Legislated CSR in practice: The experience of India

• Published date: 01 May 2022
• Author: Ninitha Koya,Juliet Roper
• Date: 01 May 2022
• DOI: http://doi.org/10.1002/pa.2507

ACADEMIC PAPER

Legislated CSR in practice: The experience of India

Ninitha Koya | Juliet Roper

Division of Management, University of

Waikato Management School, Hamilton,

New Zealand

Correspondence

*Juliet Roper, University of Waikato

Management School, Private Bag 3105,

Hamilton 3240, New Zealand.

Email: jroper@waikato.ac.nz

In 2013, India became the first country in the world to make corporate social respon-

sibility (CSR) mandatory for highly profitable corporations. This research takes an

interpretative phenomenology approach to examine the experiences of CSR man-

agers who navigate societal and political pressures surrounding implementation of

the regulation. Thus, the article offers both insights from practice to the theoretical

academic debate of the benefits of voluntary versus mandatory mode of CSR, and

practical recommendations.

1|INTRODUCTION

Corporate social responsibility (CSR) has been traditionally viewed as

voluntary (Dentchev, Balen, & Haezendonck, 2015; McWilliams &

Siegel, 2001), based on the normative standpoint that corporations

would or should meet their moral and social responsibilities to the

societies in which they function (Garriga & Melé, 2004; Manetti &

Bellucci, 2016; Pérez, 2015). However, recent research suggests man-

datory CSR would raise awareness of these responsibilities

(Cominetti & Seele, 2016) and result in greater conformity in CSR

activities (see e.g., (Ackers & Eccles, 2015; Kao, Yeh, Wang, &

Fung, 2018). To date, however, there has been limited opportunity to

examine mandatory CSR in practise. As the first country to legislate

CSR, India provides a context for examining the assumptions sur-

rounding and implications of mandatory CSR (Mukherjee, Bird, &

Duppati, 2018; Van Zile, 2011). This article traces some of the impacts

of mandatory CSR in India, and discusses how, with hindsight, such

legislation could be refined.

In August 2013, India updated its Companies Act, and included a

CSR clause that requires companies with a net worth of rupees 500

crores (80 million USD) or a turnover of rupees 1,000 crore (160

million USD) to contribute at least 2% of their three-yearly average

net profits on social and charitable causes annually, with the activities

overseen by a CSR committee set up by the company. There are many

apparent success stories of India's legislated CSR (Sundar, 2018), but

little attention has been paid to the challenges for CSR managers who

must negotiate increased societal and political pressures as well as

corrupt practices to meet the statutory requirements.

According to Subramaniam, Kansal, and Babu (2017), India's man-

datory CSR increased commitment to socially responsible initiatives in

the corporate sector but the implementation suffered from “various

bureaucratic hurdles”as well as “insufficient human and knowledge

resources, limited stakeholder analysis, overemphasis on CSR budget

utilisation as an outcome, and lack of trust in external stakeholders”

(p. 559). Building on this, our research question was “what is the

impact of CSR legislation on CSR practice?”We interviewed CSR and

Public Relations professionals with responsibility for CSR initatives in

some of India's leading private and public sector firms and asked them

to talk about their experiences in this role.

We begin with an overview of the theoretical debate between

voluntary and mandatory CSR, then traces the development of CSR in

India, including the 2013 regulation. Our research method is then

explained, followed by the research findings and discussion.

2|LITERATURE REVIEW

Extant CSR literature tends to uncritically assume that CSR is volun-

tary, undertaken to achieve corporate agenda, be it to counter nega-

tive impacts of crises (Vanhamme & Grobben, 2009) or increase

profits (Porter & Kramer, 2006; Wigley, 2008). Matten and

Moon (2008) suggest that the idea of voluntary CSR stems from the

work of Carroll (1979) and other U.S. scholars, where the philan-

thropic capacity of the then American business leaders, and public dis-

trust in big government “largely influenced their understanding of CSR

and the principle of voluntarism”(Dentchev et al., 2015, p. 3).

CSR is also regarded as fundamentally moralistic, assuming that

corporations have moral responsibilities to s ociety that go beyond

profit (Lampert, 2016) and shou ld be manifested in practices that are

approved by society but not prescribed by law (Carro ll (1991). As the

ethics of CSR are thought to be bey ond laws, scholars have larg ely

failed to question its vo luntary nature (Wettstein, 2009). Some have

Received: 11 June 2020 Accepted: 15 September 2020

DOI: 10.1002/pa.2507

J Public Affairs. 2022;22:e2507. wileyonlinelibrary.com/journal/pa © 2020 John Wiley & Sons Ltd 1of10

https://doi.org/10.1002/pa.2507