in elevating this partnership to a new paradigm by leveraging information technology through its trailblazing ‘e-Choupal’ initiative. ITC is significantly widening its farmer partnerships to embrace a host of value-adding activities viz. creating livelihoods by helping poor tribes make their wastelands productive, investing in rainwater harvesting to bring irrigation to parched dry-lands, empowering rural women by helping them evolve into entrepreneurs, and providing infrastructural support to make schools an exciting platform for village children.

‘LABS’ of Dr. Reddy’s Labs-Dr. Reddy’s lab started ‘LABS’ (Livelihood Advancement Business School) in the year 1999. It trains the underprivileged youngsters, even street children for livelihood earnings in the job areas i.e. technology, healthcare, hospitality, finance and marketing issues. It involves four types of volunteers viz Student volunteer mentors, Faculty volunteer mentors, Network mentors and Resource mentors.

Current status of corporate social responsibility in India

India’s economic reforms and its rise to become an emerging market and global player have not resulted in a substantial change in its corporate social responsibility approach. Contrary to various expectations that India would adopt the global corporate social responsibility agenda, its present corporate social responsibility approach still largely retains its own characteristics, adopting only some aspects of global mainstream corporate social responsibility.

Corporate social responsibility is not a new concept in India. Corporate like the Tata Group, the Aditya Birla Group, and Indian Oil Corporation, to name a few, have been involved in serving the community ever since their inception. Many other organizations have been doing their part for the society through donations and charity events. Today, corporate social responsibility in India has gone beyond merely charity and donations, and is approached in a more organized fashion. It has become an integral part of the corporate strategy. Companies have corporate social responsibility teams that devise specific policies, strategies and goals for their corporate social responsibility programs and set aside budgets to support them.¹³

These programs, in many cases, are based on a clearly defined social philosophy or are closely aligned with the companies‟ business expertise. Employees become the backbone of these initiatives and volunteer their time and contribute their skills, to implement them. Corporate social responsibility Programs could range from overall development of a community to supporting specific causes like education, environment, healthcare etc.

Best practices followed by Indian Companies related to corporate social responsibility are as follows:¹⁴

· ONGC and Indian Oil Corporation has been spending 0.75-1 % of their net profits on corporate social responsibility activities. ONGC‟s corporate social responsibility projects focus on higher education, grant of scholarship and aid to deserving young pupils of less privileged sections of society, facilities for constructing schools etc.

· SAIL has taken successful actions in environment conservation, health and medical care, education, women upliftment providing drinking water.

· BHEL and Indian Airlines have been acclaimed for disaster management efforts. BHEL has also adopted 56 villages having nearly 80,000 inhabitants.

· Reliance Industries initiated a project named as “ Project- Drishti” to bring back the eyesight of visually challenged Indians from the economically weaker sections of the society. This project has brightened up the lives of over 5000 people so far.

· GlaxoSmithKline Pharmaceuticals‟ corporate social responsibility programs primarily focus on health and healthy living. They work in tribal villages where they provide financial health, medical check-up and treatment, health camps and health awareness programs.

· Bajaj Electricals Ltd corporate social responsibility activities include Education, Rural Development and Environment.

The 2010 list of Forbes Asia’s ‘48 Heroes of Philanthropy’ contains four Indians. The 2009 list also featured four Indians. India has been named among the top ten Asian countries paying increasing importance towards corporate social responsibility (CSR) disclosure norms. India was ranked fourth in the list, according to social enterprise CSR Asia's Asian Sustainability Ranking (ASR), released in October 2009.

According to a study undertaken by an industry body in June 2009, which studied the CSR activities of 300 corporate houses, corporate India has spread its CSR activities across 20 states and Union territories, with Maharashtra gaining the most from them. About 36 per cent of the CSR activities are concentrated in the state, followed by about 12 per cent in Gujarat, 10 per cent in Delhi and 9 per cent in Tamil Nadu.

The companies have on an aggregate, identified 26 different themes for their CSR initiatives. Of these 26 schemes, community welfare tops the list, followed by education, the environment, health, as well as rural development.

Further, according to a study by financial paper, The Economic Times, donations by listed companies grew 8 per cent during the fiscal ended March 2009. The study of disclosures made by companies showed that 760 companies donated US$ 170 million in FY09, up from US$ 156 million in the year-ago period. As many as 108 companies donated over US$ 216,199, up 20 per cent over the previous year.

Moreover, in 2009, the government made it mandatory for all public sector oil companies to spend 2 per cent of their net profits on corporate social responsibility.

Besides the private sector, the government is also ensuring that the public sector companies participate actively in CSR initiatives. The Department of Public Enterprises (DPE) has prepared guidelines for central public sector enterprises to take up important corporate social responsibility projects to be funded by 2-5 per cent of the company's net profits.

New Challenges and Opportunities:

Although corporate social responsibility in India is and has been predominantly about practices that nourish people, community and cultural values, there has been a new shift in focus of CSR in some new industries such as Information Technology Enterprise Solutions (ITES) and Business Process Outsourcing (BPO), which have emerged from India’s globalization. These industries’ corporate rationality has different features than older industries, with attendant differences in their approach to CSR. Breaking the conventional norms of the employer-employee relation, the IT sector has initiated and promoted a friendly and flat structure in corporate India. The work environment and employer-employee relations at all the leading firms is more relaxed and more flexible than the traditional corporate culture, with first name identification, direct e-mails and performance driven packages all common. Though a strict hierarchy is still prevalent in the old economy sectors such as manufacturing, services and finance, seniority in sectors like ITES and BPO depends on performance. For years, leading companies in India have focused on products, innovation, competition, process transformations and technology to gain a competitive edge. However, there is a distinct realization today that while these things all are still important, the key differentiator now is people. The growth of these new industries has made it necessary and inevitable that the new people recruited were professionally trained and qualified. These new people – capable, competent and professionally trained – have focused on meeting professional goals, climbing the corporate ladder, managing success, responding to complex situations, redefining their role in their company and adjusting to pushes and pulls from multiple systems . People are taken to be the most critical factor in achieving high economic performance, according to executives in these In addition, as Indian companies have begun to play in a global market, they are also under global pressure to improve environmental sustainability, and to act on climate change. Managing the environmental impact of growth is increasingly under the spotlight in India. A recent World Bank report has also identified environmental sustainability as the next great challenge that India faces along in its path to development. According to the report, only half of Indian industries monitored complied with government pollution standards. And these monitoring programs do not cover many small and medium enterprises, which are less able to afford clean technology and pollution controls. Such evolving social demands for Indian companies have led to a shift in CSR in the new industries and some have already begun efforts to turn such challenges into opportunities. In particular, companies have focused on CSR as means of workforce development, and as a reason to become more environmentally responsible and efficient.

CONCLUSION:

The world corporate sector including Indian corporate sector has seen the current decade as a period of high growth and emergence of strong incorporation having a significant global footprint. The decade also saw the financial crisis that shook the global markets. While the the corporate sector is recovering from the jolt of the global financial crisis, the future is looking bright. However, the corporate sector is also standing in the midst of a sustainability crisis that poses a threat to very existence of business. What we have before us is a cross-road where one path leads to unsustainable future. However, the first path will require careful nurturing for which all stakeholders need to assume and discharge their respective responsibilities. While the Government undertakes extensive developmental initiatives through a series of sectoral programmes, the business sector also needs to take the responsibility of exhibiting socially responsible business practices that ensures the distribution of wealth and well-being of the communities in which the business operates.

The Indian business has traditionally been socially responsible from inactive philanthropy to the incorporation of the stakeholders’ interest in the business model; the Indian business sector practices various methods of discharging its social responsibility. While a lot of human and economic energy is available for utilization in this area, a suitable mechanism is required to channelize this energy for which the government, corporate sector and the communities need to partner together. The subject of corporate social responsibility has evolved during last few decades from simple philanthropy activities to integrating the interest of the business with that of the communities in which it operates. By exhibiting socially, environmentally and ethically responsible behavior in governance of its operations, the business can generate value and long term sustainability for itself while making positive contribution in the betterment of the society.

REFERENCE:

1. Corporate Social Responsibility, available at: http://www.sbs.ox.ac.uk/research/corporte+social+responsibility, visited on 20^th April, 2012. At 9am

2. Ackerman, R.W. (1975), The Social Challenges to Business, Cambridge, Ma, Harvard University Press.

3. McDonald,D. and Puxty, A.G. (1979), An Inducement- Contribution Approach to Corporate Financing Reponing, Accounting, Organizationa and Society, 4(1/2), 53-56

4. Caroll A.B., “Corporate Social Responsibility: Evolution of Definitional Construct”, 1991, 268-95

5. For example, according to the law, the corporation is a “legal person” that is recognized in law with rights and duties. Unlike natural persons, who as human beings automatically have rights and obligations, corporations are created only through the state. They cannot insist on their right or carryout their obligations other than through human agents (e.g., employees and managers). As a legal entity, the corporation, is, however, considered a distinct entity from its members, capable of legally binding agreements. See J.E. Smyth, D.A. Soberman and A.J. Easson, “The Law and Business Administration in Canada”, 11^th edition, Toronto, Pearson- Prentice Hall, 2007, page no.585.

6. There is a group of CSR theorists who suggests that because corporations are moral persons or agents, or at least possess the characteristics of a moral person, they have certain responsibilities to society. See French P.A., “The Corporations As A Moral Person”, American Philosophical Quarterly 3, 1979, 207-15. Also see Goodpaster K.E. and Mathews J.B. Jr, “Can a Corporation Have a Conscience?”, Harvard Business Review, January-February, 1982: 132-41.

7. Jones, 1995

8. Prakash-Mani, K. 2002. Corporate Social Responsibility in the Indian Context. Sustainability Radar, Sustainability, London.

9. Towards Global Corporate Social Responsibility by Malcolm Keay. Available at:

10. http://www.riia.org/pdf/briefing_papers/TGCSR%20BP.pdf

11. Ibid

12. Ib

13. The Rationale for Corporate Social Responsibility in India” by R K Pachauri. Available at: http://www.teriin.org/features/art227.htm

14. Corporate Social Responsibility – Perceptions of Indian Business. Available at: www.csmworld.org /public/pdf/social_respons.pdf; visited on 30 March 2012, at 12pm

15. Corporation Social Responsibility - Putting the Words into Action. Available at: http://www .natural- resources.org/minerals/csr/docs/csr. Visited on 30 March, 2012 at 1pm

Received on 20.12.2014 Modified on 26.12.2014

Int. J. Ad. Social Sciences 2(4): Oct. - Dec., 2014; Page 204-209