Corporate Social Responsibility: Insights from Literature Review

Dr. G.K. Deshmukh¹, Dr. Sanskrity Joseph² and Asha Sahu³

Assistant Professor ^{1, 2}, Research Scholar ³

Institute of Management, Pt. Ravishankar Shukla University, Raipur (C.G.)

Abstract

Corporate social Responsibility has become a buzz word in recent times. Its worldwide acceptance due to the social consciousness of enterprises coupled with legal orientation in developing countries like India has made it one of the most researched issue for researchers across continents.  This paper is an attempt to review the development in the core concepts and theories which have been put forwarded by different researchers during the time period of 2010-2018. The paper undergoes a time series analysis for the selected period evaluating the evolution and impact assessment of CSR on core managerial concepts like marketing, finance and Human Resource management. The researchers after time series analysis have concluded that CSR is age long practice which has changed its orientation with the changes in objectives of business. It can be easily classified in three conceptual eras on the basis of its objectives. In the initial era it was a self-driven practice mainly influenced by the values of promoters of business. In the later stages it can be related with a business strategy of gaining goodwill. In the present era corporates have understood the value of societal obligation and it has again become a self-driven exercise. Further the impact of CSR has coupled with almost all functions of management which can be easily understood from the host of studies conducted during the selected period. The selected studies indicate that CSR has been instrumental in increasing net worth, customer satisfaction and employee retention.

Keywords: Corporate Social Responsibility, discretionary practices, philanthropy, sustainable development (SD) 

 INTRODUCTION

According to Hill et al. (2007) “Corporate social responsibility is the economic, legal, moral benevolent actions taken by the firms to improve the living standards of all its stakeholders.”   The concept of corporate social responsibility has become an instrumental tool in developing corporate mind-set and practices for sustainable development. The societal renaissance of business enterprises which was earlier evident in small glimpses have now become the centre and front runner of almost every activity. Corporate social responsibility coupled with corporate consciousness of their social obligations is bringing about wide spread changes in the ways and means the enterprise conduct the affairs of business.  Caroll (2015) indicated that CSR is an age old practise which came into existence after the World War II when the industries contributed actively in saving the world economy from the great depression by increasing production and generating employment. Therefore the practice of CSR by enterprises has spanned over a century and has undergone sea changers with respect to conceptual development and implementation. The wide time span has given a host of definition to corporate social responsibility. Therefore the researchers over the years have used various constructs to define the practice of CSR. Various researchers like Silberhorn and Warren (2007) and Weber (2008) have openly cited that it is very difficult to describe the concept of CSR as the objectives of corporates practising CSR has changed over the years which ultimately changed the conceptual definition. The researchers have made an attempt to analyse the various constructs used by researchers over the years to define the concept of CSR. Table 1.1 presents a snapshot of various constructs used by researchers to define CSR over various decades beginning from 1950. 

     Source: Prepared by authors

Table 1.1 indicates that the concept of CSR can be largely divided in three era. In the initial era it was a self-driven practice mainly influenced by the values of promoters of business. In the later stages it can be related with a business strategy of gaining goodwill. In the present era corporates have understood the value of societal obligation and it has again become a self-driven exercise for sustainable development.

In the present scenario the concepts of honesty, transparency, sustainable development, corporate governance, accountability, ethics etc were propounded by National Voluntary Guidelines on CSR (2011) under the ministry of corporate affairs, Government of India define the very scope and nature of CSR. CSR is a sense of ‘Returning back to society ‘as the business enterprise is also an integral part of society. No business house can operate as an island as it will require stakeholder to keep it in the operational stage. Therefore it becomes the responsibility of the business towards its stakeholders to evolve practices which can help them in contributing towards the higher goals of sustainable development of society.  Sustainable development is an integrated approach towards the growth and development of society, environmental protection, concern towards consumers and safeguarding the human rights. Elkington, (1998) used the triple bottom line approach of sustainable development namely economic, social and environmental wellbeing to discuss the approach that CSR should take in future to contribute towards society.

            The World Bank Council for Sustainable Development (2002) defines CSR as “the persistent allegiance by business to act in an ethical manner and conducive to economic development by improving the quality of life of the employee’s family and overall society.” Tthe definition in recent era by researchers openly discusses the reasons and scope of CSR with respect to policy and practise. McWilliams and Siegel, (2001) defined CSR as “legal actions that leads to social wellbeing apart from the profitability of the firm. Further Carroll (1979) and (1990) highlights the scope of CSR by defining CSR as “The social responsibility of business comprises of economic, legal, ethical, and discretionary (philanthropic) prospects of society”

           Similarly Kotler and Lee, (2005); Perrini, (2005) identified the broad categories where the practices of CSR are generally directed in present times. They identified seven broad categories which includes:  (1) cause promotion (increasing awareness and concern for social causes); (2) cause-related marketing (contributing to causes based on sales);  (3) corporate social marketing (behaviour change initiatives); (4) corporate philanthropy (contributing directly to causes); (5) community volunteering (employees donating time and talents in the community); and (6) socially responsible business practices (discretionary practices and investment to support causes). Further Madison (2017) in a blog has summated functions of CSR by identifying the key areas in which the business houses are making active investments under the banner of CSR. The major activities carried out by enterprises includes following:

 Responsible sourcing of materials and supplies

• Employee, vendor, customer and community engagement and relations
• Adherence to labour standards
• Environmental protection and management
• Anti-corruption measures
• Upholding social equity, gender equity and other human rights goals
• Conservation of resources, like water and energy, in production

          In short CSR can be envisaged as balance between business and society and the extension of firms responsibilities beyond the self-motive & compatibility with law (Carroll, 1979; Jones, 1980; McWilliams & Siegel, 2001; see also Davis, 1973). Further the scope of an evolving concept can be understood by its amalgamation and summation with existing practices of management function. The concept of CSR was philanthropic in nature during its inception. The further elaboration of the concept intermingled with self-consciousness of business houses where they fulfilled their societal obligations for developing corporate goodwill.  In recent times the concept of CSR has undertaken its conceptual development by becoming a necessity for business houses due to constant pressure of stakeholders for fulfilling corporate responsibility. Genesis of CSR has revealed that with the time being passed corporations have shifted themselves from the involuntary actions of CSR towards voluntary actions. Corporations have realised the positive effects of the social responsibility at large and in long run. Many big giants have been engaged in CSR activities to reap long term benefits of CSR. During the period of 2010-2018, many research studies have been conducted in different spheres of globe and have concluded that social practices positively affects the business functions. Table 1.2 makes an attempt to understand dimensions used by researchers across functional areas between the periods of 2010- 2018 in relation to studies conducted in field of CSR.

Source: Prepared by authors

Table 1.2 highlights that the major researches conducted during the period of eight years starting from 2010 to present year of 2018 were majorly related with six areas namely (i) value of Firm, (ii) Sustainability, (iii) Leadership, (iv) performance of firm (v) Marketing Perspective and (vi) value proposition. The researchers who concentrated on financial perspectives of CSR were of the opinion that CSR practices can bring down the operational profits in the short run but can be helpful in increasing the goodwill in the long run which will be helpful in raising capital from primary markets. Further the researchers who studied the impact of CSR on sustainability emphasised on innovation and ethical practices to gain the objective of balance between the facets of triangle of sustainability namely economic, social and environmental development through CSR. The researchers indicated that indeed it is transformational leadership style which can help in better implementation of CSR in organisations.  The dimension of firm performance was studied from the pointers of financial as well as from the employees’ point of view. The study indicated that CSR has the power and capacity to influence the institutional stakeholder while the take decisions to invest in companies. Further the researchers also linked high employee organisational commitment to CSR practices. CSR was also examined from the value proposition point of view. The researchers concluded that CSR can enhance or diminish the value of firms in the eyes of customer in emotional, social and functional dimensions.   

Further a plethora of studies have been conducted to understand and analyse the benefits derived from the very practise of CSR the researchers analysed the selected research papers to understand the direct and indirect benefits that can be derived from the practise of CSR.  Table 1.3 studies the benefits which were cited again and again by the research papers over the years.

Source: Prepared by authors

The concept of CSR is debatable as the benefits derived from CSR can generally be felt and cannot be attributed only to CSR. A large number of studies have tried to justify the stand of companies by linking the benefits that a company can derive from CSR through various empirical and conceptual articles. The researchers have tried to sum up the benefits which have featured gain and again in the conclusions of papers related with CSR. The benefits have been arranged as per the functional areas of marketing, finance, Human resources and others which are termed as overall advantage.  The area of finance is the most debated area because it correlates the benefits with the associated cost. The benefits in financial area were High value to firm, reduced risk, Easier access to finance, Low Cost of Capital; Equity Capital; debt, Higher Stock Return, Increased Profitability, Increase in number Of Investors, Increased shareholder value, Reduce contracting cost, Reduce contracting cost, Increased financial performance were benefits related with financial area.

The benefits related with marketing area by and large were related with the outlook of customers. The researchers indicate that CSR practices provides Increased Customer Loyalty, Consumer Value proposition, Increased Sales, brand Image, Customer satisfaction, attraction of new customers, and customer confidence. Further Reduced Employee Turnover, Increased Employee Trust And Satisfaction, Enhanced Employee Participation/ commitment, Employee Retention, Attract Top Talents, Employees’ Social Valuation, social behaviour (preventing absenteeism), Recruitment, Job Satisfaction,  Employee’s attitude and behaviour, Employee satisfaction were benefits related with human resource area. The overall benefits of firm had a strategic over view and dealt with Better stakeholder engagement, Enhance Firm’s Competitive Advantage and Firm reputation. In short the table 1.3 is summated below in  Figure 1.1

Figure1.1 Benefits of CSR

(Source: Prepared by authors)

Figure 1.3 was supported by the studies of various scholars whose details have been provided in table 1.4

(Source: Prepared by authors)

 CONCLUSION

The selected studies related with CSR during the time span of 2010 to 2108 provided the researchers the must needed understanding of the concept of CSR.  The studies indicate that future researchers can undertake research in the following dimensions of study:

 CSR is a concept which has come to stay. Many countries are trying to make the practise of CSR mandatory. There has been a constant debate on part of corporates against the legality of the case. The enterprises across the world perceive that CSR practices must be voluntary. India has made CSR practise mandatory by making an amendment in the companies Act 2013. The corporates houses in India have accepted the law and are trying to adhere and comply by its rules. Rana & Majumdar (2017) indicated that companies are giving an active contribution to sustainability trends and are pushing towards cleaner environment, green supply chains, water conservation and conservation of renewable energy. This has again initiated the need across the world to bring CSR under legal scanner. More research in the fields of CSR can provide the required base to policy makers to decide a working non objectionable mandate for CSR. 

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