Mandatory Corporate Social Responsibility: The Indian experience |
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Authors: | Abhishek Mukherjee Ron Bird Geeta Duppati |
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Institution: | 1. Freedom Institute of Higher Education, New Zealand;2. Finance Discipline, Waikato School of Management, New Zealand;3. IMR Program, University of Technology Sydney, Australia |
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Abstract: | The question we raise is what to do when companies fail to keep pace with societal expectations with respect to their corporate social responsibility (CSR). The response of the Indian government was to make it mandatory for large corporations to spend funds on CSR activities. In this paper, we investigate the success of this legislation both for the companies and the intended beneficiaries. We find that the impact of the legislation has fallen short of expectations both in terms of the volume of CSR expenditure generated and the activities to which it has been directed. In particular, we find that the legislation has had a negative corporate profitability which can impact on the willingness of companies to spend in this area. We conclude that greater care must be taken when implementing mandatory CSR if it is to be effective. |
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Keywords: | CSR Corporate Social Responsibility DiD Differences in Differences G38 M14 Corporate Social Responsibility (CSR) Mandatory Indian legislation Corporate response Impact on profitability |
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