Table Of ContentCSR, Sustainability, Ethics & Governance
Series Editors: Samuel O. Idowu · René Schmidpeter
Saumitra N. Bhaduri
Ekta Selarka
Corporate
Governance and
Corporate Social
Responsibility of
Indian Companies
CSR, Sustainability, Ethics & Governance
Series editors
Samuel O. Idowu, London Metropolitan University, London, UK
René Schmidpeter, Cologne Business School, Cologne, Germany
More information about this series at http://www.springer.com/series/11565
Saumitra N. Bhaduri · Ekta Selarka
Corporate Governance
and Corporate Social
Responsibility of Indian
Companies
1 3
Saumitra N. Bhaduri Ekta Selarka
Madras School of Economics Madras School of Economics
Chennai, Tamil Nadu Chennai, Tamil Nadu
India India
ISSN 2196-7075 ISSN 2196-7083 (electronic)
CSR, Sustainability, Ethics & Governance
ISBN 978-981-10-0924-2 ISBN 978-981-10-0925-9 (eBook)
DOI 10.1007/978-981-10-0925-9
Library of Congress Control Number: 2016936569
© Springer Science+Business Media Singapore 2016
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Acknowledgments
We gratefully acknowledge the project grant from the Indian Council of Social Science
Research to support this study. Research assistance from Dr. A. Balasubramanian is
highly appreciated. We also acknowledge the assistance provided by Mr. Bishu Giri
and Mr. Ranveer Sengupta during the process of data collection.
Also, this project would not have been possible without the institutional s upport
from Professors. K.R. Shanmugam and Sunder Ramaswamy and the administra-
tive team at the Madras School of Economics.
In addition, we sincerely acknowledge the inputs from the members of ICSSR
Advisory Committee—Professors Madheswaran, Hemnath Rao and Krishna
Prasanna. We gratefully appreciate their efforts and time in reading our chapters
and providing valuable inputs. We are also thankful to the referees at the Springer
to provide bird’s eye view and inputs that shaped this manuscript further.
Finally, we thank our families for their love and support. Ekta Selarka spe-
cifically acknowledges Devang for his continuous encouragement & support and
Reva for her endless patience during all phases of this project.
Saumitra N. Bhaduri
Ekta Selarka
v
Contents
1 Corporate Governance and Corporate Social
Responsibility—Introduction .................................. 1
1.1 Introduction ............................................ 1
1.2 Globalisation, Corporate Governance and Social Responsibility .... 3
1.3 The Competitive Advantage and Corporate Social
Responsibility ........................................... 4
1.4 Varying Definitions of CSR ................................ 4
1.5 Corporate Governance and Corporate Social
Responsibility—Indian Perspective .......................... 5
1.6 Objective of the Study .................................... 6
1.7 Measurement of Corporate Governance ....................... 7
1.8 Data Sources and Empirical Methodology ..................... 7
1.9 Contribution and Organisation of the Study .................... 8
References .................................................. 9
2 Corporate Social Responsibility Around the World—An
Overview of Theoretical Framework, and Evolution .............. 11
2.1 Introduction ............................................ 11
2.2 Origin and Evolution of Corporate Social Responsibility ......... 12
2.3 Concept of Corporate Social Responsibility: Timeline ........... 13
2.3.1 Corporate Social Responsibility in—1950s .............. 14
2.3.2 Corporate Social Responsibility as Philanthropy
in 1960s ......................................... 15
2.3.3 Period of Rapid Growth in the Concept of CSR
During 1970s ..................................... 15
2.3.4 Stakeholder Theory and Business Ethics as CSR
in 1980s ......................................... 17
2.3.5 CSR in Business Practice During 1990s ................ 19
2.3.6 Research on CSR in 21st Century ..................... 21
vii
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2.4 Comprehensive Review of Surveys on Corporate
Social Responsibility Around the World ...................... 25
2.4.1 Consumers Perspective on CSR ....................... 25
2.4.2 Employee Perceptions of Corporate Social
Responsibility ..................................... 27
2.4.3 CEO’s Perspective on CSR .......................... 28
2.5 Conclusion ............................................. 29
References .................................................. 29
3 Corporate Social Responsibility—Guidelines and Best Practices .... 33
3.1 Introduction ............................................ 33
3.2 Global Principles and Guidelines on Corporate
Social Responsibility ..................................... 34
3.2.1 Business and the Millennium Development
Goals (BDGs) ..................................... 34
3.2.2 United Nations Global Compact (UNGC) ............... 34
3.2.3 New Guiding Principles on Business and Human Rights ... 35
3.2.4 OECD Guidelines: Multinational Enterprises ............ 36
3.2.5 Europe Union Commission on CSR .................... 36
3.3 Accounting Standards on Corporate Social Responsibility ........ 37
3.3.1 Social Return on Investments (SROI) Network ........... 38
3.3.2 London Benchmarking Group Model (LBG) Model ....... 38
3.3.3 The Principles for Responsible Investment (PRI) ......... 38
3.3.4 Transparency International (TI) ....................... 39
3.3.5 The Global Reporting Initiative (GRI) .................. 39
3.4 Reporting and Impact of CSR .............................. 39
3.5 Conclusion ............................................. 41
References .................................................. 41
4 Corporate Social Responsibility in India: Evolution
and Progress of CSR and Regulations ........................... 43
4.1 Introduction ............................................ 43
4.2 Evolution of Corporate Social Responsibility in India ........... 44
4.2.1 Ethical Approach (1800–1914): CSR as Charity
and Philanthropy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.2.2 Trusteeship Approach (1914–1960) .................... 46
4.2.3 Statist Approach (1960–1980) ........................ 47
4.2.4 Liberal Approach (1980–1990) ....................... 47
4.2.5 Stakeholder Approach (After 1991) .................... 47
4.3 Principles and Guidelines on Corporate Social Responsibility
in India ................................................ 48
4.3.1 Guidelines on Social, Environmental and Economic
Responsibilities of Business .......................... 48
4.3.2 Global Compact Society in India ...................... 50
4.3.3 The Responsible Entrepreneurs Achievement
Programme (REAP) ................................ 50
Contents ix
4.4 CSR Provisions in the Companies Act 2013 ................... 50
4.5 Corporate Social Responsibility in India—Review of Literature ... 53
4.5.1 General Studies on Corporate Social Responsibility ....... 53
4.5.2 Case Studies on CSR in India ........................ 55
4.5.3 Empirical Studies on CSR in India .................... 56
4.6 Conclusion ............................................. 58
References .................................................. 59
5 Corporate Governance: An Overview ........................... 61
5.1 Introduction ............................................ 61
5.2 Corporate Governance Mechanisms. . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.2.1 Internal Corporate Governance Mechanisms ............. 63
5.2.2 External Corporate Governance Mechanisms ............ 66
5.3 Corporate Governance in India ............................. 67
5.4 Conclusion ............................................. 70
References .................................................. 71
6 CSR Activities in Large Indian Firms—Descriptive Statistics ....... 73
6.1 Introduction ............................................ 73
6.2 Sample Selection ........................................ 73
6.3 Reporting Statistics on CSR Expenditure ..................... 74
6.4 Patterns in CSR Expenditure Across Activities ................. 79
6.5 Univariate Analysis of Top and Bottom Ten Companies .......... 79
6.5.1 Ownership Structure and CSR Spending ................ 81
6.5.2 Firm Characteristics and CSR Spending ................ 85
6.5.3 Comparison of Top Ten Companies on CSR
Spending and Percentage of PAT ...................... 85
6.6 Conclusion ............................................. 85
7 Impact of Corporate Governance on Corporate Social
Responsibility in India—Empirical Analysis ..................... 87
7.1 Introduction ............................................ 87
7.2 Data and Sample Selection ................................. 88
7.3 Hypotheses ............................................. 89
7.4 Construction of Variables .................................. 91
7.4.1 Dependent Variable ................................ 91
7.4.2 Explanatory Variables ............................... 93
7.4.3 Stylized Facts in CSR ............................... 95
7.5 Empirical Methodology ................................... 99
7.5.1 Ordered Probit with Sample Selection .................. 101
7.5.2 Descriptive Statistics ............................... 103
7.6 Discussion of Results ..................................... 104
7.6.1 Marginal Effects and Predicted Probabilities ............. 106
7.6.2 Data Validation for Non-sample Companies ............. 107
7.7 Conclusion ............................................. 109
References .................................................. 109
x Contents
8 Impact of Corporate Governance on Corporate Social
Responsibility: An Empirical Exploration Using Structural
Equation Technique ......................................... 115
8.1 Introduction ............................................ 115
8.2 Structural Equation Modelling .............................. 116
8.3 Model Specification ...................................... 117
8.3.1 Estimation ........................................ 118
8.4 Results and Discussion .................................... 119
8.5 CSR and Excess Returns .................................. 121
8.6 Conclusion ............................................. 124
References .................................................. 125
Appendix ..................................................... 127
