Corporate Social Responsibility of Reliance

CORPORATE SOCIAL RESPONSIBILITY
TABLE OF CONTENT
CHAPTER I:
1.
INTRODUCTION 4
What is Corporate Social Responsibility (CSR)? The Pillars of CSR CSR A e! Para"i#$ History of CSR %ision of CSR Tools Ten &ri'ers of CSR Ar#($ents for CSR Ar#($ents a#ainst CSR Achie'in# balance So$e internationally reco#ni)e" #(i"elines for CSR *arriers to CSR I$portance of Ethics ee" for partnership Conte$plation o'er the peoples approach to #oo" #o'ernance So$e e+a$ples of corporate citi)enship ,e'era#e Corporate CSR -pport(nities Corporate International I$perati'es. I/I co$parati'e a"'anta#es CSR 0 I/I pri'ate sector strate#ies Challen#e to I/Is in preparation for the Worl" S($$it on S(stainable &e'elop$ent1 2332:
2. OBJECTIVE
30
CHAPTER II:
THEORETICAL PERSPECTIVE
INDIAN INSTITUE OF FINANCE
32
1
CORPORATE SOCIAL RESPONSIBILITY Corporate Social Responsibility I"entification an" characteristics of corporate social Responsibility Theoretical *asis of CSR A Sta4ehol"er Theory of the 5o"ern Corporation /o(n"ation principles of corporate social responsibility %ie!s of 5ilton /rie"$an Ethics Ethics of Corporate Social Responsibility A &ebate on corporate social responsibility Corporate Social Responsibility as Rep(tation Ins(rance The nee" for acco(ntability Econo$ics of Corporate Social Responsibility The pros an" cons of corporate social responsibility Ar#($ents for CSR Ar#($ents a#ainst CSR The Anti6CSR Ar#($ent /i#$ent of the i$a#ination 7Can a Corporation Ha'e a Conscience?8 5oti'es for corporate social responsibility I$plications for the relationship bet!een CSR an" C/P To!ar"s a 'al(ation of CSR as Ins(rance
CHAPTER III:
COMPANYS BACKGROUND
Ho! Reliance ,ife Ins(rance ca$e into e+istence? Abo(t San$ar life ins(rance Abo(t the co$pany Corporate profile Pro"(ct of the co$pany
122
CORPORATE SOCIAL RESPONSIBILITY CSR Policy in Reliance ,ife Ins(rance
CHAPTER I%:
METHODOLOGY
&esi#nin# of 9(estionnaire Calc(lation $etho"
143
CHAPTER %
DATA
-bser'ation of Reliance ,ife Ins(rance Co$parati'e "ata of three co$panies.
149
CHAPTER %I
ANALYSIS OF THE DATA
Interpretation of reliance life ins(rance Co$parison responsibility bet!een a!ar" !inners in area of corporate social
1 !
CHAPTER %II:
FINDINGS 1"2
CHAPTER %III:
CONCLUSION 194
CHAPTER I::
INDIAN INSTITUE OF FINANCE 3
SUGGESTIONS 19"
*I*,I-;RAPH<
CHAPTER I:
I TR-&=CTIWhat is Corporate Social Responsibility (CSR)?
The integration of ethica !a "e#$ #"#taina%i it& into the %"#ine## 'o(e The recognition of an o% igation %e&on( #hareho (er !a "e ) re#*on#i%i it& to #ta+eho (er# ,Tri* e %otto' ine- .financia / #ocia / en!iron'enta 0 The co'*an& a# re#*on#i% e g o%a citi1en 2oing %e&on( co'* iance ,2oo( go!ernance
ITS ABOUT RESPONSIBLE CITIZENSHIP You cannot talk about CSR unless you lo e you! "eo"le an# you! count!y$
The Pillars of CSR

4 Infor'ation (i#c o#"re$ re*orting 4 I'* e'entation of *erfor'ance %ench'ar+#$ En!iron'enta
5anage'ent S&#te'# .E5S0
4 Engage'ent of #ta+eho (er# .Sta+eho (er# inc "(e co''"nitie#/ #hareho (er#/ con#"'er#/ e'* o&ee#/ 7 N2O#0 >Co!"o!ate Soc%al Res"ons%b%l%ty %s not a cos&et%c' %t &ust be !oote# %n ou! alues( It &ust &ake a #%))e!ence to t*e +ay +e #o ou! bus%ness($
CSR A e! Para"i#$
To thin+ co'*rehen#i!e & an( #&#te'atica & a%o"t 4 The ro e of %"#ine## in (e!e o*'ent 4 The 'anner in 8hich the %"#ine## i# con("cte( 4 Cor*orate 2o!ernance 4 Po!ert& a e!iation 4 Cor*orate contri%"tion to *eace an( 8ar again#t terror 4 B"#ine##/ go!ern'ent an( ci!i #ociet& *artner#hi*9 co''on gro"n( an( co ecti!e action
History of CSR
I(a Tar%e :# 1;<3 8or+ The History of the Standard Oil Company he *e( ea( to the S"*re'e Co"rt:# (eci#ion to %rea+ "* the co'*an& on antitr"#t gro"n(#= Congre##= Tra"itional Attit("es In ,the goo( o ( (a&#-/ cor*orate #ocia re#*on#i%i it& 'eant a gent & *aterna i#tic attit"(e to8ar( e'* o&ee#/ (i#creet (onation# to8ar(# 8orth& Si'i ar &/ U*ton Sinc air:# 1;<> %oo+ The Jungle e( to the *a##age of the P"re Foo( an( Dr"g# Act an( the 5eat In#*ection Act %&
>
ca"#e# an( the co'*an& na'e on itt e eag"e hoc+e& or #occer #8eater#= Tho#e 8ere the (a&#/ a##"'ing the& e!er rea & e?i#te(/ 8hen gro8th 8a# goo(= The Conference Boar( of Cana(a a##ert# that cor*orate #ocia re#*on#i%i it& ha# no8 %eco'e ,a !ita *art of a ong9ter'/ co'*rehen#i!e a**roach to %"#ine## #"cce##=Tra"itional Corporate Responsibilities
%ision of CSR
A World where risks are controlled because everyone believes suffering and loss are morally socially and economically unacceptable= ,A one 8e can (o #o itt e@ together 8e can (o #o '"ch=Cor*orate Socia Re#*on#i%i it& i# not the ate#t %" et or %"#ine## fa(@ it i# not a *hi anthro*ic i(ea= It i# an internationa i'*erati!e for %oth %"#ine## an( the co"ntrie#= Cor*orate Socia Re#*on#i%i it& in a g o%a i1e in("#tria 8or ( i# a%o"t 'a+ing the %"#ine## in!e#t'ent an( the co''"nit& *ro'i#e #"#taina% e for
the co'*an& an( for the co''"nitie# 8e o*erate in/ it# *eo* e an( en!iron'ent= It (e'an(# re#*on#i% e go!ernance9%a#e( *rinci* e# ofB LEADERSCIP INTE2RITY RESPECT CO55IT5ENT RELATIONSCIPS
Tools
4 2 o%a E9S"r!e&# 4 2 o%a E9Conference# 4 De%9Ba#e( Co"r#e# .2 o%a $Co"ntr& Foc"#0 4 Face9to9Face 4 Cigh9Profi eB A8arene## an( Con#en#"# 4 Action P an
Ten &ri'ers of CSR

In 2<<2/ the Conference Boar( of Cana(a e?a'ine( the rationa e %ehin( #ocia re#*on#i%i it& initiati!e# a'ong Cana(ian co'*anie#= The Nationa Cor*orate Socia Re#*on#i%i it& Re*ort ,5anaging Ri#+#/ Le!eraging O**ort"nitie#- i(entifie# nine co''on (ri!er# that are the 'oti!ator#B Re*"tation an( %ran( 'anage'ent B"#ine## ri#+ 'anage'ent E'* o&ee recr"it'ent/ 'oti!ation an( retention Acce## to ca*ita
INDIAN INSTITUE OF FINANCE E
Learning an( inno!ation Co#t #a!ing# an( o*erationa efficienc& Co'*etiti!ene## an( 'ar+et *o#itioning Socia icence to o*erate I'*ro!e( re ation# 8ith reg" ator# Organi1ationa tran#for'ation an( contin"e( i'*ro!e'ent
Ar#($ents for CSR

The arg"'ent# for CSR ten( to foc"# on the re ation#hi* %et8een *o8er an( re#*on#i%i it&/ the nee( for goo( #ta+eho (er re ation#/ an( %"#ine##: (e#ire to fore#ta go!ern'ent reg" ation= .The notion of ,en ightene( #e f9 intere#t- a #o fit# in here=0
Ar#($ents a#ainst CSR

The arg"'ent# again#t CSR ten( to foc"# on the econo'ic f"nction of %"#ine## .to 'a+e *ro("ct#/ not to #o !e #ocia *ro% e'# that are the re#*on#i%i it& of in(i!i("a #/ #ociet&/ an( the go!ern'ent0/ the i'*o#ition of "neF"a co#t# on #o'e co'*anie# an( #ta+eho (er#/ an( o8er econo'ic efficienc&=
Achie'in# balance
B"#ine##e# nee( to %a ance econo'ic/ ega / an( #ocia re#*on#i%i itie# in or(er to achie!e ong9r"n #"cce##= 5ore genera &/ there i# a often a re ation#hi* %et8een goo( #ocia an( goo( financia *erfor'ance=
F"rther/ fir'# that are #een a# acting i egiti'ate & are i+e & to face (iffic" t re ation# 8ith e'* o&ee#/ go!ern'ent#/ co''"nitie#/ an( con#"'er#G8hich a ine#= One (efen#e of the #hareho (er !ie8 of CSR i# that #hareho (er# ta+e on a "niF"e #et of ri#+#/ %"t other #ta+eho (er# are *rotecte( %& contract"a re ation# 8ith organi1ation#= 8itho"t +no8ing it= One re#" t of increa#ing g o%a i1ation i# that there are 'an& (ifferent !oice# aro"n( the 8or ( 8ith (iffering !ie8# on cor*orate #ocia re#*on#i%i it&= Dhat i# #een a# ,ethica - in one co"ntr& 'a& not %e in another . i+e 25O#0= B"t Enron an( other co'*anie# i "#trate that 'o#t #ta+eho (er# ta+e on ri#+G#o'eti'e# ha!e (irect i'*act# on the to* an( %otto'
So$e internationally reco#ni)e" #(i"elines for CSR

Uni!er#a Dec aration of C"'an Right# ILO core a%or #tan(ar(# OECD g"i(e ine# on '" tinationa enter*ri#e# DB *o "tion *re!ention #tan(ar(# US OPIC categorica *rohi%ition# ISO 13<<1 2 o%a S" i!an Princi* e#
INDIAN INSTITUE OF FINANCE 1<
Dor ( Co''i##ion on Da'# fina re*ort Socia Acco"nta%i it& .SA0 E<<<
*arriers to CSR
A) Corporate ,e'el 9 Lac+ of ea(er#hi* an( !i#ion 9 Too '"ch foc"# on #hort9ter' goa # 9 Ina%i it& to recogni1e o**ort"nitie# 9 Lac+ of entre*rene"ria #*irit an( inno!ation *) Co(ntry?Society ,e'el ) Lac+ of creati!e *re##"re fro' the go!ern'ent an( ci!i #ociet&= ) Lac+ of #"**ort fro' the con#"'er# ) Lac+ of *eer #"**ort thro"gh %"#ine## a##ociation# 9 re "ctance of other co'*anie# to fo o8 ) Lac+ of econo'ic$'ar+et incenti!e# The integration of en!iron'enta / #ocia an( cor*orate go!ernance i##"e# into ong9range %"#ine## #trateg& an( o*eration# i# CSR
So$e necessary 9(estions

) Dhich of the fo o8ing factor# 'o#t affect# *"% ic i'*re##ion of in(i!i("a co'*anie#H ) Dhich of the fo o8ing *ro% e'# affect# &o"/ &o"r fa'i & an( &o"r co''"nit& the 'o#tH
11
) Dhat are the 'ain con#traint# that 'a+e it (iffic" t for co'*anie# in &o"r co"ntr& to a((re## Cor*orate 2o!ernance/ 8a& ) Di( &o" re8ar( or *"ni#h co'*anie# in the *a#t &ear %a#e( on &o"r *ercei!e( #ocia *erfor'anceH ) Dhat i# &o"r *referre( a**roach to #trengthening internationa #afeg"ar(# an( %"#ine## con("ct co(e#H Cor*orate Socia Re#*on#i%i it& an( B"#ine## Ethic# i##"e# in a 'ore #&#te'atic an( effecti!e
I$portance of Ethics
T*e best c*ance you *a e o) &ak%n, a b%, success-%s to #ec%#e )!o& s.ua!e one t*at you a!e ,o%n, to #o %t et*%cally$ ! Alan "reenspan Chairman #ederal $eserve %oard ,The f"n(a'enta o%#tac e to CSR i# that 8e are cage( in o"r c"rrent i(ea#= I'agine a 'an in#i(e a *ri#on 8ith %ro+en9(o8n techno og& ) co'*"ter#/ c othe#/ a'*#/ an( a +in(# of thing#= If 8e #tic+ 8ith o"r c"rrent
12
techno og&/ con#"'*tion/ %"#ine## 'o(e / an( (eci#ion9'a+ing 'o(e #/ thi# i# 8here 8e 8i en( "* for #"re=) I5ET inter!ie8ee ,2"& going fro' one #i(e of the can&on to the otherJ a ot of c o"(# i+e fog= The *oint i# going fro' one 8a& of (oing %"#ine## to another i# !er& to"gh= There:# a ot "ncertaint&= It ta+e# a ot of #+i / %"t 8e ha!e to ift o"r#e !e# %e&on( that/ a%o!e the fog/ an( that:# not going to %e a #i'* e e?erci#e= CSR i# a%o"t #eeing the fore#t/ the fog/ an( #eeing ho8 8e can get on the other #i(e/ an( ho8 8e can %e 8e 9eF"i**e( for (oing that= So *ro%a% & 8e nee( to (e!e o* a((itiona "n(er#tan(ing=) I5ET inter!ie8ee ,De ha!e #o'e +in( of #a a( 8ith a h"'an faceJ 8ith a #'i e 'a(e 8ith a hot *e**er= So the #tor& i# that in a of o"r i'* e'entation cha enge#/ 8e ha!e to #ee that h"'an face/ i(entif& 8ith itJ on the tree# 8e are c"tting (o8n/ the fie (# 8e are (e#tro&ingJ o"r#e !e# 8e are h"rting= Dith #o'e +in( of creati!e effort/ 8e can #ee that= It:# not going to %e a #8eet= Thi# hot *e**er 8i 'a+e o"r i!e# "n* ea#ant fro' ti'e to ti'e= B"t I thin+ the o!era effect 8i %e *o#iti!e=) I5ET inter!ie8ee ,The 'e##age i# that 8hate!er 8e (o to(a& 8i ha!e an i'*act on f"t"re generation#= It:# not K"#t '& +i(# or &o"r +i(# or #o'e%o(& e #e:#= It:# f"t"re generation#= De #ho" ( not ho*e that the 8a # 8e %"i ( to *rotect o"r#e !e# 8i %e ta eno"gh to *rotect o"r chi (ren= On & 8ith !er& con#cio"# effort 8e can 'a+e the 8or ( for the' a %etter * ace to i!eJe!en if 8e a((re## o"r 'o#t #e fi#h nee(# 8e ha!e to a((re## the nee(# of the ne?t generation= That:# 8hat CSR i# a%o"t=INDIAN INSTITUE OF FINANCE 13
#+i #/ +no8 e(ge/ an(
) I5ET inter!ie8ee
ee" for partnership

4 B"#ine##e# are (i#co!ering #ocia !a "e#= 4 NPO# are (i#co!ering %"#ine## *rinci* e# A ne8 thin+ing a%o"t *artner#hi*B not an e?change %"t %"i (ing re ation#hi*# %et8een %"#ine## an( NPO#= To fin( 8a&# to 'a+e *hi anthro*& #er!e the co''"nit& an( co'*an&:# %"#ine## o%Kecti!e#= 4 The co a%oration contin""' ) Phi anthro*ic .Charita% e (onor an( reci*ient0 ) Tran#actiona ) Integrati!e It:# ea#& to choo#e %et8een goo( an( %a(= Dhen competing goods #ee' to c a#hG i+e conf icting c ai'# fro' the egiti'ate #ta+eho (er# of an organi1ationGit i# often har(er for 'anager# to 'a+e goo( (eci#ion#=
Conte$plation o'er the peoples approach to #oo" #o'ernance

CSR @ #oo" #o'ernance ,Po!ert& re("ction cannot %e achie!e( 8itho"t goo( go!ernance= To #"**ort an( *ro'ote goo( go!ernance/ fo"r +e& e e'ent# are a((re##e(B acco(ntability1 participation1 pre"ictability1 an" transparency. There i# in(ee( a #trong corre ation %et8een goo( go!ernance an( econo'ic gro8th=9ADB Pre#i(ent Chino
To*ic for to(a& i# goo( go!ernance fro' a ci!i #ociet& *er#*ecti!e= I 8i %e foc"#ing on the ro e of %"#ine## an( goo( cor*orate go!ernance/ %"t o%!io"# & the ro e of go!ern'ent an( go!ern'ent in#tit"tion# i# cr"cia = To(a&:# in*"t 8i foc"# on go!ernance fro' ci!i #ociet& *er#*ecti!e/ *artic" ar & on ho8 cor*oration# ha!e 'anage( in the a#t 2< &ear# or #o/ to (o'inate #ocia an( econo'ic *o ic&= The F"e#tion i# not #o '"ch a%o"t attracting in!e#t'ent %"t rather ho8 the ret"rn# on thi# in!e#t'ent 8i %e (i#tri%"te(/ an i'*ortant #"#taina%i it& i##"e= In the cor*orate #ector 'o#t of the 'oti!ation for goo( cor*orate go!ernance co'e# fro' #hareho (er# ("e to the co a*#e of co'*anie# %eca"#e of ac+
of o!er#ight %& %oar(# of tr"#tee# an( "n(er#tan(a% & #o= Fro' a ci!i #ociet& *er#*ecti!e go!ernance i# i'*ortant for other rea#on# an( that i# the #"#taina%i it& of co''"nitie# an( the acce## to econo'ic en!iron'enta K"#tice= De cannot ta + a%o"t goo( go!ernance 8itho"t ta +ing a%o"t #ocia re#*on#i%i it& an( acco"nta%i it&= An( 8e cannot ta + a%o"t #ocia re#*on#i%i it& 8itho"t ta +ing a%o"t #"#taina%i it&= B"t at the heart of #ocia re#*on#i%i it& an( #"#taina%i it& ie# goo( go!ernance= 2oo( go!ernance i# a%o"t fairne##/ acco"nta%i it&/ re#*on#i%i it& an( tran#*arenc&= ife an(
In tr&ing to con!ince %"#ine## a%o"t goo( go!ernance an( #"#taina%i it&/ arg"'ent# are *"t for8ar( a# to ho8 %"#ine## 8i %enefit thro"gh %etter in!e#t'ent o**ort"nitie#/ i'*ro!e( *"% ic re ation# an( cor*orate i'age= B"t 'o#t i'*ortant &/ the %"#ine## ca#e for #"#taina% e (e!e o*'ent i# gro"n(e( in the rea it& of *o!ert&/ "ne'* o&'ent/ econo'ic e?c "#ion/ #+e8e( (i#tri%"tion of re#o"rce# %et8een rich an( *oor/ (e*ri!ation an( the re#" tant o## of *eo* e:# (ignit&= To(a& the foc"# 8i %e on one a#*ect of go!ernance an( that i# the (i#tri%"tion of inco'e an( ho8 thi# i'*act# on #"#taina%i it&=
1>
A'at&a Sen 8a# a8ar(e( the No%e Peace Pri1e in econo'ic# for hi# 8or+ on t8o f"n(a'enta #ocia *o ic& i##"e# that #a&# that Lif one gro"* of *eo* e #a arie# ri#e fa#ter that the no'ina rate of gro8th in the econo'&/ the inco'e of another gro"* '"#t (ec ine: Lan( that co"ntrie# 8here the ga* %et8een rich an( *oor i# narro8 gro8 'ore #"#taina% e than co"ntrie# 8ith high e!e # of ineF"a itie#:= Ce goe# on to #a& that Lh"ge ineF"a itie# in the (i#tri%"tion of nationa inco'e e!e # ten( to (e*re## the rea 8age# of 8or+er# an( the n"'%er of Ko%# that can %e create(:= 2oo( go!ernance i# not K"#t a%o"t 'a+ing the right in!e#t'ent choice %"t a%o"t 'a+ing the right 'ora choice# that are in the intere#t# of the co''on goo(= Dhat nee(# to %e ta+en into acco"nt i# not K"#t financia !ia%i it& an( *otentia *rofit#/ %"t #ocia i##"e# i+e "ne'* o&'ent an( *o!ert& a e!iation= It:# a #o a%o"t ho8 *ro("ction i# (one/ an( ho8 'an& Ko%# are create(= It i# a%o"t #"#taina%i it& of #ocietie#/ an( the interconnecte(ne## of cor*oration# an( #ociet&= It i# a%o"t a #&#te'# a**roach to #"#taina%i it&= Cor*oration to(a& * a& an i''en#e & i'*ortant ro e in #ociet&/ #ha*ing re ation#/ (eter'ining *ro("ction/ e!e # of e'* o&'ent/ "ne'* o&'ent an( e?c "#ion= U* to the 1;A<:# go!ern'ent:# * a&e( an i'*ortant econo'ic ro e in #ociet&/ en#"ring #o'e fairne## %et8een ca*ita an( a%o"r/ *rotecting oca econo'ic (e!e o*'ent/ thro"gh *rotectioni#t *o icie#/ in the for' of e?change contro an( i'*ort tariff#/ e#*ecia & the *rotection of *ri'ar& in("#trie# #"ch a# te?ti e# an( agric" t"re= In#tea( there i# a 8or ( 8i(e tren( a8a& fro' *ro("cti!e in!e#t'ent to 'a+ing 'one& on 'one&= Thi# #*ec" ati!e in!e#t'ent (oe# not create 'ore
INDIAN INSTITUE OF FINANCE 1A
factorie# or Ko%#/ or increa#e #*en(ing *o8er= In fact it (oe# nothing for the rea econo'&/ 8here it 'atter# an( 8here Ko%# are nee(e(= An( %& the 8a& thi# i# an area for goo( go!ernance of the econo'& that nee(# to %e #ha*e( %& go!ern'ent# 8ho #o often ac+ the *o itica 8i = That i# the (i#tri%"tion of re#o"rce#= Ditho"t a foc"# on thi#/ goo( go!ernance %& State# i# f"ti e a# it on & he *# to *er*et"ate *o!ert& an( the inco'e (i!i(e= A itt e 'ore on thi# ha# to %e #ai(/ an( that i# 8e (o not 8ant go!ern'ent# thro"gh goo( go!ernance to on & create the fra'e8or+ for in!e#t'ent that a##i#t# in *er*et"ating the *o!ert& (i!i(e= An( go!ern'ent:# ro e# ha!e %een re("ce( to creating an ena% ing en!iron'ent/ often for the f ight of *rofit#= De +no8 for e?a'* e that in!e#t'ent an( ai( tric+ ing into Africa i# e## than 8hat i# going %ac+ to the (e!e o*e( 8or (= The EIB nee(# to con#i(er the *roKect# it #"**ort# to en#"re that thi# #+e8e( (i#tri%"tion i# not *er*et"ate(= Thi# #+e8e( 8a& of (oing thing# et# 'one& tric+ e "*8ar(# to tho#e 8ho nee( it ea#t/ cannot #*en( it an&8a& an( 8a#te it on Lga'% ing:= Unre ent e## gree( i# the i##"e= Nothing tric+ e# (o8n/ a# the *o*" ar '&th of ca*ita i#' 8i ha!e "# %e ie!e= 2ro8th in the econo'& i# #hare( %& a fe8 at the e?*en#e of 'an&= Thi# i# the rea i##"e facing #ociet&= De can %"i ( 'ore Kai #/ oc+ "* tho#e 8ho #tea / an( &et the *ro% e'# of "ne'* o&'ent/ *o!ert&/ cri'e an( !io ence 8i %e 8ith "#= 2oo( go!ernance i# a%o"t a((re##ing #ocia *ro% e' that ca*ita i#' i# ca"#ing/ e#*ecia & it# re ent e## #earch for increa#ing *rofit# at an& e?*en#e= The e?*en#e to #ociet& thro"gh the (e#tr"ction of nat"ra en!iron'ent/
INDIAN INSTITUE OF FINANCE 1E
*eo* e:# i!e ihoo(#/ (o8n8ar( *re##"re# on 8age# an( the *ractice of #+e8ing 8ea th (i#tri%"tion at the e?*en#e of 'ore *rofit# for tho#e 8ho cannot #*en( it *ro("cti!e &/ #o often enco"rage( %& 8ea+ene( an( tooth e## State# goe# to the heart of goo( go!ernance=
2oo( go!ernance nee(# to #tart fro' a (ifferent *re'i#e/ that of caring for the 8or ( an( *eo* e= M"#t for ho8 ong can e?ce##i!e *rofit# contin"e to %e 'a(e 8ith o"t con#i(ering the effect# an( e?*en#e on *eo* e that ha# occ"rre(H In thi# regar( the ro e of the #tate i# i'*ortant/ not on & to ha!e o!er#ight an( creating the right en!iron'ent/ %"t en#"ring a fairer re ation#hi* of (i#tri%"tion %et8een a%o"r an( ca*ita = The EIB nee(# to con#i(er not on & financia #"#taina%i it& %"t rather %a ancing #ocieta concern# that are not *"re & *rofit (ri!en= De nee( to enco"rage an inc "#i!e #&#te' of go!ernance that con#i(er# an( incor*orate# oca co''"nitie#= I 8ant to ta + a%o"t the f"n(a'enta *ro% e' of inco'e (i#tri%"tion an( goo( go!ernance= Briti#h econo'i#t Mohn Na& #a&# that 8hen ,CEO:# e?tract #e!era h"n(re( tho"#an( (o ar# fro' a co'*an&/ that it i# not 'ateria & (ifferent fro' 8hat for'er Pre#i(ent 5a%"t" Se#e Se+o of Iaire (i(/ 8here he #i*hone( off foreign ai( into hi# %an+ acco"nt# in E"ro*e= Ce goe# on to #a& that it i# 8rong to #a& that re8ar(# at the to* are #i'* & the re#" t# of #"** & an( (e'an(= De o"ght to thin+ of the#e *o#ition# a# *o#ition# of tr"#t an( a"thorit& i+e K"(ge# or *ri'e 'ini#ter#= Ce #a&# 8e +ee* gree(& *eo* e o"t of *o itic#/ %"t then 8e #a& it i# a right for the' to %e in %"#ine##= De #ho" (n:t %e #"r*ri#e( that 8e en( "* 8ith corr"*t %"#ine## *eo* e-
1;
In an artic e 8ritten in the Ne8 Yor+ Ti'e# %& Bo% Cer%ert on the #hift of nationa inco'e a8a& fro' a%o"r to *rofit#/ he #tate# that it i# e?traor(inar& that on & a fe8 *eo* e are ta +ing a%o"t it= The tren( "* to the Secon( Dor ( Dar 8a# that nor'a & a%o"r recei!e( a%o"t >6 *ercent an( cor*orate# 16 to 1E *ercent/ %"t no8 cor*orate *rofit# get 31 *ercent an( a%o"r no8 get# 3E *ercent= Thi# 3E *ercent i# 'a(e "* of a inc "(ing 8age#/ an( the *ercentage of *a&ro e'* o&ee co'*en#ation/ ta?e# *ai( %& e'* o&er#=
E!en a tho"gh a%o"r *ro("cti!it& gain# ha!e 8i(e & %een ac+no8 e(ge(/ 8or+er# are not co'*en#ate(= Ce a#+# 8hat ha# ha**ene( to the %" + of gain# if the& (i( not go to the 8or+er# %"t in#tea( "#e( to %oo#t *rofit#/ o8er *rice#/ or increa#e CEO co'*en#ation= Stan(ar(# nee( to %e #et %& the EIB to 'ea#"re thi# an( to en#"re that *roKect# f"n(e( (o not *er*et"ate the inco'e (i!i(e= 2ain# nee( to %e #hare( o"t 'ore eF"ita% & a# #"#taina%i it& i# the +e&= Ci# re*ort conc "(e# that that the a'o"nt of inco'e gro8th (e!o"re( %& cor*orate *rofit# i# Lhi#torica & "n*rece(ente(- a# i# the o8e#t #hare accr"ing to the nation# 8or+er# in the for' of co'*en#ation #ince the 1;36= In So"th Africa accor(ing to Unite( Nation# De!e o*'ent Re*ort/ 22 'i ion *eo* e i!e on e## that O2 (a&= That i# ha f the *o*" ation= B"t 8e +no8 Ko%# are contin"a & %een o#t an( that 8e ha!e re#tr"ct"ring that ea(# ca*ita inten#i!e *ro("ction an( that CEO# a8ar( the'#e !e# h"ge #a arie# an( %on"#e#/ %"t at the e?*en#e of other inco'e earning gro"*#= Thi# r"#h for *rofit# at an& e?*en#e an( 8hether it i# Ko%# or 'ore onero"# 8or+ing con(ition# or en!iron'enta (egra(ation cannot %e #"#taina% e an( nee(# to %e at the to* of the go!ernance agen(a=
2<
It i# ea#& to *a& i* #er!ice to (i!er#it& an( recognition of (ifferent intere#t# gro"*# an( (o nothing a%o"t it i# a# ref ecte( in the econo'ic choice# that are 'a(e= Cor*oration# %eca"#e of their "n i'ite( *o8er an( inf "ence/ are often 'ore i'*ortant than go!ern'ent# an( 8e in ci!i #ociet& are going to ca'*aign for reF"i#ite re#*on#i% &= De are not intere#te( in han(o"t# or 8or+ of *hi anthro*& %"t in 'eaningf" engage'ent/ engage'ent that goe# to the heart of (eci#ion 'a+ing= De 8ant acco"nta%i it&@ 8e 8ant to +no8 ho8 an( 8h& certain (eci#ion# are 'a(e= De 8ant to en#"re that 8hen (eci#ion# are 'a(e that a *rofit= 2oo( go!ernance i# a%o"t 'a+ing (eci#ion# that are in the intere#t# of a #ta+eho (er gro"*#= Too '"ch i# % a'e( on 'ar+et force# 8herea# it i# *eo* e 8ho 'a+e (eci#ion an( #o'e of the#e (eci#ion# are #hort#ighte( an( %a#e( on gree(= 2oo( go!ernance i# a%o"t con#i(ering the i'*act of %"#ine## (eci#ion# on the 8i(er co''"nit&= It i# a%o"t re#*on#i% e %"#ine## *ractice# an( a%o"t #etting #tan(ar(# a# 'ea#"re( again#t #ocieta #hareo8ner# %"t a e?*ectation#= 2oo( go!ernance i# a%o"t the 'ora c"#to(ian#hi* o!er the intere#t# of not on & #ta+eho (er gro"*#= It i# a%o"t en#"ring ong9ter' #"#taina%i it& an( not #hort9ter' *rofit#= It:# a%o"t 'a+ing *rofit in a re#*on#i% e 'anner %& not e?c "(ing certain gro"*# for the %enefit of other gro"*#= the (ifferent #ta+eho (er gro"*# are con#i(ere( an( that in *eo* e are *"t %efore
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It i# * a"#i% e that one (a& h"'anit& 8i h"'an+in(=
oo+ %ac+ on the #ocia *ro("ction
of to(a& in a%horrent ter'#/ a# the 8or#t e!i e!er *er*et"ate( %&
Cor*oration# ha!e a ot of rethin+ing to (o/ 'in( fa'e# nee( to change an( 8e nee( to 'o!e a8a& fro' the hoar( 'enta it& to one of eF"it& an( fair9 * a&= Cor*oration# o*erate 8ithin the con#traint# of the *re!ai ing *o itica / #ocio9c" t"ra an( econo'ic *ara(ig' an( the#e nee(# to %e F"e#tione(=== De nee( reg" ation an( acco"nta%i it&= 2oo( go!ernance i# not K"#t a%o"t the co'*o#ition of %oar(#/ %"t rather a%o"t the #ocia an( econo'ic 8e %eing of a = A# 8e 'o!e for8ar( into the 21 #t cent"r&/ et "# %e a8are that the r" e# that go!ern cor*oration# are "n(er attac+ an( that cor*oration# that #tart to change ho8 the& o*erate 8i in a i+e ihoo( %e the 8inner# of to'orro8= B"t for thi# to ha**en/ 8e nee( #tronger ro e# for go!ern'ent# in reg" ating an( ho (ing cor*oration# acco"nta% e to %roa(er #ocieta an( (e!e o*'ent o%Kecti!e#= Let "# ho*e that ci!i #ociet&:# !oice i# not K"#t a !oice in the 8i (erne##= A# 8e: #ee/ the conce*t"a i1ation of corporate social responsibility offere( in &o"r te?tGthat a cor*oration #ho" ( %e he ( acco"nta% e for an& of it# action# that affect *eo* e/ their co''"nitie#/ an( their en!iron'entG'a& %e a %it too %roa( .%"t not too '"ch #o0= Re'e'%er that an& #ocia in#tit"tion that fai # to "#e it# *o8er in a #ocia &9 re#*on#i% e 8a& i# i+e & to o#e it= .The f i* #i(e i# that in#tit"tion# #een to
%e *o8erf" 8i face (e'an(# to "#e their *o8er in #ocia &9re#*on#i% e 8a&#=0 The (e%ate a%o"t cor*orate #ocia re#*on#i%i it& .CSR0 %egan in the ear & 2<th cent"r&/ a# concern# a%o"t arge cor*oration# an( their *o8er ca'e to the fore= T8o %roa( *rinci* e#Gcharit& an( #te8ar(#hi*Gha!e he * to #ha*e thin+ing a%o"t CSR=
So$e e+a$ples of corporate citi)enship

Corporate Citi)enship 2enera E ectric .2=E=0 A (i!er#ifie( techno og&/ 'e(ia an( financia #er!ice# co'*an& 8ith 3<</<<< e'* o&ee# an( c"#to'er# on 'ore than 1<< co"ntrie#= An en!iron'ent/ hea th an( #afet& .ECS0 'anage'ent #&#te' that a** ie# to a 2E %"#ine##e# A con#i#tent e?*ectation# of ECS *erfor'ance at a *ro!i(e con#i#tent re*orting an( 'ea#"re'ent A #"** ier co'* iance *rogra' ocation#
A #tan(ar(i1e( co'* iance a"(iting an( ta#+ 'anage'ent that
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Corporate Citi)enship Dofa#co .cont=0 Dofa#co i# i#te( on the Do8 Mone# S"#taina%i it& Dor ( In(e?/ one of on & 13 Cana(ian Co'*anie#= ,S"#taina%i it&9(ri!en co'*anie# achie!e their %"#ine## goa # %& integrating econo'ic/ en!iron'enta / an( #ocia gro8th o**ort"nitie# into their #trategie#= Dofa#co ha# %een recogni1e( a# a to* 6< e'* o&er in Cana(a= Recei!e( the Nationa P"a it& In#tit"te Cea th& Dor+* ace A8ar( in 2<<2=
Corporate Citi)enship Br"ce Po8er Cana(a:# arge#t in(e*en(ent n"c ear generating #tation 8ith 3/><< e'* o&ee# Achie!e( ;=> 'i ion ho"r# 8itho"t an ac"te o#t9ti'e inK"r& It# cor*orate !a "e# #tate'ent rea(# in *art ,De 8i J A 8a&# * ace n"c ear #afet& a# the o!erri(ing *riorit& Acce*t *er#ona re#*on#i%i it& for o"r o8n an( other#: con!entiona an( ra(io ogica #afet& A 8a&# ta+e into acco"nt the en!iron'enta i'* ication# of 8hat 8e (o
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A 8a&# * ace #afet& %efore co''ercia gain Stri!e for contin"o"# i'*ro!e'ent in #afet& a8arene## an( *erfor'ance
;ro!in# S(pport
Dhi e the achie!e'ent# of the *re!io"# organi1ation# are "niF"e to each of the' the& are not o*erating in i#o ation= 5an& factor# an( force# are 8or+ing to he * %"#ine##e# to a##"'e greater CSR= e! corporate $o"els: Qirt"e 5atri? cor*orate 'o(e e! International Stan"ar"s: ISO 2><<< #ocia re#*on#i%i it& g"i(e ine# e! ,e#islation: Cana(ian Bi C936 e! corporate Initiati'es: Cana(ian CEO Cea th an( Safet& Lea(er#hi* Charter
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,ea"ership i$perati'e of corporate social responsibility
,e'era#e Corporate CSR -pport(nities

=n"erstan" the footprint yo(r or#ani)ation lea'es in the !orl" aro(n" yo( the follo!in# fra$e!or4: 2o!ernance an( 'anage'ent *ractice# C"'an re#o"rce# 'anage'ent En!iron'ent/ hea th an( #afet& Co''"nit& in!e#t'ent an( in!o !e'ent/ an( C"'an right#
2>
=n"erstan" yo(r options Fig"re o"t 8hat &o" can (o %etter= Con("ct a co#t $ %enefit ana &#i# of (oing thing# %etter !er#"# K"#t #ta&ing the co"r#e an( %"i ( a #trategic * an= State yo(r intentions Create a #ocia re#*on#i%i it& *o ic& or a(a*t e?i#ting !i#ion/ 'i##ion an( !a "e #tate'ent# to ref ect &o"r organi1ationa co''it'ent= In!o !e &o"r %e#t *eo* e in the *roce## an( (e'on#trate to*9 e!e co''it'ent Set E+pectations Shift organi1ationa effort# fro' achie!ing to e?cee(ing the 'ini'"' #tan(ar(# #et %& reg" ator& agencie#= I(entif&/ e#ta% i#h an( 8or+ to8ar(# 'ore a'%itio"# cor*orate #tan(ar(# of *erfor'ance Create yo(r o!n $ar4ets Sti'" ate co''erce an( (e!e o*'ent at the %otto' of the Dor (:# econo'ic *&ra'i( ) the *o#ition of 'o#t 8or+er# in (e!e o*ing co"ntrie# The Worl" Pyra$i"
2A
Corporate International I$perati'es.

,Dor+ i# an in(i#*en#a% e %a#i# of #ociet&/ an( f"rther'ore the *roce## of 8or+ #ho" ( %e o*ti'i1e( %& g"aranteeing (ecent 8or+ing con(ition# for a =The goa of the g o%a co''"nit& #ho" ( %e to g"arantee a "ni!er#a 'ini'"' e!e in 8or+ing con(ition# an( in occ"*ationa #afet& an( hea th for a 8or+ing *eo* e 8ith the he * of g o%a #trategie#= The goa #ho" ( %e e#*ecia &/ to *rotect the 'o#t !" nera% e gro"*#/ #"ch a# chi (ren/ 'igrant 8or+er#/ (i#a% e( *eo* e/ aging 8or+er#/ 8o'en an( i iterate 8or+er#=-
Tra"itional ? ,e#al
The ega & (efine( 'an(ate of to(a&:# cor*oration i# to *"r#"e re ent e## & an( 8itho"t e?ce*tion/ it# o8n #e f intere#t/ regar( e## of the often har'f" con#eF"ence# it 'ight ca"#e to other#= C"rrent &/ the 'o#t 8i(e &9"#e( 'o(e in %"#ine## i# the #toc+ho (er 'o(e / cha'*ione( %& /%lton 0!%e#&an +*o sa%# t*e bus%ness o) bus%ness %s bus%ness$( Ba#ica &/ *rofit# are e!er&thing= The o%#tac e to 'a+ing an& #ignificant/ %roa(9%a#e( *rogre## in i'*ro!ing factor& hea th an( #afet& con(ition#/ not to 'ention 8age#/ ho"r#/ hara##'ent an( (i#cri'ination in the g o%a econo'&/ i# not a ac+ of g"i(e ine# or 'anage'ent CSR co''an(9an(9contro certification #che'e#= #&#te'#/ or
The real obstacles are:

Lac+ of *o itica 8i %& cor*oration# to refrain fro' ta+ing a(!antage of !" nera% e co"ntrie# an( (e#*erate 8or+er#= Lac+ of *o itica 8i an( *erha*# ac+ of gen"ine o*tion#/ on the *art of go!ern'ent# in the (e!e o*ing 8or ( to enforce reg" ation# an( e#ta% i#h ne8 one#= Lac+ of re#o"rce# .financia / infor'ationa an( *o itica 0 of #8eat#ho* 8or+er# ) to +no8 8hat their right# are/ to +no8 ho8 to *rotect the'#e !e# on the Ko%/ an( to %e a% e to ,o*erationa i1e- #"ch +no8 e(ge=
2;
The "*ta+e of CSR %& IFI# can cata &1e *ri!ate #ector o*eration# to 'eet %oth the ,%otto' ine- an( the #"#taina% e en!iron'enta an( #ocia (e!e o*'ent nee(# of (e!e o*ing econo'ie#=
I/I co$parati'e a"'anta#es

5DB#/ IFI# ha!e re ati!e & 'ore e?*erience on *"% ic con#" tation/ info (i#c o#"re/ en!iron'enta ("e (i igence IFI# can %e *ro'ote #*ecific *roKect# or #ector# I=e= RENEDABLE ENER2Y Pro!i(e technica a##i#tance on CSR to (o'e#tic S5E#/ in("#tr& aggar(#
CSR 0 I/I pri'ate sector strate#ies

En!iron'ent/ a%or/ h"'an right# #tan(ar(# #ho" ( %e *art of a co'*an&:# %"#ine## 'o(e 'echani#'# Re*orting of infor'ation .2 o%a ,confi(entia it&- not an e?c"#e= Re*orting Initiati!e099 C ient to gain acce## to IFI financing
Challen#e to I/Is in preparation for the Worl" S($$it on S(stainable &e'elop$ent1 2332:
Integrate CSR e?*ectation# into *ri!ate #ector #trategie# Dor+ 8ith *ri!ate #ector to finance co''ercia 9%a#i# rene8a% e Con!ene #trategic (ia og"e# a'ong cor*orate c ient# an( N2O# to
energ& *roKect# (i#c"## har( i##"e# 7 (i e''a#=

INDIAN INSTITUE OF FINANCE 3<
-*ECTI%ES -/ THE PR-AECT

The o%Kecti!e of thi# *roKect entit e( a#- A #t"(& of #e ecte( i##"e# of Cor*orate #ocia re#*on#i%i it& in Re iance Life In#"rance Cor*oration in the area of Ne8 De hi- i# 1= Co8 '"ch Re iance Life In#"rance !a "e# cor*orate #ocia re#*on#i%i it&/ %eca"#e cor*orate *rofit# an( a tho"ght for #ociet& an( it# "* ift'ent are in+e( an( I 8i#h to fin( o"t that !er& e!e of integration %et8een the t8o= 2= Cor*orate #ocia re#*on#i%i it& can %e e!a "ate( on 8i(e n"'%er of *ara'eter# %"t the *roKect i'itation *er'it# 'e to con("ct '& #t"(& on K"#t one *ara'eter= In '& #t"(& I con("cte( the ana &#i# on e'* o&ee#/ 8hich can a #o %e e?ten(# to #"** ier#/ C"#to'er#/ #hareho (er#/ an( 'an& 'ore 8ho are (irect & affecte( %& the f"nctioning of the co'*an&. I 8ant to (i#co!er the nat"re of cor*orate #ocia re#*on#i%i it& 8hich re iance ife in#"rance fo o8#/ an( act"a i'*act on the e'* o&ee#= 3= 5i ton Frie('an No%e Pri1e Dinner in Econo'ic# in 1;A> #ai( that The Social $esponsibility of %usiness &s to &ncrease &ts 'rofits -= Ce 8a# one of the 'o#t effecti!e a(!ocate# of econo'ic free(o'# an( free enter*ri#e/an( an a(!ocate of i'ite( go!ern'ent =Ci# theor& a##ert# a cor*orationR# *ri'ar& an( *erha*# #o e *"r*o#e i# to 'a?i'i1e *rofit# for the #toc+ho (er= I 8ant to #t"(& 8hether the
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i(eo ogie# of 5i ton Frie('an ho (# tr"e for re iance or act"a & o**o#e hi# *oint of !ie8= 3= 5& o%Kecti!e i# to con("ct '& #t"(& on e'* o&ee# on ten factor# 8hich are their Dor+= Interaction 8ith #"*erior/ Their co8or+er# Ethica *o ice#= Pro'otion# Incenti!e# Pa& C"'an right# Cea th an( #afet&= The re#" t ai'# to fin( o"t ho8 '"ch #ta+eho (er# are ta+en care of #*ecifica & of e'* o&ee 8or+ing in the organi1ation= Thi# #t"(& ai'# to (ra8 a co'*arati!e #t"(& of cor*orate #ocia re#*on#i%i it& in Re iance Life In#"rance an( #o'e other IT giant# i+e Sat&a' Co'*"ter#/ Tata Con#" tanc&=
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CHAPTER II:
THE-RETICA, PERSPECTI%E -/ C-RP-RATE S-CIA, RESP- SI*I,T<
Corporate Social Responsibility
A cor*oration #ho" ( %e he ( acco"nta% e for an& of it# action# that affect *eo* e/ their co''"nitie#/ an( their en!iron'ent= ReF"ire# co'*anie# to %a ance the %enefit# to %e gaine( again#t the co#t# of achie!ing tho#e %enefit#= Iron La8 of Re#*on#i%i it&B In t*e lon, !un1 t*ose +*o #o not use "o+e! %n +ays soc%ety cons%#e!s !es"ons%ble1 +%ll lose %t(
I"entification an" characteristics of corporate social Responsibility

What "oes corporate social responsibility (CSR) refer to? There i# #o far no con#en#"# in the aca(e'ic circ e# on the F"e#tion= Co8e!er/ #o'e US #cho ar# genera & ta+e it that CSR refer# to the fact that %oar( (irector# of a co'*an&/ a# the tr"#tee# of !ario"# intere#t *artie#/ acti!e & *artici*ate in a tr"i#t acti!itie# in or(er to *erfor' their ("e cor*orate ro e# in the #ociet&= So'e other #cho ar# are in fa!or of the o*inion of 'o#t US #cho ar# that CSR 'ean# that tho#e *rofit9oriente( co'*anie#/ 8hen their (eci#ion
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'a+ing %o(ie# %eco'e certain that #o'e "n(erta+ing# are 'o#t & (e#ire( %& the 'aKorit& of the #ociet&/ #ho" ( gi!e "* their intent of 'a+ing *rofit# fro' the "n(erta+ing# an( tr& to 'eet the e?*ectation# of the 'aKorit&= Other #cho ar# %e ie!e/ that CSR refer# to the fact that co'*anie# #ha not ta+e o*ti'a 9*rofit9'a+ing for (irector# a# the #o e ai' of cor*orate e?i#tence= In#tea(/ a cor*orate e?i#tence= Sti / other #cho ar# thin+ that CSR refer# to the #ocia o% igation that a co'*an& ha# to %e ia% e to in the 'aintenance an( i'*ro!e'ent of #ocia %enefit# in a((ition to the *"r#"it of 'a?i'i1ing #hareho (er# *rofit#= Tho"gh the (e#cri*tion of CSR !arie#/ the core of it i# #i'i ar/ i=e= a co'*an& #ho" ( "n(erta+e certain #ocia re#*on#i%i itie# an( ia%i itie# at the #a'e ti'e of 'a+ing *rofit# for the co'*an&= To #"' "* the !ario"# o*inion# %& (ifferent #cho ar#/ 8e 'a& conc "(e the fo o8ing a# the 'ain characteri#tic# of cor*orate #ocia re#*on#i%i it&= #ocia %enefit# rather than 'a?i'a & i'*ro!ing #hareho (er#: intere#t# #ho" ( %e con#i(ere( a# the #o e o%Kecti!e of
CSR i# a +in( of re#*on#i%i it& of re ation# or *o#iti!e re#*on#i%i it& 2enera & #*ea+ing/ the 8or( ,re#*on#i%i it&- contain# t8o fo (# of 'eaning#B re#*on#i%i it& of re ation# an( 'etho( re#*on#i%i it&= The for'er refer# to the fact that the *rinci*a of one *art& ta+e# "* certain re#*on#i%i itie# %a#e( on certain +in(# of re ation# of the *rinci*a of other *artie#= Thi# +in( of re#*on#i%i it& i# act"a & an o% igation@ the
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atter refer# to the negati!e con#eF"ence/ 8hich #ho" ( %e %orne %& the *rinci*a 8ho are ia% e to re#*on#i%i it& of re ation# .i=e= o% igation#0 an( fai # to *erfor' hi# re#*on#i%i it& of re ation#= CSR i#/ in fact/ an o% igation of a co'*an&= It can %e #ai( that the ,re#*on#i%i it& in ,CSRrefer# to an ,o% igation-= In a((ition/ the K"ri#*r"(entia circ e ta+e# an o% igation a# a *o#iti!e re#*on#i%i it& an( the negati!e con#eF"ence re#" te( fro' (efa" t of o% igation# a# negati!e re#*on#i%i it&= If to oo+ at CSR 8ith thi# +in( of (i!i#ion/ then/ it i# o%!io"# & a +in( of *o#iti!e re#*on#i%i it&=
CSR ta+e# tho#e concerne( 8ith non9#hareho (ing intere#t# a# the concerne( *art& of o% igation# Accor(ing to genera "n(er#tan(ing/ the #o9ca e( ,concerne( *artie# 8ith non9#hareho (ing intere#t#- are (ee'e( a# the con#i#ting *art of the concerne( *artie# of intere#t# of the co'*an&/ i=e= an& non9#hareho (er#/ 8ho are "n(er act"a / *otentia / (irect an( in(irect inf "ence of cor*orate (eci#ion9'a+ing an( cor*orate %eha!ior#= S*ecifica &/ the& inc "(e co'*an& e'* o&ee#/ con#"'er# of co'*an& *ro("ct#/ co'*an& cre(itor#/ %eneficiarie# of econo'ic an( #ocia (e!e o*'ent * anning/ re#o"rce# an( en!iron'ent/ #ocia #ec"ritie# an( 8e fare faci itie#= Since the concerne( *artie# 8ith non9#hareho (ing intere#t# ha!e their re#*ecti!e intere#t# in the co'*an&/ the co'*an& ha# ia%i itie# to 'aintain an( #ec"re their intere#t# an( thi# ia%i it& i# 8hat i# ca e( CSR= Accor(ing &/ the concerne( *artie# 8ith non9#hareho (ing intere#t# are a #o con#i(ere( a# the concerne( *artie# of o% igation of the co'*an&=
36
CSR i# an integration of ega an( 'ora o% igation# of a co'*an& Lega o% igation/ a #tat"tor& ia%i it& ta+ing #tate coerci!e force# a# it# *erfor'ance g"arantee/ 'ean# ega #ec"rit& of 'ini'"' reF"ire'ent of 'ora it& nece##ar& to 'aintain %a#ic #ocia or(er= 5ora o% igation i# a re#*on#i%i it& non9 ega i1e( an( !o "ntari & *erfor'e( %& the o% igor# an( 8hich ta+e# an& other 'ean# than the #tate coerci!e force# a# it# *erfor'ing g"arantee= It i# a higher (e'an( of 'ora it& on *eo* e a%o!e their ega o% igation#= CSR/ a# an o% igation that a co'*an& i# ia% e to the #ociet&/ i# not #i'* & a ega o% igation or a 'ora o% igation= Rather/ it i# the integration of the t8o=
CSR i# an a'en('ent an( co'* e'ent to the con!entiona *rinci* e of 'a?i'i1e( *rofit# for #hareho (er#= The con!entiona co'*anie# an( co'*an& a8# ta+e in(i!i("a *rinci*a # .#hareho (er#0 a# the #tarting *oint for con#i(eration/ %e ie!ing that the highe#t or the #o e o%Kecti!e of a co'*an& i# to achie!e *rofit# in or(er to 'a?i'i1e the *rofit# for #hareho (er#= Dherea#/ CSR ta+e# #ocia *rinci*a # a# it# #tarting *oint/ %e ie!ing that the o%Kecti!e of a co'*an& #ho" ( %e of t8o (i'en#ion#= In a((ition to rea i1ing the 'a?i'"' *rofit# for #hareho (er#/ co'*anie# #ho" ( a #o #tri!e to 'aintain an( "*gra(e #ocia %enefit#= Of the t8o cor*orate o%Kecti!e# of achie!ing 'a?i'"' cor*orate *rofit# an( #ocia %enefit#/ an& #ing e one of the o%Kecti!e# 8i ha!e to %e *"t "n(er re#triction %& the other= Therefore/ the o%Kecti!e# of 'a+ing *rofit# an( of %ringing #ocia %enefit# are often fo"n( in #trong ten#ion= Their re#*ecti!e o%Kecti!e# of
3>
'a?i'i1ation are rea i1e( "n(er con(ition# of reci*roca interaction# an( a %a ance in cor*orate o%Kecti!e# ha# a #o %een 'aintaine(= O%!io"# &/ CSR i# an a'en('ent an( co'* e'ent to the con!entiona *rinci* e of 'a?i'i1e( *rofit# for #hareho (er#= An( thi# a'en('ent an( co'* e'ent (oe# not reKect the *rinci* e of 'a?i'i1ing *rofit# for #hareho (er#=
Theoretical *asis of CSR

B. Econo$ic basis of CSR A co'*an& i#/ fir#t of a / an econo'ic #et"* 8ith 'a+ing *rofit# a# it# goa an( it ha# the #tat"# of ega entit& 8ith in(e*en(ent econo'ic intere#t#= Dhen oo+ing at the #ocia re#*on#i%i itie# that a co'*an& #ho" ( ta+e/ tho#e #cho ar# in the econo'ic circ e an( 8ho are in fa!or of thi# o*inion %e ie!e that cor*orate o%Kecti!e# ie in creating goo( con(ition# of e?i#tence an( #o"n( (e!e o*'ent *ro#*ect for a co'*an&=
The 'anager# of a co'*an& #ho" ( %eco'e concerne( 8ith the o*ti'a ong9ter' ca*ita gain# of the co'*an& in or(er to achie!e cor*orate goa #@ if to achie!e the o*ti'a ong9ter' *rofit#/ a co'*an& 8i ha!e to ta+e "* #ocia re#*on#i%i itie# a# 8e a# the #ocia co#t th"# inc"rre(= Dhen #t"(&ing on the re ation#hi* %et8een #ocia re#*on#i%i itie# an( econo'ic *erfor'ance an( efficienc&/ the foc"# i# gi!en on the re#earch of the re ation#hi* %et8een #ocia re#*on#i%i itie# an( econo'ic *erfor'ance an( efficienc& ("ring the ong9ter' (e!e o*'ent *roce## of a co'*an& #o that a *o#iti!e corre ation of the t8o ha# %een (eri!e(=
3A
2. Sociolo#ical basis of CSR Societ& i# an organic 8ho e= Co'*anie# .enter*ri#e#0 are co'*onent# 'a+ing "* the organic 8ho e= To oo+ at the re ation#hi* of #ociet& an( co'*anie#/ co'*anie# cannot #"r!i!e in i#o ation fro' a #ociet&= Socia (e!e o*'ent re ie# on the gro8th of co'*anie#= Thi# inter(e*en(enc& (eci(e# that #ociet& an( co'*anie# inter* a& 8ith each other/ an( at the #a'e ti'e the& are re#tricte( %& their re#*ecti!e (e!e o*'ent r" e#@ 8hat i# 'ore/ co'*anie#/ a# a #ocia #et"*/ ha!e their in(e*en(ent intere#t#@ #ocia %enefit# i# of *"% ic 8e fare#=
The (e!e o*'ent o%Kecti!e# of co'*anie# ie in 'a?i'i1ing their cor*orate *rofit#/ 8herea# #ocia (e!e o*'ent o%Kecti!e# are for incre'ent of co''on %enefit# of it# 'e'%er# in a #ociet&= A #o/ co'*anie#/ a# one tier of a #ociet&/ reF"ire that cor*orate intere#t# are *"t "n(er con#traint of #ocia %enefit# an( co'*an&:# o%Kecti!e# #ho" ( co'* & 8ith tho#e of #ocia %enefit#= Th"#/ it i# 'a(e +no8n F"ite o%!io"# & that co'*anie# #ho" ( "n(erta+e their re#*ecti!e #ocia re#*on#i%i itie#=
C. ,e#al *asis of CSR The chief *rinci* e of a8 to fo o8 in o"r co"ntr& 8hen reg" ating K"#tice an( intere#t#/ an( the contra(iction# %et8een the re ation#hi*# of !ario"# intere#t# i# to ta+e into acco"nt the intere#t# of the #tate/ the co ecti!e an( the in(i!i("a = Achie!ing cor*orate *rofit# an( ta+ing "*
3E
#ocia re#*on#i%i itie# are in fact a 'atter of the contra(ictor& re ation#hi* %et8een the in(i!i("a cor*orate %"#ine## %enefit# an( the co ecti!e #ocia %enefit#=
Dhen (ea ing 8ith the re ation#hi* of the t8o/ the fir#t *riorit& #ho" ( %e gi!en to #ati#f&ing the integra #ocia %enefit# 8hi e *"r#"ing in(i!i("a econo'ic %enefit#/ 8hich reF"ire# that co'*anie# #ho" ( ta+e "* certain #ocia re#*on#i%i itie# 8hi e #ee+ing for o*ti'a %"#ine## %enefit#= Secon( &/ the criterion of reg" ating the !ario"# contra(iction# of re ation#hi*# of intere#t# i# to *rioriti1e efficienc& 8hi e gi!ing con#i(eration to K"#tice/ 8hich 'ean# 8hen efficienc& contra(ict# 8ith K"#tice/ efficienc& o!erta+e# a# the (o'inating factor=
Co'*anie# #ho" ( go after a# high efficienc& a# *o##i% e in or(er to acF"ire the o*ti'a %"#ine## %enefit#= Co8e!er/ 'ora factor 8i ha!e to %e con#i(ere( at the #a'e ti'e= If co'*anie# #ee+ r"th e## & high efficienc& an( high *rofita%i it& an( therefore (a'age the K"#tice an( fair r" e# of the #ociet&/ a the in(i!i("a # in the #ociet& 8i " ti'ate & ha!e to *a& a hea!& *rice=
A# far a# ci!i
a8 i# concerne(/ a co'*an&/ a# a ega entit&/ i# the
*rinci*a of ci!i a8= The *rinci* e of *"% ic or(er an( goo( con("ct# i# one of the 'o#t %a#ic *rinci* e# of 'o(ern ci!i a8/ 8hich reF"ire# that the *rinci*a # of ci!i ca#e# #ha not !io ate the *"% ic or(er# an( goo( con("ct# 8hen engage( in ci!i acti!itie#/ 8hich a #o reF"ire# co'*anie#
3;
to "n(erta+e non9*erfor'ance ia%i itie# on an& %eha!ior# *rohi%ite( %& a8 8hen engage( in ci!i acti!itie#= Secon( &/ the i(ea of ci!i a8 ha# tran#for'e( fro' the in(i!i("a *rinci*a *re!a ent in the 1; th cent"r& to the #ocia *rinci*a (e!e o*e( in the 2<th cent"r&=
A# far a# co'*anie# are concerne(/ the& #ho" ( a #o 'a+e their #hift fro' the #e f9centere( %"#ine## *rofit# to the *ro'otion of #ocia %enefit# a# a 8ho e an( ta+e "* certain #ocia re#*on#i%i itie# 8hi e not #acrificing #e f *rofit9'a+ing o**ort"nitie#=
D. %al(e Theory of CSR Theories of 'al(e orientation of CSR .i0 Theor& of 'a?i'i1e( *rofit# for #hareho (er# The con!entiona theor& of CSR %e ie!e# that co'*anie#/ a# a %"#ine## #et"*/ #ho" ( ta+e o*ti'a *rofit 'a+ing for #hareho (er# a# their 'o#t f"n(a'enta o%Kecti!e= The rea i1ation of the %enefit# of an& other concerne( intere#t *artie# 8ho are "n(er the inf "ence of the co'*an&:# %eha!ior# #ho" ( not %e (ee'e( a# the cor*orate o%Kecti!e= An( the 'anage'ent %o(& of the co'*an& #ha ha!e the right to re#ort to an& 'ean# to achie!e the goa 8hen 'a+ing an& (eci#ion# or ta+ing an& action# on %eha f of the co'*an&=
.ii0
Theor& of #ocia re#*on#i%i it& for *rotection on the intere#t# of the cor*orate #ta+eho (er# other than #hareho (er#
3<
Thi# #choo of theor& 'aintain# that 'a?i'i1ing the intere#t# of the #hareho (er# of the co'*an& i# the 'o#t i'*ortant o%Kecti!e that a %"#ine## organi1ation #ho" ( achie!e= Co8e!er/ it #ho" ( not %e con#i(ere( a# the #o e o%Kecti!e= A# a %"#ine## organi1ation/ a co'*an& i# !ita & interre ate( 8ith the o!era #ocia en!iron'ent= Dhen in %"#ine## acti!itie#/ a co'*an& #ho" ( not on & con#i(er on the inf "ence that the acti!itie# 'a& ha!e on #hareho (er#/ %"t a #o on the inf "ence that the& 8i ha!e on the intere#t# of the *artie# other than the #hareho (er#/ inc "(ing e'* o&ee#/ #"** ier#/ c"#to'er#/ cre(itor# an( on the %enefit# of the go!ern'ent= Dhen a co'*an& 'a+e# an& (eci#ion/ it ha# to ta+e into acco"nt the %enefit# of the#e *eo* e= Other8i#e/ it #ho" ( ta+e ia%i itie# again#t an& har' or (a'age# th"# inc"rre( to the#e *eo* e=
.iii0
Theor& of #ocia re#*on#i%i it& on %eing goo( citi1en#
Thi# theor& 'aintain# that co'*anie#/ a# %"#ine## organi1ation#/ #ho" ( ta+e *rofit 'a+ing a# the cor*orate o%Kecti!e#= Co8e!er/ co'*anie# are a #o ia% e to offering he */ i=e= co'*anie# #ha ha!e the o% igation to he * #o !e certain #ocia *ro% e'#= For in#tance/ co'*anie# #ha ha!e the o% igation of 'a+ing (onation# to e("cation or charit& organi1ation#=
.i!0
Theor& of #ocia re#*on#i%i it& on 'ini'"' reF"ire'ent of 'ora it&
Thi# CSR theor& %e ie!e# that co'*anie# ha!e the o% igation to #ati#f&ing #hareho (er#: intere#t# rather than ca"#ing (a'age# to other *artie#= B& thi# theor&/ a# ong a# co'*anie# ha!e a!oi(e( ca"#ing or correcte( the #ocia har' ca"#e( ("e to their %eha!ior ("ring the *roce##
of %"#ine## acti!itie#/ the co'*anie# are (ee'e( to ha!e f" fi e( their #ocia re#*on#i%i itie#= The CSR theor& of 'ini'"' reF"ire'ent of 'ora it& i# regar(e( %& #o'e #cho ar# a# con#er!ati!e i(ea i#'/ or in other 8or(# a# the !o "ntar& co'* iance 8ith the a8=
A# far a# the theorie# of econo'ic a8# are concerne(/ an econo'ic a8 i# the a8 "#e( to achie!e #tate inter!ention of the econo'&= At (ifferent hi#torica *erio(/ the 'ea#"re#/ #co*e an( !a "e orientation of #tate inter!ention of the econo'& !ar& a# (ifferent go!ern'ent# in *o8er ha!e (ifferent *o icie#=
One of the rea#on# that the #tate inter!ene# on the organi1ation an( %eha!ior of the 'ar+et *rinci*a i# that the contra(iction# %et8een the #ocia o%Kecti!e# of the %eha!ior of the 'ar+et *rinci*a an( it# econo'ic o%Kecti!e# nee( to %e inter!ene( %& the #tate for contro = One of the 'ar+et *rinci*a ) co'*anie#/ #o'eti'e# i# not a% e to ta+e "* !o "ntari & #ocia re#*on#i%i itie# an( #tate inter!ention in the for' of egi# ation i# nee(e( to force or g"i(e co'*anie# to ta+e "* #ocia re#*on#i%i itie#=
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A Sta4ehol"er Theory of the 5o"ern Corporation

Accor(ing to ,A Stakeholder Theory of the (odern Corporation - %& Profe##or of B"#ine## A('ini#tration 7 Director of The O ##on Center of A** ie( Ethic# at the Uni!er#it& of Qirginia/ %oth the #toc+ho (er# an( #ta+eho (er# ha!e a right to (e'an( certain action# fro' 'anage'ent %eca"#e a ha!e a !e#te( #ta+e in the cor*oration T!o types of sta4ehol"er: S Narro8 (efinition 9 A #ta+eho (er inc "(e# tho#e gro"*# 8ho are !ita to the #"r!i!a an( #"cce## of the organi1ation= S Di(e (efinition 9 A #ta+eho (er inc "(e# an& gro"* or in(i!i("a 8ho can affect of i# affecte( %& the cor*oration= Sta4ehol"er Roles i= ii= iii= i!= != O8ner# ha!e a financia #ta+e in the cor*oration an( e?*ect a ret"rn on their in!e#t'ent= E'* o&ee# ha!e their Ko%# an( "#"a & their i!e ihoo( at #ta+e= S"** ier# *ro!i(e ra8 'ateria # to the cor*oration/ th"# the cor*oration i# !ita to the #"** ierR# #"cce##= C"#to'er# e?change re#o"rce# for the *ro("ct# or #er!ice# of the fir' an( in ret"rn recei!e the %enefit# of the *ro("ct# or #er!ice#= Loca co''"nit& grant# the cor*oration the right to %"i ( faci itie# in their area@ in t"rn/ the co''"nit& %enefit# fro' the ta? %a#e an( econo'ic contri%"tion# of the cor*oration=
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!i=
5anager# '"#t oo+ after the hea th of the cor*oration an( caref" & %a ance the conf icting c ai'# of a #ta+eho (er#=
STAEEH-,&ERS T-WAR&S WH-5 C-5PA < H-,&S RESP- SI*I,IT<
C=ST-5ERS -W ERS E5P,-<EES
= I- S
S=PP,IERS
;-%ER 5E T
,-CA, C-555= IT <
STATE;IC PART ERS
S-CIET< I ;E ERA,
33
36
%A,=E SPECTR=5 -/ CSR Fir' Beha!ior Financia I'*act 1=1 Sta+eho (er$Effect# Po#iti!e Incre'enta 2ain 1 E'* o&ee# 9 increa#e( 'ora e/ co''it'ent C"#to'er# ) re*eat Negati!e 5itigate Car'
E'* o&ee# ) re("ce( rog"e$#e f9intere#te( %eha!ior C"#to'er# ) re("ce( (efection# In!e#tor# *otentia ) re("ce for
*"rcha#e/ enhance( i'age In!e#tor# ) o8er co#t of ca*ita Partner# increa#e( tr"#t egi# ation Acti!i#t# Co''"nit& 5e(ia co!erage ) ) ) *ro("ct fa!ora% e fa!ora% e reco''en(ation# %"#ine## c i'ate .#"** ier#0 co a%oration/
) a%an(on'ent Partner# .#"** ier#0 ) re("ce (efection ) ) re("ce re("ce( i'*o#ing egi# ation Acti!i#t# threat of %o&cott Co''"nit& ) re("ce( threat of "*ri#ing 5e(ia ) re("ce( threat of negati!e co!erage
Reg" ator# ) fa!ora% e Reg" ator#
3>
/o(n"ation principles of corporate social responsibility

Charity Principle Definition B"#ine## nee(& gro"*# #ho" ( *er#on# Ste!ar"ship Principle gi!e B"#ine##/ acting a# a tr"#tee/ #ho" ( an( con#i(er the intere#t# of a 8ho are affecte( %& %"#ine## (eci#ion# an( B"#ine##/ acting a# a 99Cor*orate *hi anthro*& *"% ic a tr"#tee/ con#i(er the intere#t# of *ro'ote the #ocia goo( 8ho are affecte( %& %"#ine## (eci#ion# an( *o icie E?a'* e# *o icie# 99Ac+no8 e(ging an( #ociet& inter(e*en(ence 99Ba ancing the intere#t# an( nee(# of 'an& (i!er#e gro"*# in #ociet& 99Cor*orate *hi anthro*ic 99En ightene( fo"n(ation# 99Pri!ate 99Socia initiati!e# #o !e #ocia *ro% e'# 8ith nee(& gro"*# intere#t to 995eeting reF"ire'ent# a**roach #trategic to cor*orate ega #e f9
!o "ntar& ai( to #ociet&:# *"% ic
#ho" ( 99Qo "ntar& action# to %"#ine##
*artner#hi*# 99Sta+eho (er * anning
%ie!s of 5ilton /rie"$an
3A
The Social Responsibility of *(siness Is to Increase Its ProfitsF 1= 1;A> No%e Pri1e Dinner in Econo'ic# 2= One of the 'o#t effecti!e a(!ocate# of econo'ic free(o'# an( free enter*ri#e 3= An a(!ocate of i'ite( go!ern'ent 3= Ci# theor& a##ert# a cor*orationR# *ri'ar& an( *erha*# #o e *"r*o#e i# to 'a?i'i1e *rofit# for the #toc+ho (er= T!o $ain s(pportin# ar#($ents: Stoc+ho (er# are the o8ner# of the cor*oration/ an( hence cor*orate *rofit# %e ong to the'= Cor*orate e?ec"ti!e# are the #toc+ho (erR# agent# an( '"#t o*erate in the intere#t# of their *rinci* e .#toc+ho (er#0= Thi# (oe# not a o8 (onation# to charit& %& the cor*oration .cor*orate e?ec"ti!e#0 %eca"#e the inco'e %e ong# to the #toc+ho (er#/ not the cor*orate e?ec"ti!e#= In(i!i("a *ro*rietor# are (ifferent in that if the& choo#e to #*en( the inco'e generate( %& their %"#ine## the& are #*en(ing their o8n 'one&/ not the 'one& of other *eo* e= Stoc+ho (er# are entit e( to their *rofit# a# a re#" t of a contract a'ong the cor*orate #ta+eho (er#
So$e rele'ant facts re#ar"in# this theory

A #ta+eho (er in thi# conte?t refer# to e'* o&ee#/ 'anager#/ c"#to'er#/ #"** ier#/ the oca co''"nit&/ an( the #toc+ho (er#= Each #ta+eho (er gro"* ha# a contract"a re ation#hi* 8ith the fir'/ #ince the& recei!e the re'"neration the& free & agree( to in a *re9e#ta% i#he( agree'ent .contract0= The ethical "(ty of b(siness people is to $a+i$i)e profit ) G!ithin the la!. So they sho(l" st("y b(siness 0 $aybe la!. ) Gnot ethics= *(siness people are not 9(alifie" to "o anythin# b(t $a+i$i)e profit. ) ,ea'e social policy to #o'ern$ent1 etc. obo"y is as4in# b(siness people to $a4e social policy. ) -nly to ta4e responsibility for their co$pany8s i$pact. ) What "oes this entail? St("y b(siness ethics to fin" o(tH B"#ine## *eo* e ha!e no right to (o an&thing other than 'a?i'i1e *rofit= ) It:# other *eo* e:# 'one& .#toc+ho (er#0= 4 J"n e## one i# a #o e *ro*rietor= 4 Cor*orate officer# are hire( to 'a?i'i1e ret"rn on in!e#t'ent=
3;
On & e ecte( re*re#entati!e# ha!e the right to #*en( other *eo* e:# 'one& on #ocia 8e fare *roKect#= %ut the stockholders would have social responsibilities if they ran their own business) ) #or e*ample don+t price gouge) The& (on:t #he( the#e o% igation# %& hiring agent# to r"n the %"#ine## for the'= ) A 'afia %o## (oe#n:t a!oi( re#*on#i%i it& for '"r(er %& hiring a hit 'an= ) B"#ine##9re ate( ethica ("tie# tran#fer to cor*orate officer# 7 (irector#= B"t %"#ine##9re ate( ("tie# re("ce to *rofit 'a?i'i1ation= E!er&one i# %etter off if %"#ine## 'a?i'i1e# *rofit .or #hareho (er !a "e0= An&thing e #e g"'# "* the 8or+#= 5ilton /rie"$an Was Ri#ht )
TCor*orate #ocia re#*on#i%i it&T i# %"n+= 5i ton Frie('an fa'o"# & (ec are( that the #o e %"#ine## of the 'anager# of a *"% ic & he ( cor*oration 8a# to 'a?i'i1e the !a "e of it# o"t#tan(ing #hare#= An& effort to "#e cor*orate re#o"rce# for *"re & a tr"i#tic *"r*o#e# he eF"ate( to #ocia i#'= Ce *ro*o#e( that cor*oration a8 #ho" ( *re!ent
6<
'anager# fro' #tra&ing off the re#er!ation to Koin the a tr"i#t#/ a *o8er no8 a 'o#t "ni!er#a & grante( the' %& #tate egi# ation= Since it 8a# (iffic" t or i'*o##i% e to (i#ting"i#h a *rofit 'oti!e fro' a charita% e 'oti!e in an& *artic" ar cor*orate action/ a #trong r" e again#t cor*orate a tr"i#'/ a# Frie('an 8a# a(!ocating/ 8o" ( in!ite K"(ge# to e?a'ine the *ro*riet& of a #ignificant #et of 'anageria (eci#ion#= There i# ina%i it& of 'an& co''entator# to (i#ting"i#h %et8een *ri!ate an( *"% ic *ro*ert&99in other 8or(#/ %et8een a free enter*ri#e #&#te' an( #ocia i#'= So'eho8 arge9#ca e %"#ine## #"cce##/ "#"a & re#" ting in a *"% ic & he ( co'*an&/ #ee'# '&#terio"# & to tran#for' the nat"re of n"'ero"# in(i!i("a #R *ri!ate in!e#t'ent# into a##et# affecte( 8ith a *"% ic intere#t= An( once the#e cor*orate %ehe'oth# are Taffecte( 8ith a *"% ic intere#t/T the& '"#t either %e reg" ate( %& the #tate or the& '"#t act a# tho"gh the& are o8ne( %& the *"% ic/ an( are therefore inferentia & a *art of the #tate= Thi# attit"(e i# ref ecte( not 'ere & %& cor*orate acti!i#t#/ %"t %& 'an& T'o(ernT cor*orate 'anager#= An integra *art of the o (er notion of *"% ic "ti it& reg" ation reF"ire( that the enter*ri#e %e/ or act i+e/ a 'ono*o & .8hether Tnat"ra T or not0/ in or(er to %e affecte( 8ith a *"% ic intere#t= B"t in to(a&R# conf"#ion/ there i# no #"ch reF"ire'ent= No arg"'ent#/ 8ea+ a# the& are/ a%o"t nat"ra 'ono*o &/ 'ar+et fai "re/ go!ern'ent creation of cor*oration# or the a ege( go!ern'ent gift# of i'ite( ia%i it& an( *er*et"a e?i#tence/ are reF"ire( to K"#tif& the (e'an(# no8 reg" ar & * ace( on %"#ine## entitie#= An& arge enter*ri#e/ no 'atter ho8 co'*etiti!e it# in("#tr& an( no 'atter ho8 #"cce##f" & it i# f" fi ing the *"% icR# (e#ire#/ ha# a #ocia re#*on#i%i it&99a
ter' that 'a+e# 'oc+er& of the i(ea of in(i!i("a re#*on#i%i it&99to "#e *art of it# re#o"rce# for T*"% icT en(ea!or#= To(a&R# fa!orite ca"#e# are en!iron'enta *rotection/ e'* o&ee hea th/ #a e# of goo(# at %e o89'ar+et *rice#/ 8eather 'o(ification/ co''"nit& (e!e o*'ent/ *ri!ate enforce'ent of .not 'ere & a%i(ing %&0 go!ern'ent reg" ation# an( #"**ort of c" t"ra / e("cationa an( 'e(ica faci itie#= Co8 (i( thi# tran#*o#ition fro' *ri!ate to *"% ic re#*on#i%i it& co'e a%o"tH After a / e!en the arge#t cor*oration #tarte( #i'* & a# an i(ea in #o'eoneR# hea(= At fir#t thi# *er#on hire# e'* o&ee#/ %orro8# ca*ita or #e # eF"it&/ *ro("ce# goo(# or #er!ice an( 'ar+et# a *ro("ct= Nothing a%o"t an& of the#e *"re & *ri!ate an( %enign arrange'ent# #"gge#t# a *"% ic intere#t in the o"tco'e= B"t then the %"#ine## %egin# to gro8/ fa'i & #toc+ ho (ing# %eco'e 'ore (iff"#e(/ a((itiona ca*ita i# reF"ire( an(/ voil,/ another *"% ic & he ( cor*oration= In other 8or(#/ another A'erican #"cce## #tor&= B"t 8hat ha# ha**ene( to i'* icate *"% ic in!o !e'ent in the 'anage'ent or go!ernance of the#e enter*ri#e# a# the& gre8 fro' a 'ere i(eaH Nothing= An( if that nothing %e '" ti* ie( %& ten# or h"n(re(# or tho"#an(#/ the *ro("ct i# #ti 1ero= So 8here a ong the ine to enor'o"# #i1e an( financia heft ha# the *"% ic9*ri!ate ne?"# nece##ari & change(H Tr"e/ there are no8 a arge n"'%er of co'* e? an( #*ecia i1e( *ri!ate contract#/ %"t e!er& #ing e one of the#e tran#action# i# %a#e( on *ri!ate *ro*ert&/ free(o' of contract/ an( in(i!i("a ri#+ an( re8ar(= If one a** e i# a fr"it/ e!en a %i ion a** e# (o not %eco'e 'eat=
62
The origin# of thi# tran#for'ation ie in the 'in(# of *eo* e 8ho (o not i+e or a**reciate the geni"# of ca*ita i#t #"cce## #torie#/ inc "(ing a 8a&# *o itician#/ 8ho 8i genera & 'a+e an& arg"'ent in or(er to contro 'ore *ri!ate 8ea th= Of co"r#e/ the #ocia re#*on#i%i it& of cor*oration# i# a 8a&# tie( to the *ro*onent#R o8n !ie8# of co'*a##ion or K"#tice or a!oi(ance of a catac &#'= B"t the ogic of their o8n arg"'ent# reF"ire# that e##entia & *ri!ate cor*oration# %e !ie8e( a# #o'eho8 T*"% icT in nat"re= That i#/ the *"% ic/ or the *referre( *art of it/ often ter'e( T#ta+eho (er#T .another #ha'ef" #e'antic * a&/ thi# ti'e on the 8or( T#hareho (er#T0/ ha# a *#e"(o9 o8ner#hi* intere#t in e!er& arge cor*oration= Ditho"t that (i'en#ion in their arg"'ent/ free 'ar+et ogic 8o" ( *re!ai = The i "#ion of great an( threatening *o8er/ the #"*erficia attracti!ene## of the notion/ an( the freF"ent re*etition of the 'antra of cor*orate #ocia re#*on#i%i it& ha!e 'a(e thi# fa ac& a *art of the 'o(ern cor*orate 1eitgei#t= Li+e the citi1en# 8ho 8ere afrai( to te the e'*eror that he 8a# na+e(/ no re#*on#i% e %"#ine## officia 8o" ( (are contra(ict the notion *"% ic & for fear of financia r"in/ e!en tho"gh the *ractice contin"e# to co#t #hareho (er# an( #ociet& enor'o"# a'o"nt#= Thi# i# e#*ecia & #o in arge9 #ca e retai %"#ine##e# i+e Da 95art or Coca9Co a or BP that are high & !" nera% e to organi1e( *"% ic critici#'= O"r a8# again#t e?tortion (o not f"nction effecti!e & 8hen it co'e# to cor*oration#= An( #o to #o'e e?tent the#e *ri!ate entitie# ha!e in(ee(/ !ia the #ocia re#*on#i%i it& notion/ %een con!erte( into cr&*to9*"% ic enter*ri#e# that are the e##ence of #ocia i#'= 5i ton Frie('an 8a# right again=
63
Ethics
The co(e of 'ora *rinci* e# an( !a "e# that go!ern the %eha!ior# of a *er#on or gro"* 8ith re#*ect to 8hat i# right or 8rong= Ethical &ile$$a 4 4 A #it"ation that ari#e# 8hen a a ternati!e choice# or %eha!ior# ha!e Potentia & negati!e ethica con#eF"ence#/ 'a+ing it (iffic" t to
%een (ee'e( "n(e#ira% e= (i#ting"i#h right fro' 8rong= Criteria for Ethical &ecision 5a4in# 5o#t ethica (i e''a# in!o !e A conf ict %et8een nee(# of the *art 7 8ho e= The in(i!i("a !er#"# the organi1ation= The organi1ation !er#"# #ociet& a# a 8ho e= Fo"r Con#i(eration# in Ethica Deci#ion 5a+ing Uti itarian A**roach In(i!i("a i#' A**roach 5ora 9Right# A**roach M"#tice A**roach
63
=tilitarian Approach 5ora %eha!ior *ro("ce# the greate#t goo( for the greate#t n"'%er= Co'*"tation# can %e !er& co'* e?/ #i'* if&ing the' i# con#i(ere( a**ro*riate= Critic# fear a ,Big Brother- a**roach an( a#+ if the co''on goo( i# #F"ee1ing the ife o"t of the in(i!i("a = In"i'i"(alis$ Approach Act# are 'ora 8hen the& *ro'ote the in(i!i("a R# %e#t ong9ter' intere#t#= In(i!i("a #e f9(irection *ara'o"nt= In(i!i("a i#' i# %e ie!e( to ea( to hone#t& 7 integrit& #ince that 8or+# %e#t in the ong r"n= 5oral6Ri#hts Approach 4 4 A##ert# h"'an %eing# ha!e f"n(a'enta right# an( i%ertie#= 5ora (eci#ion# are tho#e that %e#t 'aintain the right# of tho#e *eo* e
affecte( %& the'= 4 An ethica (eci#ion i# one that a!oi(# interfering 8ith the f"n(a'enta
right# of other#=
66
>5oral Ri#htsF Consi"erations The right to *ri!ac& The right of free(o' of con#cience The right of free con#ent The right of free #*eech The right to ("e *roce## The right to ife 7 #afet& A(stice Approach 5ora Deci#ion# '"#t %e %a#e( on #tan(ar(# of eF"it&/ fairne##/ an( i'*artia it&= Treat'ent of in(i!i("a # #ho" ( not %e %a#e( on ar%itrar& characteri#tic#= C o#et thin+ing to co(ifie( a8= ,e'els of 5oral &e'elop$ent
6>
C(lt(ral I$pact I(estions 1= I(entif& the organi1ation# heroe#= 2= Dhat are #o'e i'*ortant organi1ationa rit"a #H 3= Dhat are the ethica 'e##age# #ent to ne8 entrant# into the
organi1ation/ '"#t the& o%e& a"thorit& at a co#t#H 3= Doe# ana &#i# of organi1ationa #torie# an( '&th# re!ea in(i!i("a # 8ho #tan( "* for 8hat i# right/ or i# confor'it& the !a "e( characteri#ticH 6= Doe# ang"age e?i#t for (i#c"##ing ethica concern#H >= Dhat infor'a #ocia i1ation *roce## e?i#t#H Social Responsibility
6A
Organi1ation:# o% igation to 'a+e choice# an( ta+e action# that 8i contri%"te to the 8e fare an( intere#t# of #ociet& an( organi1ation= Di#ting"i#hing right fro' 8rong= Being a goo( cor*orate citi1en= 5an& #ocia re#*on#i%i itie# i##"e# are a'%ig"o"# 8ith re#*ect to right an( 8rong=
Sha"es of Corporate ;reen Acti!i#t A**roach9Acti!e & con#er!e the en!iron'ent Sta+eho (er A**roach 9A((re## '" ti* e #ta+eho (er concern# 5ar+et A**roach 9Re#*on( to c"#to'er# Lega A**roach9Sati#f& ega reF"ire'ent# regar(ing en!iron'enta con#er!ation Tota Cor*orate Socia Re#*on#i%i it&
6E
Three Pillars of an Ethical -r#ani)ation
6;
En ightene( Co'*anie# Rea i1e the i'*ortance ofB integrit& tr"#t
Ethics of Corporate Social Responsibility

INDIAN INSTITUE OF FINANCE ><
The ethica a**roach to CSR arg"e# (efect# of 'ora & in(ifferent %"#ine## con("ct an( #ocia a(!antage# of 'ora &9#en#iti!e #ta+eho (er 'anage'ent *ractice# an( e?*an#i!e *"% ic *o ic&= A tho"gh (ra8ing on a co'*o#ite of !ario"# 'ora fra'e8or+# .e=g= Nant/ Ra8 #/ #ta+eho (er right#0 other than "ti itariani#'/ethica CSR "#e# a %a#ic #hare( *rinci* e of i'*artia 'ora ref ection on to erating e?*an#i!e *"% ic *o ic& an( *racticing %roa( #e f9 re#traint an( a tr"i#'= A tr"i#' i# !o "ntar& contri%"tion to #ociet& an( #ta+eho (er# %a#e( on other regar(ing attit"(e#= A tr"i#' 'a& in!o !e "nco'*en#ate( or co#t & contri%"tion# to #ta+eho (er# or genera 8e fare= Phi anthro*& i# (i#cretionar& 8ea th tran#fer of net inco'e to #ta+eho (er#= Se f9re#traint i# 'ora an($or *o itica choice to a!oi( e?* oiting 'ar+et o**ort"nitie# eft ega & "nreg" ate(= Tracing the (e!e o*'enta hi#tor& of the ong9 e#ta% i#he( CSR ter'ino og& an( conce*t"a i1ation thro"gh +e& 8or+# i "'inate# e!o "tion an( content of the ethica *er#*ecti!e= E!en in the 2i (e( Age of ega & an( 'ora & "ncon#traine( Lro%%er %aron#: there 8a# (i#agree'ent %et8een Lthe *"% ic %e (a'ne(U: an( in("#tria i#t *hi anthro*& !ie8# .Carnegie/ 1;<<0= The Progre##i!e Era increa#e( go!ern'enta reg" ation an( *ro("ce( an ear & #cho ar & !er#ion of re#*on#i%i it& .C ar+/ 1;1>0= The 2reat De*re##ion increa#e( concern for o"tco'e#9oriente( cor*orate #ocia *erfor'ance .Nre*#/ 1;3<0= Bo8en .1;630 'ar#ha e( ethica CSR rea#oning .Carro / 1;;;0= Cor*orate co''"nit& in!o !e'ent an( #ta+eho (er re#*on#i!ene## *ractice# characteri1e( Dor ( Dar II an( *o#t98ar era# 8e into the 1;><# .Reich/ 1;;>0=
INDIAN INSTITUE OF FINANCE >1
Carro .1;;10 co'* ete( (ifferentiation of Bo8en:# %a#ic CSR notion into a #ti canonica #et of (efine( c"'" ati!e re#*on#i%i itie#/ not tra(eoff#/ (e*icte( c a##ica & a# a #"%(i!i(e( L*&ra'i(: cro##98a +e( to #ta+eho (er categorie#= The *&ra'i( i# a !ertica triang e 8ith fo"r interna #"%(i!i#ion# for econo'ic/ ega / ethica / an( *hi anthro*ic re#*on#i%i itie# in that or(er fro' fo"n(ation to a*e?= A (i'en#ion= Thi# *&ra'i(a fo"r re#*on#i%i it& (i'en#ion# are 'ora & con#tr"ct e'%e(# a *ro*o#e( theoretica inf"#e( .Carro / 1;;60B a 'ora 'anager %eha!e# (ifferent & in e!er& #&nthe#i# of econo'ic# an( ethic#= Both econo'ic an( ega re#*on#i%i itie# are 'an(ator&= Broa( econo'ic re#*on#i%i itie# .for *ro("cing goo(# an( #er!ice# &ie (ing Ko%# an( *rofit#0 are the *&ra'i(:# fo"n(ationB a egiti'ate fir' o"t of %"#ine## cannot a((re## an& re#*on#i%i itie#= Econo'ic/ citi1en#hi*/ an( ethica *er#*ecti!e# ogica & can conc"r on the econo'ic (i'en#ion #o ong a# cor*orate #ocia *erfor'ance .CSP0 #ati#fie# #hare( con(ition# .e=g= f" e'* o&'ent/ eco ogica #"#taina%i it&/ an( no #ignificant negati!e e?terna itie#0 e'*irica & "n i+e & a# a g o%a #et= The three *er#*ecti!e# a #o conc"r of *ractica nece##it& on ega co'* iance a# a 'eaning e## a%#traction= The three *er#*ecti!e# *rofo"n( & (i#agree ho8e!er on #co*e an( content of cri'ina an( reg" ator& a8/ an( on 8hether to itigate or #ett e ci!i a8#"it# %a#e( on their 'erit#= The a*e? of the *&ra'i( i# !o "ntar& cor*orate *hi anthro*& !ie8e( a# (e#ira% e %& #ociet& an( #o'e #ta+eho (er#= The econo'ic *er#*ecti!e treat#
*hi anthro*& a# either (i#cretionar& a tr"i#' %& "n(i#ci* ine( 'anager# !io ating #hort9ter' fi("ciar& re#*on#i%i it& or at %e#t a *r"(ent a tr"i#' 'arching 8ith ong9ter' fi("ciar& re#*on#i%i it& in %eing inten(e( #trategica & to 'ini'i1e intr"#i!e *"% ic *o ic& .Frie('an/ 1;A<0= The ethica *er#*ecti!e an( i(ea i1e( citi1en#hi* *ro'ote a tr"i#' .*r"(ent an( (i#cretionar&0 a# #ocia & (e#ira% e an( 'ora & co''en(a% e= In#tr"'enta citi1en#hi* tran#for'# *hi anthro*& 8e %e&on( *r"(ent a tr"i#' into a #trategic too for (e!e o*ing cor*orate re*"tation an( 'ar+et o**ort"nitie#=Ethica re#*on#i%i itie# ie %et8een "narg"a% & 'an(ator& co'* iance .econo'ic an( ega 0 an( arg"a% & (e#ira% e *hi anthro*& .*r"(ent or !o "ntar&0= Societ& an( #ta+eho (er# #ti e?*ect ethica %eha!ior %e&on( 'an(ator&
ega co'* iance= Ethica 'anager# engage in i'*artia 'ora ref ection %e&on( the a8= Se f9re#traint i# *r"(ent 'ora & a# 8e a# at a8= Econo'ic CSR e#che8# 'ora choice# in %"#ine##B 'atter# of *ri!ate !a "e# are %e#t a((re##e( in *"% ic *o ic&= B"t "nethica 'anager# cannot %e tr"#te( e!en to f" fi fi("ciar& re#*on#i%i it& .Frie('an/ 1;A<0/ a# i "#trate( %& recent cor*orate #can(a #= Fro' an in#tr"'enta citi1en#hi* !ie8/ *hi anthro*& 'ight %e %etter *o#itione( in Carro :# *&ra'i( a# a #"%(i!i#ion .or a ocation0 of financia o"tco'e# 8ithin econo'ic re#*on#i%i itie#/ a# *o#itione( ro"gh & in Fig"re 1 ear ier= The econo'ic *er#*ecti!e treat# a for'# of (i#cretionar& CSR a# !o "ntar& 8ea th tran#fer a8a& fro' in!e#tor#= Ethica CSR i# a '"ch %roa(er conce*tion of e?*an#i!e *"% ic *o ic&/ #e f9re#traint/ an( a tr"i#'=
T8o ea(ing in#tance# of 'ora con("ct %& e?ec"ti!e# in *ri!ate & o8ne( or c o#e & (o'inate( fir'# 'a& %e co''en(e( an( co'*are( to recent cor*orate #can(a # at Enron/ T&co/ or Dor (Co'= Ben 7Merr&:#/ an ice crea' co'*an&/ *ractice( *hi anthro*& an( eco ogica a8arene## "nti #o ( to a *"% ic & tra(e( fir'= A fire (e#tro&e( the 5a (en 5i # faci it&= O8ner Aaron Fe"er#tein +e*t non9*ro("cing e'* o&ee# on *a&ro @ an( a##"'e( (e%t for re%"i (ing the faci it&= There fo o8e( a #tr"gg e for contro 8ith en(er# #ee+ing to 'a+e Fe"er#tein a fi("ciar& agent= The 'o(ern o"tco'e#9 oriente( cor*orate #ocia *erfor'ance .CSP0 fra'e8or+ .Doo(/ 1;;10 *ro*o#e# 'ea#"re'ent of a cor*orate i'*act# on genera 8e fare= An "nre#o !e( i##"e i# 8hether *o#iti!e cor*orate contri%"tion in one (i'en#ion can off#et negati!e cor*orate i'*act in another= The fra'e8or+ e'%e(# Carro :# .1;;10 '" ti(i'en#iona conce*tion of re#*on#i%i itie#= The fra'e8or+ a #o e'%e(# Da!i#:# .1;><0 *ro*o#e( LIron La8 of Re#*on#i%i it&:B if the %"#ine## #ector #"fficient & offen(# #ociet&/ increa#e( go!ern'ent reg" ation i+e & fo o8#= The US Sar%ane#9O? e& Act of 2<<2 8a# #"ch a reaction to cor*orate #can(a #= Socia & i egiti'ate fir'# refor' or (i#a**ear= The co'*o#ite 'ora content an( e?*an#i!e *"% ic *o ic& orientation of ethica CSR theor& in re ation#hi* to #"*erficia & e## a'%ig"o"# an( e## con#traine( econo'ic an( citi1en#hi* a**roache# 'a& create gen"ine *"11 e# for 'anager#= The chief (efect of the ethica *er#*ecti!e i# that it i# a %roa( *rinci* e/ co!ering (iffering #it"ation#/ an( an a'a ga' of #e!era ethica theorie#/ #o
that #"%#tanti!e content of %"#ine## (eci#ion# '"#t %e a((re##e( ca#e %& ca#e= Fra'e8or+# for ethica CSR are '" ti* e9(i#ci* inar& an( co'*o#ite rather than inter(i#ci* inar& an( integrate(= There i# no con#en#"# in ethica CSR iterat"re on co''on *re#cri*tion# for *ri!ate 'anage'ent or *"% ic *o ic& or #*ecific #ocia an( #ta+eho (er i##"e#= B"t there i# a contin"ing threa( of i'*artia 'ora ref ection on ("tie#/ right#/ an( o"tco'e#= A 'anager "n(er#tan(a% & 8ant# to +no8 8hat to 'a+e of an( 8hat to (o a%o"t *"% ic *o ic&/ #ocia / an( #ta+eho (er i##"e# in *ractica ter'# affecting cor*orate re#o"rce a ocation (eci#ion#= Concrete (efinition/ 'ea#"re'ent/ an( *re(iction are arg"a% & critica to effecti!e 'anage'ent of '" ti* e acti!itie# an( i##"e# . Men#en/ 2<<<0= Short chain# of ro%"#t (e("cti!e rea#oning are *ro'inent an( *referre( in econo'ic ana &#i# Neither criterion i# ho8e!er a !a i( (e#cri*tion of 'anage'ent *roce##= B"#ine## #trateg& i# not a for'" a %"t a *roce## #tri!ing for *rofita% e in#ight@ 'anage'ent i# not a #cience %"t an art= In rea it&/ an inte ect"a 'ar+et* ace of co'*eting i(ea# interface# 8ith a *o itica conte#t to #ha*e the content of *"% ic *o ic& a8a& fro' or to8ar(# a %roa( conce*tion of CSR= The three +e& a**roache# conten( in *o itic# an( a8 o!er the reach an( content of *"% ic *o ic& an( the ro e# of cor*orate #e f9re#traint an( a tr"i#'= Thi# #it"ation i# a cha enge to #cho ar#hi* an( 'anage'ent rather than an in(ict'ent of ethica CSR= The #trict fi("ciar& re#*on#i%i it& r" e/ o*erating "n(er a *er'i##i!e %"#ine## K"(g'ent r" e .a t&*e of 'ini'a i#t *"% ic
>6
*o ic&0/ (enigrate# 'ora ref ection an( treat# cor*orate 'ora it& a# a #ocia %a(= Recent cor*orate #can(a # #igna 8here "nreg" ate( econo'ic CSR an( in#tr"'enta citi1en#hi* can ea( ) to !io ation of e!en fi("ciar& re#*on#i%i it& '"ch e## c"#to'ar& %"#ine## ethic#= Ethica CSR a**ear# a'%ig"o"# on & if !ie8e( a# a rigi( r" e .8hich econo'ic CSR i#0 8hen it i# nece##ari & (iff"#e/ an( th"# ac+ing in ogica rigor 8hen it i# *ro*er & a genera #tance or *rinci* e= There i# a !ita (ifference %et8een a *rinci* e an( a r" e= Princi* e#/ genera & %roa( or e!en !ag"e/ '"#t %e or(ere( hierarchica & %& re ati!e 8eight#@ r" e#/ genera & narro8 an( concrete/ are #i'* & f"nctiona = The %a#ic notion of CSR i# #traightfor8ar(= A narro8 & econo'ic or in#tr"'enta i#t conce*tion i# in#"fficient/ an( co"nter*ro("cti!e for #ociet& an( fir'= A 'ora *er#on ref ect# "*on #e f9re#traint/ a tr"i#'/ an( genera 8e fare= There are circ"'#tance# in 8hich 'ora concern# are #"*erior to ega & *er'itte( fi("ciar& re#*on#i%i it&= No 'ora *er#on can rigi( & fo o8 a f"nctiona r" e 8itho"t ref ecting in *rinci* e( fa#hion on origin# an( effect# of the r" e= Ethica CSR a(!ice to in#tr"'enta i#t 'anager# can on & %e #it"ationa = A(!ice can %e #t& i1e( into fo"r t&*ica #it"ation# (efine( 8ithin a t8o9%&9 t8o 'atri? of re ation#hi*# %et8een change in financia *erfor'ance an( change in cor*orate #ocia *erfor'ance= Both financia *erfor'ance an( #ocia *erfor'ance ri#e# or (ec ine# fro' a #tat"# F"o= Fro' an& #tat"# F"o
INDIAN INSTITUE OF FINANCE >>
#it"ation/ a change in fir' acti!it& or e?terna con(ition# re#" t# in one of fo"r genera o"tco'e#B 1= If financia *erfor'ance an( #ocia *erfor'ance ri#e Koint &/ the o"tco'e i# a 8in)8in efficienc& gain 8itho"t go!ern'enta inter!ention or 'ora ref ection= Strategic in!e#t'ent in 'ar+et con(ition# "n(er the g"i#e of citi1en#hi* %eha!ior fa # into thi# categor&= Thi# o"tco'e corre#*on(# to A(a' S'ith:# e?*ectation a%o"t a re ati!e & free 'ar+et econo'&= If financia *erfor'ance ri#e# 8hi e #ocia *erfor'ance #ta&# con#tant ) a Pareto efficient gain/ thi# circ"'#tance %or(er# (angero"# & on %"#ine## incenti!e a 8a&# to ignore #ocia *erfor'ance= 2= If %oth financia *erfor'ance an( #ocia *erfor'ance (ec ine/ the o"tco'e i# a o#e) o#e inefficienc& o##= 2o!ern'enta inter!ention i# i+e & to %e (e#ira% e/ %eca"#e cor*orate #e f9re#traint an( a tr"i#' ha!e *ro!en ina(eF"ate= 3= In the ca#e of a ri#e in financia *erfor'ance an( a (ec ine in #ocia *erfor'ance/ there i# a conf ict %et8een fi("ciar& re#*on#i%i it& an( #ocia re#*on#i%i it&= The conf ict i# a 8e fare tran#fer fro' #ociet& to the fir'/ a# occ"r# 8ith negati!e e?terna itie#= Thi# tran#fer i# an a%#"r( ta? on #ociet& in A(a' S'ith:# #en#e . The Wealth of -ations/ 1AA>/ Boo+ One/ Ch= 11/ Conc "#ion0=An in!i#i% e han( ca#e K"#tif&ing #trict fi("ciar& re#*on#i%i it& 8o" ( %e that in the onger r"n #ocia *erfor'ance 8i %e higher than in the #hort r"n=
>A
3= In the ca#e of a (ec ine in financia *erfor'ance an( a ri#e in #ocia *erfor'ance/ a #o a conf ict %et8een fi("ciar& an( #ocia re#*on#i%i itie#/ there i# a 8e fare tran#fer fro' the fir' to #ociet&= Frie('an .1;A<0 a('itte( to a #trategic ca#e for *r"(ent a tr"i#'= The 'ore co'* icate( ca#e 8o" ( %e that a #hort9r"n ri#e in #ocia *erfor'ance ea(# o!er ti'e thro"gh a (ec ine in financia *erfor'ance to an e!en 8or#e #ocia *erfor'ance o"tco'e= A(a' S'ith:# in!i#i% e han( arg"'ent *re(ict# thi# *o##i%i it& of "ninten(e( negati!e con#eF"ence#= E!a "ation of re ation#hi*# %et8een financia an( #ocia *erfor'ance (i'en#ion# %eco'e# 'ore co'* icate( 8here the atter:# o8n co'*onent# (o not 'o!e together= For in#tance/ 'ore Ko% creation for e## eco ogica #"#taina%i it& i# a to"gh tra(e9off=
A &ebate on corporate social responsibility

INDIAN INSTITUE OF FINANCE >E
5ilton /rie"$an an" the Social Responsibility of *(siness The 'o#t *ro!ocati!e #tate'ent of the *a#t ha f9cent"r& on the ro e of %"#ine## in #ociet& ca'e in an e##a& in the -ew .ork Times/ 8ritten %& a fe o8 na'e( Frie('an= That i#/ acting Tre#*on#i% &T ri#+# re("cing *rofit# or forgoing re!en"e in the na'e of #ocia goo(= TDhat (oe# it 'ean to #a& that the cor*orate e?ec"ti!e ha# a R#ocia re#*on#i%i it&R in hi# ca*acit& a# %"#ine##'anHT a#+e( Frie('an in hi# 1;A< artic e= TIf thi# #tate'ent i# not *"re rhetoric/ it '"#t 'ean that he i# to act in #o'e 8a& that i# not in the intere#t of hi# e'* o&er#= For e?a'* e/ that he i# to refrain fro' increa#ing the *rice of the *ro("ct in or(er to contri%"te to the #ocia o%Kecti!e of *re!enting inf ation/ e!en tho"gh a *rice increa#e 8o" ( %e in the %e#t intere#t# of the cor*oration= Or that he i# to 'a+e e?*en(it"re# on re("cing *o "tion %e&on( the a'o"nt that i# in the %e#t intere#t# of the cor*oration or that i# reF"ire( %& a8 in or(er to contri%"te to the #ocia o%Kecti!e of i'*ro!ing the en!iron'ent= Or that/ at the e?*en#e of cor*orate *rofit#/ he i# to hire Rhar(coreR "ne'* o&e( in#tea( of %etter9F"a ifie( a!ai a% e 8or+'en to contri%"te to the #ocia o%Kecti!e of re("cing *o!ert&= TIn each of the#e ca#e#/ the cor*orate e?ec"ti!e 8o" ( %e #*en(ing #o'eone e #eR# 'one& for a genera #ocia intere#t= In#ofar a# hi# action# in accor( 8ith hi# R#ocia re#*on#i%i it&R re("ce ret"rn# to #toc+ho (er#/ he i# #*en(ing their 'one&= In#ofar a# hi# action# rai#e the *rice to c"#to'er#/ he i# #*en(ing the c"#to'er#R 'one&= In#ofar a# hi# action# o8er the 8age# of #o'e e'* o&ee#/ he i# #*en(ing their 'one&=T Frie('an arg"e( that #"ch
>;
action# in effect t"rne( e?ec"ti!e# into *"% ic e'* o&ee# or ci!i #er!ant#/ e!&ing Tta?e#T .in the for' of cor*orate 'one& a ocate( to #ocia ca"#e#0 an( 'a+ing Te?*en(it"re#T 99 a *art of Tthe #ocia i#t !ie8 that *o itica 'echani#'#/ not 'ar+et 'echani#'#/ are the a**ro*riate 8a& to (eter'ine the a ocation of #carce re#o"rce# to a ternati!e "#e#=T Frie('an conc "(e(B TThe (iffic" t& of e?erci#ing R#ocia re#*on#i%i it&R i "#trate#/ of co"r#e/ the great !irt"e of *ri!ate co'*etiti!e enter*ri#e 99 it force# *eo* e to %e re#*on#i% e for their o8n action# an( 'a+e# it (iffic" t for the' to Re?* oitR other *eo* e for either #e fi#h or "n#e fi#h *"r*o#e#= The& can (o goo( 99 %"t on & at their o8n e?*en#e=T De +no8 %etter no8= For e?a'* e/ 8e "n(er#tan( that ignoring en!iron'enta an( #ocia i##"e# can %e %a( for %"#ine##= Co'*anie# that *o "te their oca co''"nitie# ri#+ *oi#oning their c"#to'er#= Ignoring the #tate of the oca #choo #&#te' ri#+# (e* eting the *oo of F"a ifie( 8or+er#= A%"#ing 8or+er# ri#+# higher t"rno!er an( training co#t#/ not to 'ention greater (iffic" t & attracting the 'o#t F"a ifie( can(i(ate#= ItR# ne!er that #i'* e/ of co"r#e= In a g o%a i1e( 8or (/ co'*anie# are free to e?* oit or *o "te a oca co''"nit&/ then 'o!e on to the ne?t * ace= Unfettere( 'ar+et# an( e?* oitation9frien( & ta? #che'e# re8ar( co'*anie# for acting in their o8n intere#t# in the na'e of econo'ic gro8th an( co'*etiti!ene##= So/ Frie('anR# *hi o#o*h& #ti reign# #"*re'e=
A<
Eenneth 5ason 'ie!s on corporate social responsibility Frie('anR# *hi o#o*h& i# far fro' "ni!er#a & #hare(/ e!en in the %"#ine## co''"nit&= In 1;A;/ for e?a'* e/ P"a+er Oat# *re#i(ent Nenneth 5a#on/ 8riting in %usiness Week/ (ec are( Frie('anR# *rofit#9are9e!er&thing *hi o#o*h& Ta (rear& an( (e'eaning !ie8 of the ro e of %"#ine## an( %"#ine## ea(er# in o"r #ociet&= ,Drote 5a#onB T5a+ing a *rofit i# no 'ore the *"r*o#e of a cor*oration than getting eno"gh to eat i# the *"r*o#e of ife= 2etting eno"gh to eat i# a reF"ire'ent of ife@ ifeR# *"r*o#e/ one 8o" ( ho*e/ i# #o'e8hat %roa(er an( 'ore cha enging= Li+e8i#e 8ith %"#ine## an( *rofit=T 5a#on 8ent onB TThe 'ora i'*erati!e a of "# #hare in thi# 8or ( i# that of getting the %e#t ret"rn 8e can on 8hate!er a##et# 8e are *ri!i ege( to e'* o&= Dhat A'erican %"#ine## ea(er# too often forget i# that thi# 'ean# a the a##et# e'* o&e( 99 not K"#t the financia a##et# %"t a #o the %rain# e'* o&e(/ the a%or e'* o&e(/ the 'ateria # e'* o&e(/ an( the an(/ air/ an( 8ater e'* o&e(=T Ce "rge( rea(er# to Tenco"rage/ not e!a(e/ (i#c"##ion of tho#e *ro% e'# that ari#e 8hen the acti!itie# of %"#ine## conf ict 8ith the nee(# an( concern# of #ociet&=T
A1
B"t the#e 8ere arge & K"#t 8e 9intentione( 8or(#= Action/ an( e!en (i#c"##ion/ on #o'e of the#e i##"e# 8o" ( %e (eca(e# in co'ing= E!en 8hen it (i( ta+e * ace/ the (i#c"##ion in!o !e( on & %ig co'*anie#= The #ocia re#*on#i%i it& of #'a er fir'# i# K"#t no8 entering the con!er#ation= There are #ign# that co'*anie# are #o'e8hat 'ore en ightene( to(a& 8hen it co'e# to "n(er#tan(ing their #ocia re#*on#i%i it&= A #"r!e& *"% i#he( thi# 'onth %& The Conference Boar( fo"n( that 8hi e %ig co'*anie# #ee 'ore *otentia re8ar( than ri#+ 8hen it co'e# to cor*orate citi1en#hi* an( #"#taina%i it& .CC7S0 i##"e#@ the& are c ear & #tr"gg ing to fin( concrete 8a&# to ca*ita i1e on their *rogra'# in the 'ar+et* ace=
Re!ar" Tr($ps Ris4: Ho! *(siness Perspecti'es on Corporate Citi)enship an" S(stainability Are Chan#in#1 %& Da!i( M= Qi(a / F"erie( 1;E co'*anie#/ the 'aKorit& of the' 8ith 'ore than 1</<<< e'* o&ee# an( 8or (8i(e #a e# of 'ore than O6 %i ion= A'ong the +e& fin(ing#B T8o9thir(# #a& cor*orate citi1en#hi* an( #"#taina%i it& i##"e# are of gro8ing i'*ortance for their %"#ine##e#= De#*ite thi# gro8th/ a #ignificant 'aKorit& .6; *ercent0 (onRt ha!e an acti!e #trateg& for (e!e o*ing ne8 %"#ine## o**ort"nitie# that ari#e fro' 'eeting cor*orate citi1en#hi* an( #"#taina%i it& .CC7S0 nee(#= A #o i( 'aKorit& .>2 *ercent0 ha!e for'a *rogra'# to 'anage their CC7S *ractice= Another 36 *ercent 8itho"t for'a *rogra'# con("ct reg" ar re!ie8# of the#e acti!itie#= 5o#t co'*anie#GA1 *ercentGre*ort *"% ic & on citi1en#hi* an( #"#taina%i it& *erfor'ance=
INDIAN INSTITUE OF FINANCE A2
Boar(# of (irector# are ro"tine & engage( in CC7S acti!itie# at a 'o#t ha f of re#*on(ing co'*anie#= On & 11 *ercent #a& there i# no %oar( re!ie8 on the#e i##"e#= It# *rogre##/ to %e #"re/ %"t *ainf" & # o8/ gi!en the #co*e an( "rgenc& of #o'e of o"r * anetR# #ocia an( en!iron'enta i #= So the (e%ate contin"e# "na%ate(B Dhat/ e?act &/ i# %"#ine##e#R re#*on#i%i it&H To 'a+e *rofit#H To T(o 8e %& (oing goo(TH A #i'* e/ "ni!er#a & acce*te( an#8er i# "n i+e &= The goo( ne8# i# that in the near & fo"r (eca(e# #ince 5i ton Frie('an e e!ate( the F"e#tion/ the con!er#ation ha# %eco'e ro%"#t= An( there i# c ear #"**ort for the i(ea that co'*anie# can o*erate in a 8a& that #trengthen# their !ario"# #ta+eho (er# an( #ti *ro!i(e #o i(/ #"#taina% e ret"rn# for their #hareho (er#=
A3
Corporate Social Responsibility as Rep(tation Ins(rance

Thi# conce*t e?a'ine# *re!io"# atte'*t# to (eter'ine the re ation#hi* %et8een cor*orate #ocia re#*on#i%i it& .CSR0 an( financia *erfor'ance .CFP0 an( fin(# that #t"(ie# ha!e "#e( an either$or a**roach= The& ha!e either e?a'ine( the re ation#hi* %et8een *o#iti!e fir' %eha!ior an( financia *erfor'ance/ or the& ha!e 'ea#"re( the re ation#hi* %et8een #o'e negati!e fir' %eha!ior an( financia *erfor'ance= Both of the#e fir' %eha!ior# '"#t %e integrate( into the 'ea#"re'ent 'o(e to *ro!i(e a 'ore acc"rate e#ti'ate of the o!era !a "e of CSR= Re#" t# fro' a #t"(& e?a'ining 'oti!e# of (eci#ion9'a+er# in!o !e( in CSR in!e#t'ent# confir' that in a((ition to acting a# a #o"rce of ne8 co'*etiti!e a(!antage the#e in!e#t'ent# a #o #er!e to *rotect e?i#ting co'*etiti!e a(!antage thro"gh the re*"tation 'echani#'= De +no8/ for in#tance/ that 8e ha!e to 'ea#"re re#" t#= De a #o +no8 that 8ith the e?ce*tion of %"#ine##/ 8e (o not +no8 ho8 to 'ea#"re re#" t# in 'o#t organi1ation#= 9 Peter Dr"c+er/ The Age of Di#contin"it& A# %"#ine##e# ha!e increa#e( their a(o*tion of cor*orate #ocia re#*on#i%i it& .CSR0 *ractice# an( their in!o !e'ent in i##"e# tra(itiona & "n(er the (o'ain of go!ern'ent# an( N2O#/ the 'ea#"re'ent cha enge# a##ociate( 8ith the#e non9tra(itiona initiati!e# ha!e a #o gro8n=
A3
5ean8hi e/
acc"rate
'ea#"re'ent
of
re#" t#
in
cor*orate
#ocia
re#*on#i%i it& ha# ta+en on a((itiona i'*ortance o!er the *a#t (eca(e a# 'anager# face *re##"re to K"#tif& the a ocation of #carce fir' re#o"rce#= In(ee(/ in!e#t'ent# in #ocia & re#*on#i% e %eha!ior# #"ch a# *hi anthro*& ha!e %eco'e '"ch 'ore #trategic an( foc"#e( on *ro!i(ing tangi% e ret"rn# to the fir'= The *re##"re# to *o#ition CSR a# en ightene( #e f9intere#t ha!e create( a 8ea th of e'*irica re#earch e?a'ining the re ation#hi* %et8een CSR an( cor*orate financia *erfor'ance .CFP0= Thi# re#earch e?a'ining CSR ha# arge & con#i(ere( the *otentia for #"ch acti!itie# to *ro!i(e an incre'enta gain to the fir'= For e?a'* e/ re#earcher# ha!e cite( heightene( *"rcha#e intention#/ increa#e( #a e#/ enhance( i'age/ an( i'*ro!e( e'* o&ee 'ora e a# %enefit# of CSR=
Co8e!er/ the *otentia for CSR to act a# an in#"rance *o ic& an( 'itigate the effect# of negati!e e!ent# ha# gone arge & "ne?* ore(= F"rther/ the e?a'ination of the re ation#hi* %et8een CSR an( CFP ha# not inc "(e( %oth the incre'enta %enefit# of CSR an( the *otentia for CSR to 'itigate har' fro' negati!e e!ent#=
E?a'ination# of the CSR9CFP re ation#hi* ha!e "#e( either a co'*ari#on of CSR .e=g=/ in!e#t'ent in en!iron'enta contro #0 an( #o'e 'ea#"re of CFP .e=g=/ ROE0/ or a co'*ari#on of #o'e financia 'ea#"re .e=g=/ #toc+ *rice0 %oth %efore an( after a negati!e e!ent .e=g=/ a (a'aging en!iron'enta re*ort0=
INDIAN INSTITUE OF FINANCE A6
In the e!a "ation of the CSR9CFP re ation#hi*/ the#e t8o for'# of 'ea#"re'ent ha!e %een "#e( in an either$or fa#hion= CSR an( it# effect# on re*"tation can ha!e #ignificant !a "e a# a for' of in#"rance for the fir'/ an( that %oth of the#e 'etho(# to in+ CSR an( CFP '"#t %e integrate( in or(er to f" & a##e## the !a "e of CSR a# a for' of in#"rance for the fir'=
Thi# e?ten(# the iterat"re e?a'ining the CSR9CFP re ation#hi* in a n"'%er of 8a&#= Fir#t/ the 'oti!ation# of cor*orate 'anager# in!o !e( in CSR (eci#ion9'a+ing *roce##e# are e?a'ine( an( confir' the i'*ortance of CSR a# a for' of in#"rance to the fir'= Secon(/ a fra'e8or+ for e?a'ining the CSR9CFP re ation#hi* %& integrating t8o (i#*arate 'etho(# "#e( %& *re!io"# re#earcher# i# *re#ente(=
Fina &/ in acco"nting for an a#9&et arge & "nrecogni1e( !a "e of CSR to the fir'/ thi# artic e *ro!i(e# an o**ort"nit& for re#earcher# to gain a 'ore acc"rate a##e##'ent of the act"a !a "e of CSR in!e#t'ent# to the fir' an( offer# g"i(ance to 'anager# #ee+ing to K"#tif& the a ocation of #carce fir' re#o"rce#=
In or(er to *ro!i(e a 'ore co'* ete "n(er#tan(ing of the CSR9CFP re ation#hi* a re!ie8 of the 'o!e'ent to8ar(# greater acco"nta%i it& of the CSR acti!itie# of the fir'/ an( the 'oti!ation for #t"(&ing the re ation#hi* i# *re#ente(= Thi# i# fo o8e( %& the *re#entation of a #t"(& e?a'ining the 'oti!e# of 'anager# in!e#ting in #ocia & re#*on#i% e fir' %eha!ior/
INDIAN INSTITUE OF FINANCE A>
confir'ing their (e#ire to ca*t"re incre'enta gain# an( *rotect their e#ta% i#he( re*"tation#= Fina &/ the integration of the#e t8o i(ea#/ arge & (i#*arate "nti no8/ an( it# i'* ication# for 'anager# are (i#c"##e(=
AA
The nee" for acco(ntability

S'ith o"t ine( the (anger# of ,(o9goo(ing e?ec"ti!e#- ) tho#e 'anager# 8ho K"#tif& CSR #i'* & on the %a#i# that it i# 'ora & (efen#i% e= Critic# ha!e ong arg"e( that fir' in!e#t'ent# in #ocia & re#*on#i% e %"t "n*rofita% e !ent"re# 8i " ti'ate & ea( to the (e'i#e of the fir' at 8or#t/ an( at %e#t ea( to "n#"#taina% e #"**ort for non*rofit organi1ation#= F"rther/ 5"rra& an( 5ontanari #tateB ,the fai "re to #"** e'ent the 'ora K"#tification for #ocia re#*on#i%i it& 8ith econo'ic con#i(eration# 'a& %e 8h& 'an& cor*orate e?ec"ti!e# !ie8 #ocia re#*on#i!ene## a# a #trict & Lnon*ro("cti!e co#t:=- S"ch critici#'# ha!e ca"#e( 'anager# to (e!e o* 'ore #trategic for'# of #ocia re#*on#i%i it& that can %e #ho8n to (e i!er a financia ret"rn to the fir' ) initiati!e# *o#itione( a# en ightene( #e f9 intere#t= In(ee(/ 'anager# re*ort increa#ing *rofe##iona i1ation of their #"**ort of #ocia ca"#e#/ *artic" ar & for arge fir'#= Thi# 'o!e'ent to K"#tif& CSR ha# a #o e( to !o "'e# of re#earch o!er the *a#t 3< &ear# e?a'ining the re ation#hi* %et8een CSR an( CFP= Again#t thi# %ac+(ro*/ *re!io"# re#earcher# ha!e a 'o#t i'* icit & a##"'e( that the !a "e in CSR i# in the for' of incre'enta gain# for the fir'= For e?a'* e/ re#earcher# often "#e the ter' in!e#t'ent 8hen (e#cri%ing cor*orate #"**ort for #ocia ca"#e#/ an( the for'# of ret"rn on in!e#t'ent to the fir' #t"(ie( ha!e inc "(e( the a%i it& to increa#e *rice#/ enhance( i'age/ an( increa#e( a%i it& to recr"it an( retain e'* o&ee#/ K"#t to na'e a fe8= F"rther/ Fo'%r"n 2ar(%erg an( Barnett co'*are CSR in!e#t'ent# to
INDIAN INSTITUTE OF FINANCE
AE
in!e#t'ent# 'a(e in R7D or e'* o&ee training in that the& can "n oc+ f"t"re gro8th *otentia for the fir' Co8e!er/ 'an& fir'# re*ort !irt"a & no a"(it *roce("re# to (eter'ine if their in!e#t'ent# are act"a & *a&ing (i!i(en(# %ac+ to the fir'/ an( re#earcher# ha!e fo"n( that the o**ort"nit& to *ro'ote their %"#ine## i# not a 'aKor factor for 'anager# (eci(ing 8hich charita% e organi1ation to #"**ort= Fina &/ Pre#ton arg"e(B ,The %" + of the cor*orate *hi anthro*ic acti!it& ha# no connection 8hat#oe!er 8ith *rofit9 #ee+ing %eha!ior or an& other con!entiona %"#ine## 'anage'ent goa =The#e fin(ing# #"gge#t %enefit# to the fir' in a((ition to tho#e concerning incre'enta gain= Po#iti!e re*"tation# ha!e often %een in+e( to *o#iti!e financia ret"rn#= Co8e!er/ their !a "e i# tie( inherent & to the ina%i it& for co'*etitor# to i'itate the re*"tation= The !a "e of a *o#iti!e re*"tation i# ,*reci#e & %eca"#e the (e!e o*'ent of a goo( re*"tation ta+e# con#i(era% e ti'e/ an( (e*en(# on a fir' 'a+ing #ta% e an( con#i#tent in!e#t'ent# o!er ti'e=Re*"tation i# therefore *erha*# the 'o#t !a "a% e a##et of an& fir'= 5oreo!er/ the #te*# ta+en %& 'anager# to *rotect their re*"tation# #tretch far %e&on( the #co*e of tra(itiona CSR acti!itie# to inc "(e #"ch %a#ic %"#ine## *roce##e# a# *roc"re'ent= The notion of re*"tation a(o*te( here i# ,a genera organi1ationa attri%"te that ref ect# the e?tent to 8hich e?terna #ta+eho (er# #ee the fir' a# Lgoo(: an( not L%a(:=N ein an( Da8ar *ro*o#e( that CSR ha# !a "e to the fir' a# a for' of in#"rance *o ic& again#t negati!e e!ent#= S*ecifica &/ the& fo"n( that con#"'er *erce*tion# of a fir'#: CSR 'o(erate( their attri%"tion# of % a'e
A;
on the *art of the fir' for a *ro("ct fai "re/ an( arg"e( that CSR 'a& ha!e !a "e to the fir' e!en if it (oe# not i''e(iate & increa#e *rofita%i it& %eca"#e it can he * 'itigate the effect# of a (a'aging e!ent= Their #t"(& e?ten(e( the 8or+ of *re!io"# re#earcher# (e'on#trating that con#"'er# are 'ore 8i ing to *"ni#h the %a( %eha!ior of fir'# 'ore than the& are 8i ing to re8ar( their goo( %eha!ior= For e?a'* e/ the& fo"n( that fir'# 8ith *o#iti!e CSR recor(# ha( #i'i ar attri%"tion# of % a'e a# tho#e fir'# 8ith ne"tra CSR re*"tation#/ 8hi e fir'# 8ith *oor re*"tation# ha( attri%"tion# that 8ere #ignificant & negati!e= Si'i ar &/ *re!io"# re#earch ha# #ho8n that fir'# 8ho are a rea(& con#i(ere( #cr"*" o"# are not a% e to enhance their i'age thro"gh cor*orate *hi anthro*&/ an( in fact (o their re*"tation har' %& engaging in *hi anthro*& that reF"ire( the con#"'er to *"rcha#e #o'ething %efore a (onation i# 'a(e= The *otentia for CSR to *ro!i(e ri#+ 'itigation i# a 8i(e & acce*te( %enefit of #"ch acti!itie#= For e?a'* e/ Nno? an( 5a+ an #tateB ,%eing tr"#te( %& #ta+eho (er# an( *"r#"ing #ocia & re#*on#i% e *o icie# re("ce# ri#+# ari#ing fro' #afet& i##"e#/ *otentia %o&cott# an( o## of cor*orate re*"tation=- It ha# a #o %een arg"e( that e?ec"ti!e# ha!e an o% igation to ta+e into acco"nt the effect of a *otentia & tarni#he( i'age that 'ight re#" t in o#t #a e# or the re("ction of %enefit# fro' other #ta+eho (er# #"ch a# go!ern'ent#= D"nfee/ for e?a'* e/ arg"e# that 'anager# not on & ha!e a ("t& to 'a?i'i1e #hareho (er !a "e %"t to a #o antici*ate changing 'ar+et* ace 'ora it& gi!en their *otentia & (e!a#tating i'*act on #hareho (er !a "e= Therefore/ CSR ha# tre'en(o"# *otentia to #er!e 'anager# #ee+ing to 'itigate negati!e i'*act# on financia *erfor'ance= In(ee(/ *re!io"# re#earch re*orting on a
INDIAN INSTITUTE OF FINANCE E<
#erie# of cor*orate #ocia re#*on#i%i it& a"(it# re!ea e( that in a((ition to the e?*ecte( gain# #"ch a# e'* o&ee 'ora e/ the a"(ite( fir'# con#i#tent & o8ere( ega e?*o#"re an( other ri#+# to co'*an& re*"tation A!oi(ing negati!e %eha!ior ha# %eco'e e!en 'ore i'*ortant 8ith greater 'e(ia #cr"tin& an( co!erage/ a(!ance# in co''"nication# techno og& an( the "#e of ra*i( an( 8i(e#*rea( co''"nication# !ehic e# #"ch a# the Internet %& acti!i#t gro"*# #"ch a# 2reen*eace= F"rther/ a# 'ar+et# ha!e %eco'e 'ore co'*etiti!e/ CSR ha# %eco'e an e!en 'ore i'*ortant #o"rce of (ifferentiation for fir'#= Da8+in# an( Le8i# fo"n( that o!er ha f the *o*" ation in their #a'* e ran+e( for'# of cor*orate re#*on#i%i it& #"ch a# co''"nit& co''it'ent a# the 'o#t i'*ortant factor in for'ing an i'*re##ion of a fir'= Therefore/ CSR ha# t8o for'# of *otentia financia ret"rn for the fir' ) a *o#iti!e incre'enta gain a# a re8ar( for *o#iti!e %eha!ior an( a 'itigation of con#eF"ence# fro' negati!e fir' %eha!ior#= Fo'%r"n 2ar(%erg an( Barnett1E categori1e( the#e a# ,o**ort"nitie#- an( ,#afet& net#- an( o"t ine( the *otentia %enefit# to fir'# acro## a n"'%er of +e& #ta+eho (er gro"*# a# #ho8n in Ta% e 1= The#e are not 'ere & t8o #i(e# of the #a'e coin= For e?a'* e/ incre'enta %enefit can %e #ec"re( fro' c"#to'er# in the for' of increa#e( o&a t& or *o#iti!e 8or( of 'o"th= C"#to'er# can a #o ta+e negati!e action an( (efect to a co'*etitor#: *ro("ct or engage in negati!e 8or( of 'o"th= Co8e!er/ a c"#to'er 8ho (oe# not engage in one #et of %eha!ior# 8i not nece##ari & engage in the other #et of %eha!ior#=
E1
Econo$ics of Corporate Social Responsibility

The re!i!e( econo'ic CSR (oe# ha!e a 'ora core in(e*en(ent of in!e#tor *ro*ert& right#= The "ti itarian #tan(ar( for genera 8e fare an( th"# cor*orate #ocia *erfor'ance .CSP0 i# con#"'*tion= LCon#"'*tion i# the #o e en( an( *"r*o#e of a *ro("ction@ an( the intere#t of the *ro("cer o"ght to %e atten(e( to on & #o far a# it 'a& %e nece##ar& for *ro'oting that of the con#"'er:= Thi# "ti itarian 'ora core e'*ha#i1e# 'ateria gain# for #ociet& a# a 8ho e achie!e( thro"gh rea#ona% & efficient an( co'*etiti!e 'ar+et#= In!e#tor *ro*ert& right# 8hi e (efen(e( are " ti'ate & #"%or(inate to genera 8e fare= Thi# *o#ition i# at !ariance fro' in#tr"'enta citi1en#hi* in!e#ting in #"ch *ro*ert& right#= Dhi e "ti itariani#' i# a !ariant of con#eF"entia i#' an( #i'i ar & an o"tco'e# orientation e?* icit & (efine# the (o'inant ethica CSP 'o(e .Doo(/ 1;;10/ an o"tco'e# orientation i# not in it#e f a #ati#factor& theoretica #&nthe#i#= Uti itariani#' an( ethica CSR re'ain co'*eting 'ora fra'e8or+# in+e( to co'*eting *o itica *hi o#o*hie#= The econo'ic !ie8*oint arg"e# that no co#t & re#*on#i%i it& action #ho" ( %e "n(erta+en !o "ntari &= Re#*on#i%i it& '"#t %e (efine( in 'ini'a i#t *"% ic *o ic&/ to 8hich one 'a& rea#ona% & a(( c"#to'ar& %"#ine## ethic#= Recent econo'ic CSR iterat"re ten(# to o'it the atter/ 8hich 8a# e'*ha#i1e( %& Frie('an .1;A<0= A**arent re#triction of a fir':# e?terna con#traint# to *"% ic *o ic& in recent iterat"re i# 'ore i+e & an o!er#ight/
E2
not a fi?e( r" e= It #ee'# a rea#ona% e e?ten#ion to *er'it c"#to'ar& %"#ine## ethic#= The (e%ate %et8een econo'ic an( ethica CSR then rea & concern# e?*an(ing ethica concern# an( *"% ic *o ic&= The econo'ic !ie8*oint trace# (irect & %ac+ to A(a' S'ith= T8o cent"rie# of e?*erience .Men#en/ 2<<<0 #trong & #"**ort# S'ith:# the#i# that %etter econo'ic *erfor'ance occ"r# 8here ca*ita a ocation for *ro("ction an( (i#tri%"tion of 8ea th o*erate# "n(er con(ition# of re ati!e & free an( co'*etiti!e 'ar+et# 8ithin 'ini'a i#t *"% ic *o ic&= LDitho"t an& inter!ention of a8/ therefore/ the *ri!ate intere#t# an( *a##ion# of 'en nat"ra & ea( the' to (i!i(e an( (i#tri%"te the #toc+ of e!er& #ociet& a'ong a the (ifferent e'* o&'ent# carrie( on in it a# near & a# *o##i% e in the *ro*ortion 8hich i# 'o#t agreea% e to the intere#t of the 8ho e #ociet&:= S'ith:# a**roach in+# actor #e f9intere#t genera & go!erning 'ar+et acti!itie# 8ith the (e#ira% e *"% ic intere#t o"tco'e of genera 8e fare i'*ro!e'ent thro"gh the 'echani#' of the in!i#i% e han(= 2o!ern'enta inter!ention# an( cor*orate a tr"i#' i+e & *ro("ce "ninten(e( negati!e con#eF"ence# in thi# #etting= Co8e!er/ 8i(e#*rea( #ec"rit& an( K"#tice are nece##ar& con(ition# antece(ent to #ocia & (e#ira% e 'ar+et o"tco'e#= Ethica CSR a((re##e# the#e con(ition#= Frie('an .1;A<0 #tate# the %a#ic ca#e for 'ini'a i#t go!ern'ent reg" ation of 'ar+et# a# (oing 8hat fir'# cannot acco'* i#h !o "ntari &B effecti!e contro of incenti!e# for *ro("cer 'ono*o i1ation at the e?*en#e of con#"'er 8e fare= US cor*oration a8 (i!i(e# %& #tate %et8een a re ati!e & a? %"#ine## K"(g'ent r" e an( #o9 ca e( con#tit"enc& #tat"te# *er'itting con#i(eration of #ta+eho (er i'*act#=
INDIAN INSTITUTE OF FINANCE E3
S'ith rai#e( the i+e ihoo( that a8 8i %e i'*erfectB LPeo* e of the #a'e tra(e #e (o' 'eet together/ e!en for 'erri'ent an( (i!er#ion/ %"t the con!er#ation en(# in a con#*irac& again#t the *"% ic/ or in #o'e contri!ance to rai#e *rice#= It i# i'*o##i% e in(ee( to *re!ent #"ch 'eeting#/ %& an& a8 8hich either co" ( %e e?ec"te(/ or 8o" ( %e con#i#tent 8ith i%ert& an( K"#tice: .The Wealth of -ations/ 1AA>/ Boo+ One/ Ch= 1</ Part 20= Thi# !er& circ"'#tance i'* ie# 'ora r" e# an( i'*artia 'ora ref ection .S'ith/ The Theory of (oral Sentiments/ 1A6;0= Pr"(ent/ e!en if not 'ora / actor# #ho" ( recogni1e an( a!oi( #"ch con#*iracie# or contri!ance#= Frie('an .1;A<0 reKecte( an& (i#cretionar& CSR in fa!o"r of #trict fi("ciar& re#*on#i%i it& foc"#e( on econo'ic 8ea th creation a# the %e#t contri%"tion of %"#ine## .i=e= CSP0 to the genera 8e fare= The reKection #tretche# (efinition of (i#cretionar& a tr"i#' to enco'*a## '"ch of ethica CSR/ in the #en#e that the reKection 'arche# 8ith 'ini'a i#t *"% ic *o ic& an( re("ce# 'ora ref ection to c"#to'ar& %"#ine## ethic#= Frie('an recogni1e( an in#tr"'enta ca#e for *r"(ent a tr"i#' to fore#ta e?*an#ion of *"% ic *o ic&= Frie('an *artic" ar & a##erte( ac+ of ogica rigor an( #"%#tanti!e a'%ig"it& of ethica CSR= So'e a(!ocate# of #ta+eho (er theor& or the g o%a cor*orate citi1en#hi* conce*t %a#ica & conce(e a'%ig"it& an( ac+ of rigor in CSR .Mone#/ 1;;60= The re!i!e( econo'ic *er#*ecti!e . Men#en/ 2<<<@ 5cDi ia'# an( Siege / 2<<10/ 8hi e har+ing %ac+ to A(a' S'ith/ Frie('an/ an( the "ti itarian 'ora core of econo'ic#/ a((re##e# ne8 con(ition# of ri#ing 'ar+et9 i+e (e'an( an( *o itica agitation for !ario"# +in(# of CSR %& increa#ing &
INDIAN INSTITUTE OF FINANCE E3
acti!i#t #ta+eho (er# .Baron/ 2<<10= Thi# re!i!a arg"e# that cor*orate re#o"rce a ocation (eci#ion# #ho" ( re#*on( on & to %rea+e!en or *rofita% e o**ort"nitie# a# if in a re ati!e & "nfettere( 'ar+et= An& other con("ct/ 8hich co!er# e##entia & a in!e#tor#: e?*en#e= Econo'ic CSR narro8# ("t& to #trict fi("ciar& re#*on#i%i it& to in!e#tor#: *ro*ert& right# e?ce*t a# con#traine( %& a8 .an( %& e?ten#ion arg"e( here c"#to'ar& %"#ine## ethic#0= Men#en e'*ha#i1e# ong9ter' or #"#taina% e 8ea th creation rather than #hort9ter' *rofit 'a?i'i1ation= Ce *ro*o#e# an en ightene( #ta+eho (er 'anage'ent of con#i(ering *ro("cti!it& effect# of not hee(ing e'* o&ee#: #enti'ent# concerning other #ta+eho (er#: 8e fare#= Econo'ic CSR re#t# on high & #t& i1e( a##"'*tion#= The ta% e (e#cri*tion i# con#i#tent 8ith Frie('an an( therefore #ho" ( not %e an "nfair & narro8 (e*iction of the econo'ic a**roach= The #t& i1e( e?* ication foc"#e# on *"% ic & tra(e( Koint #toc+ cor*oration#= The #etting i# a ca*ita i#t St& i1e( fact# a##"'e( in re!i!e( econo'ic a**roach to cor*orate #ocia re#*on#i%i it&= 4 A %oar( of (irector# e ecte( %& the #hareo8ner# .i=e= *rinci*a #0 a**oint# the CEO .i=e= #enior agent0 to a** & the #trict fi("ciar& re#*on#i%i it& r" e= 4 The fir' .i=e= CEO/ (irector#/ an( #hareo8ner#0 interact# 8ith a other #ta+eho (er# in *o8er%a#e( %argaining re ation#hi*#= of ethica CSR %e&on( ega co'* iance/ i# %roa( & #*ea+ing treate( a# (i#cretionar& a tr"i#' %& 'anage'ent at
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4 5ini'a i#t *"% ic *o icie# reg" ate right# an( ("tie# of a *artici*ant#= 4 The CEO retain# #ignificant (i#cretion of action ("e to #e*aration of o8ner#hi* an( contro .e'%e((ing infor'ation a#&''etr&0/ an( a #o %oth i'*reci#ion of a8# an( ega o"tco'e# an( agging of a8# %ehin( co''ercia *ractice#= 4 The %oar( of (irector# retain# #ignificant (i#cretion of action an( in#" ation again#t ia%i it& to the #hareo8ner# "n(er the oo#e & (efine( %"#ine## K"(g'ent r" e= 4 A CEO can han( e on & one o%Kecti!e at a ti'e .Men#en/ 2<<<0= An& other o%Kecti!e other than 8ea th creation '"#t %e han( e( in #trict & hierarchica #"%or(ination= The theor& i# critica of '" ti* e .e=g= tri* e0 L%otto' ine: *erfor'ance fra'e8or+#= 4 T8o '"t"a & reinforcing rationa e# K"#tif& a *"re & 'ar+et 8ea th creation foc"#= One rationa e i# ong9ter' #ocia 8e fare .Men#en/ 2<<<0= The (ereg" ate( 'ar+et econo'& 8i o"t*erfor' e?ce##i!e go!ern'enta inter!ention= The other rationa e i# *ro*ert& right# of in!e#tor#/ 8ho are entit e( to organi1e fir'# an( *"r#"e 8ea th creation 4 The CEO cannot *ro*er & engage in (i#cretionar& CSR action at the e?*en#e of the #hareo8ner#: 8ea th creation o%Kecti!e .5cDi ia'# an( Siege / 2<<10= Frie('an .1;A<0 characteri1e# an& (egree of (i#cretionar& CSR %& the CEO a# Ltheft: fro' the fir':# *ri'ar& #ta+eho (er#B c"#to'er#/ e'* o&ee#/ an($or #hareo8ner#= .Since #"ch (i#cretionar& CSR i# ega
INDIAN INSTITUTE OF FINANCE E>
"n(er the %"#ine## K"(g'ent r" e/ the a('onition i# *"re & 'ora =0 4 The #hareo8ner# #ho" ( not engage in (i#cretionar& CSR action/ "n(er#too( a# cor*orate a tr"i#'/ thro"gh the agenc& of the fir'= .S'ith (enigrate# %egging@ The Wealth of -ations/ 1AA>/ Boo+ One/ Ch= 2=0 Di#cretionar& CSR ero(e# the (i#tinction %et8een *"% ic an( *ri!ate action .Frie('an/ 1;A<0= 4 The fir' #ho" ( engage in CSR acti!itie# (e'an(e( or *re##"re( %& #ta+eho (er# on & to the (egree that c"#to'er# or #o'eone e #e are *re*are( to *a& for #"ch acti!itie# .5cDi ia'# an( Siege / 2<<10= 4 Beca"#e (i#cretionar& CSR i# for%i((en theoretica & an( %rea+e!en or *rofita% e CSR i# a %"#ine## K"(g'ent/ an& co#t & for' of CSR i# a 'atter #o e & for *"% ic *o ic& to (efine or for #ta+eho (er# a% e to *re##"re fir'# effecti!e & .Baron/ 2<<10= 4 I'* icit in the *re!io"# arg"'ent i# the *o itica free(o' of cor*oration# to atte'*t to inf "ence *"% ic *o ic& in (irect co'*etition 8ith #ta+eho (er# 8itho"t regar( to *"% ic intere#t#= 4 The fir' can engage in *r"(ent a tr"i#' .Frie('an/ 1;A<0/ inten(e( "n(er the %"#ine## K"(g'ent r" e to a!oi( e!en 'ore co#t & go!ern'enta or #ta+eho (er reaction# in the f"t"re/ or in #trategic *hi anthro*& inten(e( to (e!e o* cor*orate re*"tation an( 'ar+et o**ort"nitie#= 4 A fir' can ta+e rea#ona% e acco"nt of the #enti'ent# of it# e'* o&ee# .*re#"'a% & e?c "(ing the CEO *er Frie('an/ 1;A<0 concerning i'*act# on
INDIAN INSTITUTE OF FINANCE EA
other #ta+eho (er# an( nat"re to the (egree that #"ch #enti'ent# affect e'* o&ee 'ora e an( hence *ro("cti!it& . Men#en/ 2<<<0= 4 No #trong e'*irica e!i(ence e?i#t# concerning the re ation#hi* %et8een CSR acti!it& an( financia *erfor'ance= A *"re & #trategic ca c" ation i# therefore in!o !e(/ %eca"#e no nat"ra a8 i# +no8n to %e at 8or+ .5cDi ia'# an( Siege / 2<<<0='ar+et econo'& in 8hich go!ern'ent inter!ention for *"r*o#e# of acti!it& reg" ation an( *"% ic goo(# *ro!i#ion o*erate# at the e!e of #o'e 'ini'a i#t #tate 'eeting S'ith:# *re#cri*tion ."*(ate( 8here nece##ar& for 'o(ern con(ition#0= The #t& i1ation 'a& %e ta+en a# i(ea i1ation of the 2i (e( Age/ or a# *o itica * atfor' for #ocia & (e#ira% e (ereg" ation an( *ri!ati1ation= The #hareo8ner# ha!e a(eF"ate i%ert& to *"r#"e *ri!ate 8ea th .S'ith/ The Wealth of -ations/ 1AA>/ Boo+ Fo"r/ Ch= ;0= Fi("ciar& re#*on#i%i it& i# not an a%#o "te #tan(ar( .*ractica re a?ation# inc "(e the %"#ine## K"(g'ent r" e0 %"t rather ta+e# an in#tr"'enta an( ong9ter' (efinition . Men#en/ 2<<<0= Strateg& *er'it# *r"(ent a tr"i#'/ an( that notion 'ight +ee* #tretching 8ith e?*an(ing e?*ectation# of #ta+eho (er# an( #ociet&=Econo'ic #cience i# rigoro"# ogic connecting *re'i#e# an( conc "#ion# a** ie( to inter*retation of e'*irica fact# .5ar#ha / 1;2</ *= A6;/ n= 20= Fo o8ing Co"rnot:# !ie8/ ho8e!er/ an econo'ic *ro% e' i# not a chain of ca"#ation %"t a #et of '"t"a & (eter'ining e e'ent# .5ar#ha / 1;2</ **= i?)?/ intro("ction to fir#t 1E;< e(ition0= It '"#t %e a**reciate( that ogic an( !erification 'a& 8e gra** e 8ith con#i(era% e co'* e?it&= LEcono'ic
EE
ang"age #ee'# technica an( e## rea than that of co''on ife= B"t in tr"th it i# 'ore rea / %eca"#e it i# 'ore caref" an( ta+e# 'ore acco"nt of (ifference# an( (iffic" tie#:= Ethica CSR gra** e# 8ith co'* e?it&@ econo'ic CSR *ar#i'onio"# & a%#tract# a8a& fro' it= E!en 8ithin a *"re & econo'ic ogic/ "nco'*en#ate( negati!e e?terna itie# #"ffice to *ro("ce a theor& of *"% ic *o ic& %e&on( %a#ic #ec"rit& an( c"#to'ar& K"#tice= B& e?ten#ion thi# theor& #igna # (e#ira%i it& of 'ora ref ection on CSR in the a%#ence of #trong *"% ic *o ic&= A negati!e e?terna it& i'*acting a #ta+eho (er or #ociet& con#tit"te# rea co#t= Negati!e e?terna itie# can (i#tort *ro("ction an($or con#"'*tion to the (etri'ent of genera 8e fare= S"ch %"r(en '"#t %e a((re##e( %& the affecte( *art& thro"gh co'* aint or a8#"it or change in *"% ic *o ic&= In the a%#ence of *"% ic *o ic& or 'ora con#traint in #o'e for'/ the fir' o*erating "n(er the #trict fi("ciar& re#*on#i%i it& r" e #ho" ( not interna i1e the e?terna it&= Interna i1ing co#t (irect & re("ce# *rofit *erfor'ance= Dith negati!e e?terna itie#/ *"% ic *o ic& an( 'ora ref ection %eco'e #ocia & (e#ira% e/ an( th"# a *ro*er o%Kect of #t"(& %& 'anager# an( (irector#= Econo'ic# an( in#tr"'enta i#' re("ce *"% ic *o ic& for'" ation to a 'ar+et* ace/ one not i+e & e'*irica & to %e !er& co'*etiti!e=
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The pros an" cons of corporate social responsibility

Ar#($ents for Corporate Social Responsibility Ba ance# cor*orate *o8er 8ith re#*on#i%i it&= Di#co"rage# go!ern'ent reg" ation= Pro'ote# ong9ter' *rofit# for %"#ine##= I'*ro!e# %"#ine## !a "e an( re*"tation= Correct# #ocia *ro% e'# ca"#e( %& %"#ine##=
Ar#($ents a#ainst Corporate Social Responsibility Lo8er# econo'ic efficienc& an( *rofit= I'*o#e# "neF"a co#t# a'ong co'*etitor#= I'*o#e# hi((en co#t# *a##e( on to #ta+eho (er#= ReF"ire# #ocia #+i # %"#ine## 'a& ac+= P ace# re#*on#i%i it& on %"#ine## rather than in(i!i("a #=
The $(ltiple responsibilities of b(siness
EC- -5IC ,E;A, RESP- SI*I,IT< RESPSI*I,IT< INDIAN INSTITUTE OF FINANCE
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S-CIA, RESP- SI*I,IT<
Cor*orate Socia Re#*on#i%i it& .CSR0 enco'*a## 4 The o% igation of cor*oration# to ta+e action# 8hich *rotect an( i'*ro!e the 8e fare of #ociet& a ong 8ith their o8n intere#t# 4 A ogica e!o "tion of #ta+eho (er theor&
Ar#($ents for CSR

Tra"itional theories
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10 Socia contract B"#ine##e# (e*en( on #ociet& for re#o"rce# 20 No% e##e o% ige The no%i it&:# re#*on#i%i it& to the 'a##e# 30 Charit& *rinci* e 30 Tr"#tee#hi* The %oar( of (irector# a# #te8ar(# of the *"% ic intere#t= 5o"ern %ie!s 10 En ightene( #e f9intere#t i= Po#iti!e *"% icit& .or a!oi(ing negati!e *"% icit&0 ii= Fear of go!ern'ent reg" ation= E=g= 5PAA Fi ' rating# iii= Defen(ing again#t tort a8#"it# 20 Strategic *hi anthro*& i= ii= 5icro#oft:# *o#t9antitr"#t a8#"it en(ea!or# in %oth cor*orate an( 2ate# Fo"n(ation gi!ing Ta? 8rite9off# an( 'a##aging the CEO:# ego
The &elicate *alance Co8 to (efine an( 'eet CSR o% igation# an( #ti 'a+e 'one& at the #a'e ti'e
Ar#($ents a#ainst CSR

B. The in'isible han" of the free $ar4et
INDIAN INSTITUTE OF FINANCE ;2
A(a' S'ithB Se f9intere#t/ not a tr"i#'/ of the fir' en#"re# #ocia 8e fare Frie('anB On & #ocia o% igation# of %"#ine## are to 'a?i'i1e *rofit# an( o%e& the a8 2. Costs an" efficiency Chain#a8 ca#eB The fir' ha# to 'a+e a tra(eoff %et8een increa#ing co#t# an( forgoing it# #ocia re#*on#i%i it& C. 5onolithic b(siness Sa(( ing fir'# 8ith #ocia re#*on#i%i it& 'a& i'*o#e !a "e# of %"#ine## on #ociet& D. Co$ple+ity B"#ine## e?ec"ti!e# are not traine( in han( ing co'* e? #ocia *ro% e'# i+e (i#cri'ination J. Acco(ntability E!a "ating the effecti!ene## of #ocia acti!itie# i# (iffic" t= Dhat 'ea#"re# co" ( 8e "#eH
The Anti6CSR Ar#($ent

The cor*orate #can(a # that he *e( %"r#t the internet %"%% e in the ear & &ear# of thi# cent"r& a #o hera (e( a 'ar+e( %ac+ a#h in *"% ic o*inion
again#t the giant cor*oration an( #"*er#tar CEO#=Acco"nta%i it& an( tran#*arenc& ha!e %eco'e %"11 8or(# a# the 'e(ia #'e # cor*orate % oo(= In #ee+ing to (oc"'ent an( co''ent on thi# tren(/ 'an& o%#er!er# ha!e *ercei!e( a 'o!e to8ar(# #ociet& a#cri%ing the 'o(ern cor*oration 8ith 'ora e?*ectation#= To(a&:# ea(ing co'*anie# are e?*ecte( not on & to create 8ea th an( *ro("ce #"*erior goo(# %"t a #o to con("ct the'#e !e# a# 'ora actor#G acce*ting re#*on#i%i it& for their 'i#(ee(#/ %eing re#*on#i!e to the nee(# of other#/ an( 'anaging their o8n !a "e# an( co''it'ent#= Contrar& to theori#t# 8ho for cent"rie# ha!e (ec are( the cor*oration to %e a'ora / #ociet& to(a& ha# en(o8e( the cor*oration 8ith a 'ora *er#ona it&= A tra(itiona econo'ic arg"'ent co"nter# that thi# gro8ing #8e of L'ora a(!ocac&: i# at 8or#t a fig'ent of the co ecti!e i'agination/ an( at %e#t a (i#traction to the efficient o*eration of the 'ar+et=
/i#$ent of the i$a#ination

Co8/ for e?a'* e/ can a CSR #"rge e?* ain the contin"e( (o'inance of Da 95art/ the 8or (:# arge#t co'*an& 8ith O236 %i ion in re!en"e# in 2<<2H
Da 95art ha# achie!e( it# fa'o"# ,E!er&(a& o8 *rice#- thro"gh r"th e## co#t9c"tting an( %& (ictating the ter'# on 8hich it o*erate# to e'* o&ee#/ #"** ier#/ co''"nitie#/ the en!iron'ent an( an& other #ta+eho (er 8ith an intere#t= It i# *ro!i(ing it# +e& #ta+eho (er#/ it# c"#to'er#@ 8ith 8hat the& #ho8 the& 8ant= It# econo'ic (o'inance i# "nF"e#tiona% eB It i# three ti'e# the #i1e of the No=2 retai er/ France:# Carrefo"r= E!er& 8ee+/ 13E 'i ion #ho**er# !i#it Da 95art:# 3/A6< #tore#@ Vin 2<<2W/ E2X of A'erican ho"#eho (# 'a(e at ea#t one *"rcha#e at Da 95art=2 Di#traction of 'ar+et efficiencie# A# a ega entit& an( co ection of in(i!i("a #/ a cor*oration i# not ca*a% e of ha!ing the Lcon#cience:3 that 'an& o%#er!er# a#cri%e to it= Co8e!er/ e!en if it 8a# ca*a% e of ha!ing a con#cience/ the fir#t an( fore'o#t ("t& of the cor*orate 'anage'ent tea' i# to 'a?i'i1e !a "e for the co'*an&:# o8ner#/ it# #hareho (er#/ %& 'a?i'i1ing *rofit#= CSR/ %& it#e f/ a((# itt e or no !a "e for o8ner#/ an( often in!o !e# #ignificant co#t# that either #hareho (er# or c"#to'er# are force( to %ear= Socia concern# %e&on( the *ara'eter# of the 'ar+et are %e#t eft to reg" ator& agencie# or non9*rofit organi1ation# (ri!en %& (ifferent goa # an( e?*ectation#= In the a%#ence of reg" ation/ or non9*rofit acti!it&/ 'ar+et force# are #"fficient=
7Can a Corporation Ha'e a Conscience?8

To *o ice 8hich action# are an( are not acce*ta% e to the 8i(er #ociet&= The theor& of (e'an( an( #"** & (ictate# that an& co'*an& fai ing to 'eet the nee(# of it# con#"'er# an( other #ta+eho (er# on an& e!e .8hether *rice/
*ro("ct F"a it&/ or e!e of cor*orate re#*on#i%i it&0 8i
#oon go o"t of
%"#ine##= Con!er#e &/ if con#"'er#/ for e?a'* e/ are tr" & 8i ing to i'*o#e their !a "e# on cor*oration# their *"rcha#ing *attern# 8i ref ect thi# an( co'*anie# 8i F"ic+ & a(K"#t in re#*on#e= De'an( an( #"** & in eF"i i%ri"' 'a?i'i1e# the efficient a ocation of a!ai a% e re#o"rce#= The a%i it& to 'a?i'i1e *rofit# *ro!i(e# the 'a?i'"' incenti!e for co'*anie# to increa#e *ro("ct F"a it& an( inno!ation/ 8hi e +ee*ing *rice# at the 'ini'"' nece##ar& to #ati#f& con#"'er (e'an(= It ha# a #o (ri!en the Unite( State# to the (o'inant econo'ic *o#ition it c"rrent & enKo&#= S"ch an econo'ic !ie8 i# *erha*# %e#t *er#onifie( %& 5i ton Frie('an 8ho *ro!i(e( #o'e of the %e#t #o"n( %ite# .*art &/ one #"#*ect#/ (e#igne( to antagoni1e #ocia acti!i#t#0/ 8hi e en#"ring the 'ain thr"#t of hi# arg"'ent 8a# (ri!en ho'eB Fe8 tren(# co" ( #o thoro"gh & "n(er'ine the !er& fo"n(ation# of o"r free #ociet& a# the acce*tance %& cor*orate officia # of a #ocia re#*on#i%i it& other than to 'a+e a# '"ch 'one& for their #toc+ho (er# a# *o##i% e=
A co'*an&:# 'ain o% igation i# to re'ain in %"#ine## an( 'a?i'i1e *rofit#= A co'*an& 'a?i'i1e# it# contri%"tion to #ociet& %& 8or+ing to re'ain co'*etiti!e an( !ia% e o!er the ong ter'= B& re'aining in %"#ine## a co'*an& f" fi # it# " ti'ate re#*on#i%i itie#Ga o8ing it# e'* o&ee# to +ee* their Ko%#/ it# #"** ier# to +ee* a c"#to'er/ it# c"#to'er# to contin"e
INDIAN INSTITUTE OF FINANCE ;>
%"&ing the *ro("ct# the& (e'an(/ an( it# in!e#tor#: 'one& to re'ain *rotecte(= An& co'*an& that #hift# it# attention an( foc"# a8a& fro' L'a+ing 'one&: to8ar(# 8anting to Lcontri%"te to #ociet&: 8i F"ic+ & %e *"ni#he( an( #ociet& a# a 8ho e 8i %e 8or#e off= To(a&:# high & co'*etiti!e an( co#t9con#cio"# econo'& i# one in 8hich Da 95art:# #"cce## reinforce# thi# %a#ic econo'ic *rinci* e a# ne!er %efore=
5oti'es for corporate social responsibility

If the fir' can %enefit fro' CSR in t8o (i#tinct 8a&#/ it can %e e?*ecte( that 'anager# 8i con#i(er %oth criteria 8hen 'a+ing (eci#ion# concerning the CSR acti!itie# of the fir'= In or(er to "nco!er 'anageria 'oti!e# for CSR/ a #erie# of inter!ie8# 8ith 'anager# re#*on#i% e for their fir'#: co''"nit& an( #ocia in!e#t'ent *ortfo io# 8a# "n(erta+en=
;A
The #a'* e inc "(e( a tota of fifteen #enior an( 'i(9 e!e 'anager# at nine fir'# acro## a range of in("#trie#= The fir'# 8ere i(entifie( 8ith the he * of the oca Unite( Da& cha*ter/ 8ho i(entifie( the fir'# a# 'at"re in their (e!e o*'ent of CSR= Fir' #i1e range( fro' 6<< e'* o&ee# to o!er 3</<<< e'* o&ee# an( a #ta+eho (er#= F"rther/ gi!en the *ro% e' of e?a'ining a co'* e? con#tr"ct i+e CSR/ the #*ecific foc"# of the inter!ie8# 8a# on the cor*orate *hi anthro*ic initiati!e# of the fir'= 2i!en that cor*orate *hi anthro*& i# often "#e( to (e'on#trate the fir'#: *o#ition to a %roa( range of +e& #ta+eho (er# a foc"# on cor*orate *hi anthro*& i# e?*ecte( to *ro!i(e an acc"rate ref ection of the fir'# CSR #trategie#= Co8e!er/ gi!en the "n#tr"ct"re( nat"re of the inter!ie8#/ infor'ant# a #o (i#c"##e( the 8i(er #ocia & re#*on#i% e acti!itie# on the *art of the fir'= Inter!ie8# a#te( a**ro?i'ate & one ho"r an( 8ere tran#cri%e( for ana &#i# Data generate( fro' the inter!ie8# high ighte( t8o 'aKor the'e# concerning the #trateg& an( 'oti!e# %ehin( re*"tation 'anage'ent an( CSRB 10 The ("a 'oti!e to %oth gain incre'enta & fro' CSR an( to ha!e CSR *rotect the financia *erfor'ance of the fir' thro"gh re*"tation effect#/ an(@ 20 The (e icate *ro'otion of the fir'#: CSR acti!itie#/ 8ith 'ore e'*ha#i# * ace( on 'anaging *otentia (a'age fro' *ro'otiona acti!itie# than on #ec"ring incre'enta %enefit#= of the fir'# ha( genera & *o#iti!e re*"tation# 8ith
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5oti'es for CSR Infor'ant# con#i#tent & referre( to their CSR in!e#t'ent# a# ,#trateg&=- The (egree of *rofe##iona i1ation in the CSR *roce## a**ear# to %e F"ite high/ con#i#tent 8ith the fin(ing# of *re!io"# re#earcher# 8ho ha!e #t"(ie( organi1ation# 8ith ong9#tan(ing CSR initiati!e#= F"rther/ the (e#ire for 'anager# to *o#ition the a ocation to CSR a# en ightene( #e f intere#t 8a# *erha*# the 'o#t (o'inant a#*ect of the inter!ie8#B ,De oo+ at it a# an in!e#t'ent= It either ha# to %e #o'ething that 8e thin+ i# an i'*ortant in!e#t'ent in o"r e'* o&ee#/ an in!e#t'ent in other #ta+eho (er#/ %"t it ha# to %e an in!e#t'ent that 8o" ( %e goo( for "#=A tho"gh 'an& re#earcher# ha!e cite( (irect %enefit# to %"#ine##e# #"ch a# increa#e( #a e# or i'age enhance'ent/ infor'ant# e?*ecte( #ofter/ e## ,(irect- %enefit# fro' their CSR acti!itie#= Perha*# thi# i# ("e to the (iffic" t& in tracing %ac+ a #*ecific %"#ine## e!ent 8ith a #*ecific CSR acti!it&= 5anager# genera & he ( the %e ief that their in!e#t'ent# in CSR *ro!i(e( #o'e incre'enta %enefit to the fir'/ %"t the& are "n(er no i "#ion that CSR i# #o'e ,'agic *i - that can #"((en & ca"#e the fir' to increa#e #a e# or 8in o!er an a(!ocac& gro"*= ,I:' #"re it ha# %enefite( "# a ong the 8a&/ %"t I can:t *oint to an& one thing that 8e ha!e gotten (irect & fro' 8hat 8e (o for charit&= A*art fro' fee ing goo( at the ti'e/ I can:t te &o" e?act & 8here it ha# *ai( %ac+ for "#= B"t I +no8 it ha#=- .Tiffan&0 Co8e!er/ infor'ant# 8ere K"#t a# i+e & to (i#c"## in#"rance %enefit# fro' CSR in!e#t'ent# a# the& 8ere to (i#c"## incre'enta in!e#t'ent ret"rn# to
INDIAN INSTITUTE OF FINANCE ;;
the fir'= For e?a'* e/ a 'anager at a arge energ& co'*an& fee # that ri#+ 'itigation i# one of the corner#tone %enefit# to the in!e#t'entB ,I 'ean &o"r re*"tation can %e gone to'orro8 ) #o for #"re it:# *rotecting &o"r re*"tation= That:# *art of the te?t%oo+ #trateg& for #trategic co''"nit& in!e#t'ent that &o" can he * 'itigate an( 'anage &o"r ri#+#= Yo" can #cre8 "* %"t &o":!e got thi# re*"tation %ehin( &o" that:# #o i( an( #ta+eho (er# are gi!ing= The nat"re of o"r %"#ine## i# 8e tran#fer (angero"# f "i(# thro"gh *i*e#= An( *i*e #*i #/ *i*e ea+#/ an( the& are K"#t (e!a#tating to the fir'= B"t the& ha**en=Perha*# %eca"#e the 'anager# in the #a'* e 8ere a##ociate( 8ith arger/ 'ore e#ta% i#he( fir'#/ an a#*ect of the *rotecti!e !a "e of the CSR in!e#t'ent re ate( to *otentia for #ta+eho (er# to !ie8 the fir' a# e?* oitati!e of the oca co''"nit&= Larger fir'# are *erha*# 'ore of a , ightning ro(- for tho#e concerne( 8ith re#o"rce (e* etion an( other a##ociate( i##"e#= 5anager# !ie8 their CSR in!e#t'ent# a# a #trateg& for 'itigating the *otentia concern# o!er their e?* oitation= For e?a'* e/ a 'anager at one *artic" ar & *rofita% e arge *"% ic fir' #tate(B ,De 'a+e a ton of 'one&/ rightH So I thin+ that 8e ha!e to gi!e %ac+ to the co''"nit& ) in a certain 8a&/ in a #'a 8a&/ to #ho8 o"r cor*orate re#*on#i%i it&=Si'i ar &/ the 'aKorit& of the fir'# ha( ong #tan(ing hi#torie#/ 8ith 'an& %eing in %"#ine## for o!er 1<< &ear#= A# #"ch/ the#e fir'# 8ere a% e to %"i ( re*"tation# o!er a #ignificant *erio( of ti'e/ an( 8ere in the *o#ition of ha!ing genera & *o#iti!e re*"tation#= For the#e 'anager#/ the %enefit# of
INDIAN INSTITUTE OF FINANCE 1<<
CSR #"rro"n(ing cor*orate i'age 8ere a 'o#t entire & a##ociate( 8ith ri#+ 'itigationB ,It:# tr&ing to #"**ort an i'age that 8e ha!e that 8e (on:t fee 'an& organi1ation# in thi# cit& ha!e= De ha!e a !er& %ig *iece of the 'ar+et here an( 8e:( i+e to contin"e to *roKect o"r *re#ence=In genera / #i'i ar to the %enefit# of CSR in the for' of incre'enta gain/ the %enefit# of CSR a# in#"rance 8ere a #o 'ore genera than ref ecti!e of an& #*ecific antici*ate( threat= In(ee(/ *re!io"# re#earcher# ha!e arg"e( that e?ec"ti!e# ha!e (iffic" t& in ga"ging the i+e ihoo( of %a( *re## %efore the fact =Infor'ant# !ie8e( the in!e#t'ent# a# a for' of co'*rehen#i!e in#"rance *o ic&/ co!ering a 8i(e range of *otentia threat# to re*"tationB ,So if the co''"nit& can oo+ an( #ee that %& ha!ing "# %eing 'e'%er# (oing %"#ine## there/ the&:!e %enefite(/ then that i# going to %e ha!ing the' %e 'ore #"**orti!e to ha!e "# aro"n(=-
S-5E E:A5P,ES E:HI*ITI ; THE 5-TI%ES ATTAI E& *< =SE -/ CSR One intere#ting #"% the'e concerning the 'oti!e to ha!e CSR 'itigate re*"tation (a'age 8a# that CSR #trategie# often re#" te( (irect & o"t of #*ecific negati!e e!ent# #"ch a# * ant c o#"re# or e'* o&ee #tri+e#B
,De ha( a 'erger fi!e &ear# ago an( the * ace 8a# a 'e##= De 8ere a&ing off *eo* e/ an( the 8or( on the #treet 8a# that Vthi#W 8a# a terri% e * ace to 8or+= An( a tho"gh the t8o #e*arate organi1ation# each ha( goo( re*"tation# the co'%ine( organi1ation ha( no L%"ffer=:
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De rea i1e( that 8e nee(e( to create #o'ething to get o!er tho#e %"'*# in the roa( ) there 8i a 8a&# %e %"'*# in the roa(=-
The fir' (e#cri%e( a%o!e #et o"t 8ith a CSR #trateg& #*ecifica & (e#igne( to %"i ( %ri(ge# 8ith +e& #ta+eho (er# #"ch a# e'* o&ee#/ %"t recogni1e( the %enefit# of the re#er!oir of goo(8i no8 e?ten( to 'itigating the effect# of an& f"t"re negati!e e!ent#= B"t it 8a# the negati!e e!ent that ca"#e( the fir' to #ee the !a "e in ha!ing the #trong re*"tation that can 8ith#tan( #"ch *re##"re#/ an in#ight #hare( %& a 'anager at another fir'B ,De ha( a %a( #tri+e here 8hich hit "# har(= Since then 8e ha!e gotten in!o !e( in 'an& oca charitie#/ #"**orting oca gro"*#/ &o" +no8= De recogni1e( that 8e nee(e( to ha!e #o'e +in( of *rotection again#t the +in(# of negati!e e!ent#= Yo" can:t *rotect again#t the'/ the&:re K"#t %"#ine##= B"t if &o":re not rea(& for the' the& can rea & hit &o" har(=Other fir'# that ha!e ta+en the ti'e to %"i ( "* #trong re*"tation# 8ere a% e to 8ith#tan( #i'i ar negati!e e!ent#= In fact/ the CSR #trategie# of #o'e fir'# ca"#e( #o'e +e& #ta+eho (er# to not on & re#i#t attac+ing the fir' for a negati!e e!ent/ %"t to act"a & #tan( %ehin( the fir'B ,De c o#e( (o8n a * ant a co"* e &ear# ago 8here 8e ha( an e?ce ent re ation#hi* 8ith the co''"nit&= De 8ent an( ta +e( to the co''"nit& an( the 5a&or an( that (i#c"##ion 8ent !er& 8e = I thin+ %eca"#e 8e ha( a goo( re ation#hi* 8ith the' %eca"#e 8e (onate to the co''"nit& ca"#e# ) the Unite( Da&/ a #ort# of thing# ) it 'a(e that (ia og"e ea#ier= An( (i( the& he * "# 8hen the * ant #h"t(o8n 8a# in the
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'e(iaH Yeah= It:# a !er& c ear e?a'* e 8here o"r in!e#t'ent# in the co''"nit& ha!e c ear & 8or+e(=-
5an& 'anager# 8ho *artici*ate( in the #t"(& engage in CSR acti!itie# #"ch a# cor*orate *hi anthro*& #i'* & %eca"#e the& 8o" ( %e con#*ic"o"# in their a%#ence= For 'anager# in the#e fir'#/ the !a "e fro' #"ch in!e#t'ent# i# recei!e( fro' 'ere & %e onging to their *eer gro"*= In(ee(/ *re!io"# re#earcher# ha!e fo"n( that *eer *re##"re i# an i'*ortant factor for fir'# (onating f"n(# to #ocia ca"#e#= Si'i ar &/ 2a a#+ie8ic1 an( B"rt fo"n( a #trong re ation#hi* %et8een the e!e of %"#ine## interaction# %et8een fir'# an( their *hi anthro*ic acti!itie#= Infor'ant# #*o+e of the co'*etiti!e *re##"re# to %e in!o !e( in CSR an( for 'an& fir'# the fact that co'*etitor# an( other fir'# 8ere in!o !e( in an initiati!e create( a (o8n#i(e to their ref"#a to %eco'e engage(= For e?a'* e/ one infor'ant #*o+e of the fir'#: (eci#ion to 8ith(ra8 fro' the ann"a Unite( Da& ca'*aign/ 8hich enKo&# the #"**ort of the ion#: #hare of fir'# in hi# in("#tr&= ,It %eca'e a %it "nco'forta% e=
No8 in#tea( of %eing *roKecte( a# a concerne( citi1en/ a gratef" *artici*ant in the cit&:# econo'&/ 8e 8ere %eing critici1e( for not (oing o"r #hare/ 8hich i# o%!io"# & contrar& to the i'age 8e 8ere tr&ing to *roKect= An( that critici#' 8a# co'ing fro' the %"#ine## co''"nit&= So/ 8e tho"ght that 8e can:t affor( to (o that/ #o 8e (eci(e( to ratchet "* o"r effort an( (o the %e#t 8e co" ( in #"**orting Unite( Da&= If 8e:re not going to %e the front9r"nner at ea#t *"t
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o"r#e !e# in a *o#ition 8here 8e:re not going to %e #"%Kecte( to +in( of negati!e critici#' that 8e face(=-
Thi# #tate'ent echoe# the !ie8# of other re#earcher# 8ho *oint to the ,*eer *re##"re- that e?i#t# for fir'# to %eco'e an( re'ain in!o !e( in CSR acti!itie#= For 'an& fir'#/ the "*#i(e of the#e acti!itie# i#n:t a# great a# the *otentia (o8n#i(e of %eing a%#ent fro' the * a&ing fie (= F"rther/ the (o8n#i(e i# *otentia & 'o(erate( %& factor# #"ch a# fir' #i1e$(o'inance in the oca co''"nit& an( the *rofi e of the #*ecific CSR initiati!e= For e?a'* e/ a 'anager a#+e( to *artici*ate in a high *rofi e ann"a charit& e!ent K"#tifie( their *artici*ation i# %a#e( on the *rofi e of the e!ent a oneB ,De ha!e to %e in!o !e( %eca"#e it:# #"ch a 'aKor organi1ation aro"n( the cit& an( nationa & that if 8e 8eren:t in!o !e( 8e 8o" ( %e notice( %& o"r a%#ence to %e F"ite hone#t=Fina &/ infor'ant# 8ere a#+e( a%o"t the *o##i%i it& that the fir' 8o" ( cea#e to *artici*ate in CSR acti!itie#/ an( foc"# #trict & on (e i!ering *rofit# to #hareho (er# 8ho co" ( then choo#e to #"**ort #ocia ca"#e#= ,I thin+ if 8e (i(n:t (o it o"r re*"tation 8o" ( #"ffer= An( it:# har( to #a& ho8 '"ch it 8o" ( #"ffer= Re*"tation# ta+e a h"ge a'o"nt of ti'e to %"i ( ) the& can (i#a**ear in a 'o'ent= I thin+ 8e get #o'e goo(8i fro' a of o"r #ta+eho (er# %eca"#e of the thing# that the& +no8 "# for in the co''"nit&=The (a'age to the re*"tation of the fir' a# a re#" t of 8ith(ra8ing #"**ort for CSR 8a# e?*ecte( to ha!e i''e(iate (e!a#tating i'*act# on the fir'B
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So'eti'e# the fir'#: goo( intention# can %ac+fire an( a CSR acti!it& that i# inten(e( to a!oi( *otentia har' can act"a & re#" t in a negati!e e!ent for the fir'@ in other 8or(#/ no goo( (ee( goe# "n*"ni#he(= For e?a'* e/ the #e ection of the target for the CSR can offen( #o'e #ta+eho (er#= E?a'* e# a%o"n( of fir'# that ha!e *ro!i(e( #"**ort to a #*ecific #ocia ca"#e or organi1ation an( then face( inten#e critici#'# for their action= AT7T an( #e!era other fir'#/ for e?a'* e/ face( an inten#e ca'*aign in ear & 1;;< fro' %oth #i(e# of the a%ortion (e%ate after their #"**ort an( then 8ith(ra8a of #"**ort for P anne( Parenthoo(= The fir' angere( *ro9 ife acti!i#t# 8ith their #"**ort of the organi1ation /an( #"%#eF"ent & face( #cr"tin& fro' *ro9choice gro"*# 8ho acc"#e( the fir' of ca!ing into *re##"re= The re#" t 8a# an organi1e( %o&cott of AT7T an( a gro"* of other 'aKor fir'#=
A *o#iti!e action can a #o t"rn negati!e a# a re#" t of the fir'#: *ro'otion of it# CSR= A tho"gh 'an& con#"'er# fin( it acce*ta% e for a fir' to (eri!e #o'e %enefit fro' their CSR acti!itie#/ an( the inc "#ion of ca"#e9'ar+eting 'e##age# in a(!erti#ing i# genera & #een a# %eneficia to the fir'/ re#earcher# ca"tion that thi# t&*e of *ro'otion reF"ire# great care= Atte'*ting to ca*ita i1e on goo( (ee(# %& *ro'oting the' ha# %ac+fire( on #o'e fir'# 8ho ha!e #*ent 'ore on *ro'oting their action# than the& #*ent on the action it#e f= The e##on# of fir'# 8ho ha!e (one 'ore (a'age than goo( thro"gh the CSR acti!itie# 8ere not o#t on infor'ant# in the #t"(&=
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Si'i ar to their 'oti!e# for engaging in CSR/ the *ri'ar& concern for 'an& infor'ant# re#*on#i% e for *ro'oting their fir'#: acti!itie# 8a# to *rotect again#t *otentia har'= Beca"#e infor'ant# !ie8e( the !a "e in CSR a# *artia & %eing a% e to (ra8 %ac+ on a re#er!oir of goo(8i at a f"t"re ti'e/ the& 8ere caref" to *ro'ote their effort# 8ith a F"iet 'o(e#t& to +e& #ta+eho (er#= 5an& 'anager# 8orr& that %& o!ert & *ro'oting their *artici*ation #ta+eho (er# 'ight !ie8 the acti!it& a# #e f9#er!ing= In fact/ 'an& re#*on(ent# re*orte( 'ini'a or no atte'*t# of #e f9*ro'otionB ,De:re *rett& #en#iti!e= De (on:t 8ant to go o"t th"'*ing o"r che#t# #a&ing Loh/ aren:t 8e 8on(erf" an( here:# a the great thing# 8e (oU: De 8ant *eo* e to #ee for the'#e !e# an( the& can (ra8 their o8n conc "#ion#=-
In#tea( of #ee+ing to ta+e cre(it at the ti'e the in!e#t'ent i# 'a(e/ 'an& infor'ant# fe t that #i'* & ha!ing #ta+eho (er# a8are of the acti!it& 8a# !a "a% e= ,De 8a + a ine ) &o" (e*en( on the goo(8i of the thir( *art& en(or#e'ent#/ 8e (on:t acti!e & #o icit the' Vto #*ea+ o"t on o"r %eha fW %eca"#e then &o":re in it for the 8rong rea#on#/ rightH If &o" get the recognition/ that:# great ) if &o" (on:t/ &o" K"#t +ee* going=B& +ee*ing a o8er *rofi e/ 'anager# fe t that #ta+eho (er# 8o" ( %e 'ore i+e & to #tan( "* for the fir' %eca"#e the& !ie8e( their CSR a# %eing 'oti!ate( %& the %enefit to the co''"nit&= ,De:re 'ore intere#te( in he *ing the co''"nit& than ha!ing o"r na'e on a %"i (ing= O"r *reference
INDIAN INSTITUTE OF FINANCE 1<>
8o" ( %e for *eo* e to %e ta +ing a%o"t "# Vin#tea( ofW ha!ing o"r na'e on a %"i (ing=Li+e8i#e/ fir'# recogni1e( the !a "e of 'a+ing the in!e#t'ent in CSR *rior to #o'e *otentia negati!e e!ent 8here the& 8o" ( nee( to re & on their re*"tation= S*ecifica &/ 'an& fe t that *ro'oting CSR after a negati!e e!ent in an atte'*t to o!erco'e the #it"ation 8o" ( %ac+fire an( that #"ch in!e#t'ent# 8ere nee(e( in a(!ance #i'i ar to in#"ranceB ,I thin+ it ha# a ot to (o 8ith cor*orate i'age an( re*"tation= B"t it:# not a%o"t tr&ing to o!erco'e #o'e negati!e i'age or #it"ation %eca"#e &o" i(ea & (o it %efore &o" ha!e the negati!e #it"ation= Yo" (on:t 8ant to ca in the fa!or "nti &o" nee( it=-
Si'i ar to the 'oti!e for ri#+ 'itigation/ the *ro'otion of the fir' 'a& %e 'o(erate( %& the (egree to 8hich the fir' a rea(& ha# a #trong re*"tation for CSR= For e?a'* e/ an infor'ant at a fir' 8ith a #trong re*"tation a'ong #ta+eho (er# in the co''"nit&/ an( a ong hi#tor&B ,It:# #ort of a cor*orate 'o(e#t&= De ha!e a *rett& goo( * ace in the co''"nit& for a ong ti'e an( g"e## there:# 'a&%e #o'e thin+ing aro"n( that 8e (on:t ha!e to #* a#h o"r na'e e!er&8here= 5o#t *eo* e +no8 "# an( re#*ect "#=The re#" t# fro' thi# #t"(& c ear & #"**ort the theor& that fir'# "#e CSR for %oth incre'enta gain an( for 'itigation of *otentia ri#+#= In fact/ the genera con#en#"# 8a# that 'o#t of the !a "e fir'# recei!e( fro' CSR 8a# in 'aintaining their re*"tation# an( *roacti!e & %"i (ing a re#er!oir to
INDIAN INSTITUTE OF FINANCE 1<A
*rotect again#t an "nfore#een e!ent= 2i!en that fir'# recei!e financia !a "e fro' each of the#e t8o #o"rce#/ the !a i(it& of tra(itiona 'ea#"re# an( 'etho(# "#e( to e#ta% i#h a re ation#hi* %et8een CSR an( CFP i# F"e#tiona% e= S*ecifica &/ the !a "e recei!e( in the for' of re*"tationa in#"rance ha# %een ignore( in *re!io"# e?a'ination# of the CSR9CFP in+/ *otentia & gro## & "n(er#tating the !a "e of CSR=
I$plications for the relationship bet!een CSR an" C/P

De#*ite conf icting re*ort#/ critici#'# of o'i##ion of contro #/ ac+ of ca"#a it& an( other 'etho(o ogica *ro% e'#/ the 'aKorit& of re#earcher# no8 agree that the CSR9CFP re ation#hi* i# genera & *o#iti!e= Co8e!er/ there re'ain #erio"# F"e#tion# *ertaining to the *ro*er o*erationa i1ation of the CSR9CFP re ation#hi*= For e?a'* e/ in their 'eta9ana &#i# Or it1+& Sch'i(t an( R&ne# high ight a arge a'o"nt of "ne?* aine( !ariance acro## the #t"(ie# in their 'eta9ana &#i#/ #"gge#ting the *re#ence of 'o(erator#/ an( 5cDi ia'# an( Siege fin( that 8hen R7D e?*en(it"re# are factore( into the re ation#hi*/ the in+ %et8een CSR an( CFP %eco'e# ne"tra = Cere/ a f"rther refine'ent to the CSR9CFP re ation#hi* i# offere(=
INDIAN INSTITUTE OF FINANCE 1<E
Pre!io"# #t"(ie# ha!e *ri'ari & "#e( one of t8o 'etho(# for e#ta% i#hing the CSR9CFP re ation#hi*= Fir#t/ re#earcher# ha!e e?a'ine( the corre ation %et8een the e!e of in!e#t'ent in CSR an( #o'e 'ea#"re of CFP= For e?a'* e/ 'an& #t"(ie# ha!e o*erationa i1e( CSR "#ing the NLD (ata%a#e that 'ea#"re# fir'#: #ocia in!e#t'ent acro## a n"'%er of criteria #"ch a# co''"nit& in!e#t'ent/ treat'ent of the en!iron'ent an( F"a it& of *ro("ct# an( #er!ice#= In the#e #t"(ie#/ the CSR i# t&*ica & a##"'e( to %e a e!e of *o#iti!e fir' %eha!ior= The#e 'ea#"re# of CSR are then 'atche( 8ith #o'e acco"nting 'ea#"re of CFP/ #"ch a# #hare *rice= Co8e!er/ the 'ea#"re# of financia *erfor'ance are often i'iting= For e?a'* e/ each of the categorie# of financia *erfor'ance 'ea#"re# o"t ine( %& 2riffin an( 5ahon ) *rofita%i it&/ a##et "ti i1ation/ gro8th/ iF"i(it&/ ri#+$'ar+et 'ea#"re# ) corre#*on(# to incre'enta financia gain= Si'i ar &/ Or it1+& et a = c a##ifie( the three 'aKor t&*e# of 'ea#"re# a# 'ar+et9%a#e( .in!e#tor ret"rn#0/ acco"nting9%a#e( .acco"nting ret"rn#0/ an( *erce*t"a 'ea#"re# .e=g=/ #"r!e&# ca*t"ring #"%Kecti!e e#ti'ate# of a fir'#: financia *o#ition0/ an( none of the#e 'ea#"re# ca*t"re the financia %enefit recei!e( fro' the 'itigation of #o'e negati!e e!ent= In(ee(/ *re!io"# re#earcher# ha!e note( that the fie ( ha# %een o%#e##e( 8ith 'ea#"re# of CSR 8hi e arge & ignoring 'ea#"re# of *rofita%i it&= The #econ( 'etho( that ha# %een "#e( to F"antif& the re ation#hi* %et8een CSR an( CFP i# to e?a'ine #o'e financia in(e? of *erfor'ance/ #"ch a# #toc+ *rice/ %oth %efore an( after #o'e negati!e e!ent= The#e #t"(ie# o*erationa i1e CSR a# the negati!e e!ent it#e f ) CSR i# a##"'e( to %e a
INDIAN INSTITUTE OF FINANCE 1<;
ac+ of #ocia & re#*on#i% e %eha!ior= Co8e!er/ the !a "e of CSR a# a for' of in#"rance can on & %e ca*t"re( %& "#ing %oth for'# of CSR ) #o'e e!e of *o#iti!e fir' %eha!ior/ fo o8e( %& #o'e for' of negati!e %eha!ior %& the #a'e fir'= Ditho"t ta+ing into acco"nt the negati!e %eha!ior/ re#earcher# (i#co"nt the goo( thing# fir'# (o an( on & foc"# on the a*#e in #ocia re#*on#i%i it&= Con!er#e &/ %& on & ta+ing into acco"nt the *o#iti!e %eha!ior re#earcher# are "na% e to ga"ge the !a "e of the in!e#t'ent a# an in#"rance *o ic&= The#e t8o (ifferent !ie8# of CSR ) one that foc"#e# on the *o#iti!e a#*ect# of fir' %eha!ior an( the other that foc"# on the negati!e ) ha!e i!e( a 'o#t e?c "#i!e & in t8o #e*arate ca'*# thro"gho"t the (eca(e#9 ong (e%ate o!er the CSR9CFP re ation#hi*= Thi# (i#tinction i# e!i(ent in Froo'an:# 'eta9 ana &#i# of #ocia & irre#*on#i% e an( i ega fir' %eha!ior an( it# re ation#hi* to #hare *rice= The 'eta9ana &#i# #*ecifica & e?c "(e( t8o #t"(ie# that in!o !e( fir'# choo#ing to 8ith(ra8 fro' So"th Africa ("ring the A*arthei( era/ genera & con#i(ere( a for' of *o#iti!e CSR= A tho"gh hi# ana &#i# "n(er#core( the i'*ortance of e!ent #t"(ie# in the e?a'ination of the CSR9CFP re ation#hi*/ he neg ecte( to e!a "ate the effect# of *o#iti!e %eha!ior .i=e=/ a re#er!oir of goo(8i 0 *rior to the negati!e e!ent= Si'i ar &/ #t"(ie# that ha!e e?a'ine( the effect# of *o#iti!e fir' %eha!ior ha!e neg ecte( to inc "(e the effect# of #*ecific negati!e e!ent#= A tho"gh *re!io"# re#earcher# ha!e ca e( for a e!e of in!e#t'ent that o*ti'i1e# the !a "e to the fir' "#ing co#t9%enefit ana &#e#/ *re!io"# #t"(ie# ha!e not ta+en into acco"nt the tota %enefit of CSR/ inc "(ing %oth incre'enta gain an( the 'o(erating effect of CSR on negati!e fir' %eha!ior=
INDIAN INSTITUTE OF FINANCE 11<
The !a "e of the fir'#: re*"tation act# a# %oth a 'e(iator an( a 'o(erator in the re ation#hi* %et8een CSR an( CFP= Fir#t/ the !a "e gaine( %& a net *o#iti!e CSR enhance# a fir':# re*"tation/ 8hich then *ro!i(e# %enefit# in the for' of co'*etiti!e (ifferentiation/ the a%i it& to charge higher *rice#/ etc= Thi# *o#iti!e re*"tation a #o #er!e# to 'o(erate the #*ecific effect# of a negati!e e!ent/ #"ch a# a *ro("ct reca = Th"#/ %& *rotecting their re*"tation/ fir'# can %oth enhance an( %"ttre## financia *erfor'ance= Since the *otentia co#t to the 'ar+et ca*ita i1ation of the fir' fro' the (a'age to their re*"tation i# t&*ica & '"ch greater than the har( co#t# inc"rre( fro' the act"a e!ent it#e f/ #"ch a# a *ro("ct reca / 'itigating the re*"tationa effect# fro' #"ch e!ent# can *ro!i(e tre'en(o"# %enefit to the fir'= In(ee(/ Froo'an fo"n( a #ignificant effect of negati!e fir' %eha!ior on ret"rn to #hareho (er eF"it& ) a 'o#t one f" #tan(ar( (e!iation %e o8 the nor'a ret"rn= Ba#e( on the #t"(& *re#ente( here an( the 8or+ of *re!io"# re#earcher# i+e N ein an( Da8ar/ it a**ear# that the in#"rance %enefit# recei!e( %& fir'# in the for' of re*"tationa ca*ita co" ( act"a & %e greater than the incre'enta gain# e?*ecte( fro' CSR= Since a negati!e e!ent i# 'ore i+e & than a ac+ of *o#iti!e %eha!ior to i'*act the financia *erfor'ance of the fir'/ inc "(ing a 'ea#"re of the in#"rance !a "e #ho" ( ha!e a (i#*ro*ortionate effect of CSR on CFP= Therefore/ an& 'ea#"re of the CSR9 CFP re ation#hi* that (oe#n:t ta+e into acco"nt #o'e 'ea#"re of the in#"rance !a "e of CSR recei!e( %& fir'# 'a& gro## & "n(er#tate the !a "e of the CSR in!e#t'ent=
111
If the fir' ha# no negati!e e!ent 8here the CSR can act to 'itigate har'/ the fir' recei!e# no in#"rance %enefit fro' their in!e#t'ent# in CSR= Si'i ar to an& in#"rance *o ic&/ if no c ai' i# 'a(e the co#t of the *o ic& i# #i'* & e?*en#e( an( the fir' a**ear# e## *rofita% e than the& 8o" ( ha( no #"ch *o ic& %een *"rcha#e(= Therefore/ %& not acco"nting for the *otentia !a "e of the in#"rance gaine( fro' CSR/ tho#e fir'# that in!e#t in #"ch acti!itie# 'a& a**ear e## *rofita% e than tho#e that (o not= E!en arg"'ent# that in!e#t'ent# in CSR create a fa!ora% e %"#ine## en!iron'ent an( therefore ift the *erfor'ance of a fir'# fai to ca*t"re the in#"rance !a "e/ #ince fir'# that (o not inc"r #"ch e?*en#e# .i=e=/ free ri(er#0 8i a**ear 'ore *rofita% e than tho#e that (o not=
An in#"rance *o ic& i# on & !a "a% e if it i# *"rcha#e( %efore a c ai' i# 'a(e= Si'i ar &/ the a%i it& of CSR to 'itigate the har'f" effect# of a negati!e fir' %eha!ior i# e?*ecte( to *rotect the financia *erfor'ance of the fir' if it i# e?hi%ite( *rior to a negati!e fir' e!ent= In(ee(/ re#earcher# ha!e fo"n( that *ro#ocia cor*orate co''"nication# .e=g=/ ca"#e9re ate( 'ar+eting a(!erti#ing0/ 8hi e #"cce##f" at generating a *o#iti!e re#*on#e %efore a negati!e e!ent/ o#e# it# a%i it& to inf "ence *"% ic o*inion if it fo o8# a negati!e ne8# re*ort a%o"t a fir'= A #o/ #i'i ar to other for'# of in#"rance/ if no c ai' i# 'a(e then in an acco"nting #en#e the *re'i"' *a&'ent# (o not ha!e re#i("a ca*ita !a "e= Co8e!er/ there i# e?*ecte( to %e re#i("a !a "e in the for' of re*"tation ca*ita an( th"# *rotection again#t *otentia negati!e for'# of CSR= Therefore/ re &ing #o e & on acco"nting 'ea#"re# of financia *erfor'ance
INDIAN INSTITUTE OF FINANCE 112
ignore the !a "e of re*"tationa ca*ita / %"i t "* in a re#er!oir of goo(8i o!er 'an& &ear#= The fra'e8or+ *re#ente( in Fig"re 1 ta+e# into acco"nt the *otentia for incre'enta gain fro' CSR a# 8e the !a "e of re*"tationa ca*ita %"i t "* o!er ti'e= F"rther/ the !a "e of CSR to the fir' 'a& %e in an e!ent that (oe#n:t occ"r= For e?a'* e/ re#earcher# ha!e arg"e( that %& acting in a *o#iti!e 'anner/ the fir' .an( in(ee( the 8ho e in("#tr&0 'a& %enefit %& a!oi(ing go!ern'ent egi# ation that 8o" ( i'*o#e re#triction# or other8i#e change the %"#ine## en!iron'ent in 8hich the fir' o*erate#= Th"#/ in a((ition to acting to %o #ter atte'*t# to inf "ence e?i#ting go!ern'ent egi# ation/ CSR can act to #"**re## *otentia egi# ation= In the atter #cenario/ (e#*ite the *otentia for #o'e ,free ri(er#/- CSR i# c ear & financia & %eneficia to the fir' %"t #"ch !a "e 8o" ( not %e e!i(ent in tra(itiona 'ea#"re# of the CSR9 CFP re ation#hi*= The inc "#ion of re*"tation into the CSR9CFP fra'e8or+ ha# i'* ication# for ho8 re#earcher# (e!e o* their 'ea#"re# 8hen #t"(&ing thi# re ation#hi*= S*ecifica &/ the "#e of re*"tation in(ice# #"ch a# the afore'entione( NLD (ata%a#e a# a 'ea#"re of CSR i# F"e#tiona% e #ince the& are e?*ecte( to %e high & corre ate( 8ith an( o%#c"re the re ation#hi* %et8een act"a CSR in!e#t'ent# .e=g=/ cor*orate *hi anthro*&/ in!e#t'ent in en!iron'enta & frien( & *ro("ction *ractice#/ etc=0 an( financia *erfor'ance= Thi# #"**ort# the concern# of *re!io"# re#earcher# o!er the "#e of #"ch in(ice# an( their corre ation to financia 'ea#"re#= a# the *otentia (ifferentia in effect %et8een incre'enta gain# an( 'itigation of har' an(
113
F"rther/ if the fir' i# he#itant to for'a & *ro'ote it# CSR/ e?terna in(ice# 'a& not ca*t"re the f" #*ectr"' of the CSR in!e#t'ent an( therefore o!ere#ti'ate the re ation#hi* %et8een CSR an( CFP= The *ro*o#e( fra'e8or+ for e?a'ining the CSR9CFP re ation#hi* in a(!ance# the #t"(& of thi# re ation#hi* %& *ro!i(ing a 'echani#' for F"antif&ing %oth the incre'enta an( in#"rance !a "e of in!e#t'ent# in CSR= E?a'ination of the 'o(erating effect of CSR$re*"tation on negati!e e!ent# ha# %een initia & F"antifie( in the con#"'er9%a#e( #t"(& of N ein an( Da8ar=
F"t"re #t"(ie# can "#e fir'9 e!e (ata .i=e=/ *rofita%i it&/ #toc+ *rice/ etc=0 to 'ea#"re *rofita%i it& 8here a negati!e e!ent ha# affecte( a cro##9#ection of fir'# acro## an in("#tr&= An e?a'* e co" ( %e the recent negati!e *"% icit& recei!e( %& the a**are an( foot8ear in("#trie# for their "#e of #8eat#ho*# o!er#ea#= In thi# ca#e/ CSR 'a& *ro!i(e incre'enta gain ("ring goo( ti'e# an( #"%#eF"ent 'itigation of negati!e *"% icit&= Perha*# 'o#t i'*ortant &/ e?a'ination# of the CSR9CFP re ation#hi* that inc "(e 'ea#"re# of the in#"rance !a "e 8i 'o!e to8ar( an "n(er#tan(ing of the o*ti'a e!e # of in#"rance in!e#t'ent for fir'# #ee+ing to *rotect their financia *erfor'ance thro"gh their re*"tation#=
113
To!ar"s a 'al(ation of CSR as Ins(rance

The fin(ing# re*orte( here an( e #e8here a%o"t ,*eer *re##"refor fir'# to engage in CSR ha!e #ignificant i'* ication# for the #t"(& of the re ation#hi* %et8een CSR an( CFP= S*ecifica &/ the fin(ing# re*orte( here #"gge#t that not a for'# of CSR are eF"a / not on & for incre'enta gain %"t a #o for in#"rance *"r*o#e#= For e?a'* e/ 8hen a 'anager #*ecifica & choo#e# a high *rofi e charit& e!ent to #"**ort %eca"#e he 8i %e con#*ic"o"# & a%#ent fro' that #*ecific e!ent/ #$he i# *rioriti1ing the !a "e of the 'an& CSR o*tion# a!ai a% e to hi'= 5ea#"re# of CSR that are %roa( in nat"re/ an( ca*t"re on & the o!era in!e#t'ent %& fir'# (o not ta+e into acco"nt the n"ance# of in(i!i("a CSR acti!itie# an( their #*ecific !a "e a# for'# of in#"rance .nor/ in fact/ (o the 'ea#"re# that ha!e a##"'e( CSR i# tie( to incre'enta gain0= The#e #*ecific e!ent# %eco'e i+e the ,ante- in a *o+er ga'e/ an( %& %eing a%#ent fro'
116
#"ch e!ent# fir'# can * ace the'#e !e# in greater Keo*ar(& than %& %eing a%#ent fro' other for'# of CSR= For 'anager#/ CSR a**ear# to not %e con#i(ere( a genera acti!it& %et8een ho'ogeneo"# o*tion#/ %"t rather a #erie# of caref" & e!a "ate( an( cho#en acti!itie# (e#igne( to (e i!er %oth incre'enta an( in#"rance !a "e to the fir'= Therefore/ 'ea#"re# of CSR that (o not ta+e into acco"nt the (ifferentia !a "e a'ong a gro"* of heterogeneo"# CSR o*tion# 8i 'i#ca c" ate the ,rea - !a "e to the fir'=
The in#"rance !a "e of CSR i# e?*ecte( to !ar& acro## in("#trie# an( fir'#= For e?a'* e/ 5i e# high ighte( the conce*t of %"#ine## e?*o#"re/ the (egree to 8hich a fir' i# !" nera% e to it# en!iron'ent= Fir'# that are "n(er greater #cr"tin& fro' a %roa(er range of #ta+eho (er# face greater %"#ine## e?*o#"re= In(ee(/ *re!io"# re#earch ha# #ho8n that a fir'#: *hi anthro*ic acti!it& 8a# high & corre ate( to the e!e of %"#ine## e?*o#"re it face(= Si'i ar &/ S'ith arg"e( that re*"tationa ri#+ i# 'ore of a concern for con#"'er goo(# fir'# 8hich ha!e a arger e?*o#"re to a con#"'er %o&cott# or negati!e 'e(ia e?*o#"re= Co8e!er/ he a #o high ight# re*"tationa ri#+ for %"#ine##9to9%"#ine## fir'# 8ho face *re##"re# fro' other #ta+eho (er# #"ch a# (i#tri%"tion channe 'e'%er# or go!ern'ent egi# ation= The re#" t# *re#ente( in the #t"(& here #"gge#t that fir'# o"t#i(e of con#"'er *ro("ct# categorie# #ti face a high (egree of re*"tationa ri#+= A #o/ tho#e fir'# that are in inherent & higher ri#+ categorie#/ #"ch a# fir'#
11>
that 8or+ in en!iron'enta & #en#iti!e area#/ are *erha*# 'ore i+e & to reF"ire thi# for' of in#"rance than fir'# that o*erate in 'ore #ta% e in("#trie#/ or in("#trie# 8here the *otentia co#t# of har'f" e!ent# are e## #e!ere= E?a'* e# of #e!ere negati!e e!ent# for fir'# in #en#iti!e in("#trie# inc "(e the E??on Qa (e1 (i#a#ter/ or the recent reca of Qio?? %& (r"g9 'a+er 5erc+= Fir'9#*ecific !aria% e# 'a& a #o e?acer%ate the nee( for in#"rance thro"gh re*"tation#= For e?a'* e/ fir'# that o*erate in certain geogra*hic ocation# 'a& face greater *otentia for #ignificant negati!e e!ent# to occ"r= E?a'* e# co" ( %e tran#*ortation fir'# that o*erate in (en#e & *o*" ate( area# of the 8or ( !er#"# tho#e that o*erate in 'ore r"ra area# 8here cata#tro*hic e!ent# are i+e & to ha!e fe8er con#eF"ence# for the *o*" ation= In(i!i("a 'anager# '"#t a##e## the ri#+ of their fir'$in("#tr& an( 'a+e in!e#t'ent# in in#"rance accor(ing &= In or(er to f" & ca*ita i1e on the !a "e of CSR a# in#"rance/ the fir' '"#t engage it# #ta+eho (er# an( en#"re the& are a8are of the action# of the fir'= E?terna #ta+eho (er# #"ch a# acti!i#t gro"*# can act"a & %e engage( a# *artner# in *ro#ocia %eha!ior there%& re("cing the nee( for an& for' of *ro'otion to that #ta+eho (er gro"*= Since *ro'otion of CSR acti!itie# can %e a (angero"# *ro*o#ition/ an( can act"a & %ac+fire on the fir'/ "n(er#tate( *ro'otion or none at a 'a& %e the %e#t o*tion= 5an& of the infor'ant# in the #t"(& *re#ente( here re ie( hea!i & on their #ta+eho (er# to #*ea+ on their %eha f in the e!ent of a negati!e con#eF"ence of fir' o*eration#= F"rther/ the !a "e of a #trong
INDIAN INSTITUTE OF FINANCE 11A
re*"tation 'a& *ro!i(e !a "e to the fir' e!en if the negati!e e!ent i# o"t#i(e the nor'a o*eration# of the fir'= D"ring the 1;;2 riot# in Lo# Ange e#/ 5cDona (:# re#ta"rant# 8ere arge & #*are( %& !an(a # an( ooter#/ a re#" t that the fir' cre(it# to it# *roacti!e effort# to (e!e o* rich re ation#hi*# 8ith the co''"nit& thro"gh it# (e!e o*'ent of e'* o&'ent o**ort"nitie# an( other effort# #"ch a# Rona ( 5cDona ( Co"#e=
Fina &/ the recognition an( !a "ation of CSR a# a for' of in#"rance 'a& offer in#ight into the ca"#e an( effect re ation#hi* %et8een CSR an( CFP= A tho"gh #o'e recent re#earch ha# e#ta% i#he( a ,!irt"o"# circ e- %et8een CFP an( CSR/ F"e#tion# re'ain a%o"t 8hether a fir' ,(oe# 8e %& (oing goo(- or that it ,(oe# goo( %& (oing 8e =Dhen CSR i# !ie8e( *artia & a# in#"rance/ it a((# another (i'en#ion to the !irt"o"# circ e %& #"gge#ting that the (irection i# (e*en(ent "*on the ife c&c e of the fir'= For e?a'* e/ in the (e!e o*'enta #tage# fir'# 'a& "#e CSR *ri'ari & for incre'enta gain= Beca"#e the& ha!e !irt"a & no re*"tationa ca*ita to *rotect .a tho"gh CSR acti!it& 8i * a& a ro e in (e!e o*ing #"ch ca*ita 0/ the *ri'ar& %enefit to the fir' i# in the for' of incre'enta gain #"ch a# (ifferentiation a'ong it# co'*etitor#= S"ch %enefit i# e?*ecte( to ea( to financia *erfor'ance= Co8e!er/ after (oing 8e financia &/ the fir' in!e#t# in *rotecting it#
a##et# inc "(ing it# re*"tation= Engaging in thi# *rotection en#"re# that the
INDIAN INSTITUTE OF FINANCE 11E
fir' can contin"e to thri!e in the f"t"re/ 8hich create# a((itiona CSR acti!it&= Th"#/ re*"tation 'a& initia & * a& a 'e(iating ro e %et8een CSR an( CFP/ an( ater K"#tif& in!e#t'ent# in CSR in or(er to 'aintain CFP= Dhen in!e#t'ent# in CSR are con#i(ere( a# a for' of in#"rance/ there i# no (o"%t a# to the ca"#a or(ering of the CSR9CFP re ation#hi* ) in#"rance *re'i"'# '"#t %e *ai( *rior to an& c ai'= Pre!io"# re#earch #"gge#t# that the re ation#hi* %et8een financia *erfor'ance an( re*"tation i# reci*roca = Si'i ar &/ the re ation#hi* %et8een CSR an( re*"tation i# a #o reci*roca = For e?a'* e/ O#terh"# (e'on#trate( that *ro#ocia *o#itioning #trategie# are 'ore effecti!e 8hen con#"'er# e?hi%it a e!e of tr"#t to8ar( the fir'= Th"#/ fir'# can engage in CSR to gain re*"tation .an( #"%#eF"ent financia *erfor'ance0/ %"t then engage in CSR in or(er to *rotect that re*"tation .financia *erfor'ance0= Thi# create# e?citing *o##i%i itie# for f"t"re re#earch that inc "(e the re ation#hi* %et8een CSR an( fir' ife c&c e in a((ition to *rofita%i it&/ an( a((re##e# the concern# of *re!io"# re#earcher# 8ho arg"e that #*ecific con(ition# 'a& change the nat"re of the re ation#hi* %et8een CSR an( CFP= Contrar& to Dr"c+er:# confi(ence that at ea#t in %"#ine## organi1ation# 8e can 'ea#"re re#" t#/ the '" ti9(i'en#iona nat"re of the CSR9CFP re ation#hi* ha( create( tre'en(o"# 'ea#"re'ent (iffic" tie#= Intere#ting &/ the fir#t #erio"# atte'*t# to ca*t"re the CSR9CFP re ation#hi* ca'e on & a fe8 &ear# after Dr"c+er 'a(e that c ai'/ an( the (e%ate ha# %een +e*t a i!e e!er #ince=
11;
Atte'*t# to acc"rate & ref ect the financia ret"rn fro' CSR are 'ore than an aca(e'ic e?erci#e= 5an& non*rofit organi1ation# are no8 re iant on cor*orate #o"rce# of #"**ort/ an( 8itho"t #"#taine( #"**ort 'an& 'a& not ha!e the a%i it& to *"r#"e their 'i##ion#= The increa#e( *re##"re face( %& 'anager# to K"#tif& the a ocation of #carce re#o"rce# 'ean# that (o ar# #*ent on CSR acti!itie# are %eco'ing 'ore c o#e & #cr"tini1e(/ an( are at ri#+ of %eing 8ith(ra8n= The *ro*o#e( refine'ent to the 'ea#"re'ent of the CSR9CFP re ation#hi* #ho" ( enco"rage 'anager# to con#i(er the !a "e of CSR %e&on( the a%i it& of #"ch *ractice# to *ro!i(e incre'enta gain= Often/ e!en if the fir' on & 'aintain# the #tat"# F"o the in!e#t'ent in CSR can %e con#i(ere( a 8i#e in!e#t'ent= B& *re#enting thi# no!e conce*tion of the !a "e of CSR/ thi# artic e ha# e?ten(e( the 8or+ of *re!io"# re#earcher# 8ho ha!e ca e( for a 'ore co'* ete acco"nting of the !a "e of CSR in!e#t'ent#/ inc "(ing the !a "e of the in#"rance f"nction of tho#e in!e#t'ent#= The re#" t# *re#ente( here #"gge#t that in!e#t'ent# in CSR are not/ an( *erha*# #ho" ( not/ %e con#i(ere( %& 'anager# to %e a (i#cretionar& e?*en#e= M"#t a# the *"rcha#e of other for'# of in#"rance are con#i(ere( #o"n( 'anage'ent *ractice/ #o too i# the *"rcha#e of in#"rance thro"gh re*"tation= Thro"gh thi# 8i(ening of the *ercei!e( !a "e of the CSR in!e#t'ent/ fir'# can %etter K"#tif& their ro e in #o !ing #ocieta 8oe# fro' a *o#ition of en ightene( #e f9intere#t=
12<
Cor*orate #ocia re#*on#i%i it& .LCSR:0/ a con#tant #o"rce of (e%ate in the re#earch of co'*an& a8#/ ha# attracte( 8i(e attention fro' #cho ar# an( increa#ing & inten#i!e #t"(ie# ha!e %een 'a(e in the re#*ect=
5I,EST- ES
Serial no. B 2 C
THE
I$portant
&E%E,-P5E T
E'ent "escription
-/
in
THE
area of
I S=RA CE SECT-R I I &IA

<ear of e'ent BKJ3 BKLB BKLD ins(rance Triton ins(rance co$pany lt" set (p in Calc(tta *o$bay $(t(al 1In"ia7s first life ins(rance co$pany set (p -riental fire an" #eneral ins(rance co$pany lt" set (p D BM3L In"ian $ercantile ins(rance lt" 1the first co$pany to transact all classes of #eneral J BMB2 ins(rance b(siness 1set (p ,ife ass(rance act of BMB2 passe"
121
N L K M B3 BB B2
BMBD BMCD BMCN BMCL BMCK BMDJ BMJ3
;o'ern$ent starts p(blishin# ret(rns of life ins(rance co$panies S C Sen appointe" as a special offer to !or4 o(t a report on ins(rance la! Co$$ittee (n"er Sicar set (p to e+a$ine Sen8s reprt &raft ins(rance bill intro"(ce" Ins(rance act 1BMCK passe" Co$$ittee hea"e" by Co!asOi set (p to st("y $alpractices an" ta4e correcti'e steps Ins(rance a$en"$ent act 1BMJ3 p(t in place base" on the reco$$en"ations of a co$$ittee (n"er S R Ran#anathan ,ife ins(rance corporation of In"ia set (p Re6ins(rance corporation of In"ia 1first In"ian re6ins(rer set (p Ins(rance act a$en"e" f(rther to pro'i"e effecti'e control o'er #eneral ins(rance co$panies 1re9(irin# increase" "eposits fro$ the$ also pro'i"es for settin# (p of tariff a"'isory -r"inance pro$(l#ate" to replace the #eneral ins(rance e$er#ency pro'ision act 1BMLB ;eneral ins(rance b(siness nationali)e" ;eneral ins(rance corporation set (p
BC BD BJ
BMJN BMJL BMNK
BN BL BK
BMLB BML2 BMLC
122
BM
BMMC
$alhotra co$$ittee constit(te" to $a4e
reco$$en"ations on pri'ate sector entry into 23 2B 22 2C 2D 2J 2N BMMD BMML BMMM April BM1 2333 A(ly BD1 2333 A(#(st BN12333 -ct 2C 12333 ins(rance 5alhotra co$$ittee s(b$its report Ins(rance re#(latory an" "e'elop$ent "e'elop$ent
a(thority co$es into e+istence. Ins(rance re#(latory an"
a(thority act cleare" by parlia$ent IR&A $a"e a stat(tory bo"y IR&A iss(es first set of #(i"elines for ins(rance co$panies IR&A opens !in"o!s for application fro$ pri'ate sector /irst three licences a!ar"e" to pri'ate
co$paniesPthree other recei'e'e in principle 2L &ecB212333 clearance ICICI pr("ential an" H&/C stan"ar" life la(nch ins(rance policies P beco$e first pri'ate co$panies to operate in In"ia since BML2 an" 2K &ec 2333 first life ins(rers in al$ost fi'e "eca"es ational ins(rance1ne! In"ia ass(rance 1oriental ins(rance an" (nite" In"ia ins(rance the fo(r p(blic sector #eneral ins(rance (n"er!riters "elin4e" fro$ #eneral ins(rance corporation 1!hich !as "esi#nate" as the 2M AanB12333 In"ian reins(rer &etarrification of #eneral ins(rance.
123
CHAPTER III: C-5PA <8S *ACE;R-= &

Ho! Reliance ,ife Ins(rance ca$e into e+istence?
Re iance Life In#"rance Co'*an& Li'ite( i# a *art of Re iance Ca*ita Lt(= of the Re iance 9 Ani Dhir"%hai A'%ani 2ro"*= The co'*an& acF"ire( 1<< *er cent #hareho (ing in A5P San'ar Life In#"rance Co'*an& in A"g"#t 2<<6= Ta+ing o!er A5P San'ar Life *ro!i(e( Re iance Life In#"rance a rea(&'a(e infra#tr"ct"re an( a *ortfo io=
Abo(t San$ar life ins(rance

A5P San'ar Life In#"rance 8a# a Koint !ent"re %et8een A5P/ A"#tra ia an( the San'ar 2ro"*= Cea(F"artere( in Chennai/ A5P San'ar ha( o!er ;< office# acro## the co"ntr&/ ;/<<< agent#/ an( 'ore than ;<< e'* o&ee#=
Abo(t the co$pany

Re iance Life In#"rance Co'*an& Li'ite( i# a *art of Re iance Ca*ita Lt(= of the Re iance 9 Ani Dhir"%hai A'%ani 2ro"*= Re iance Ca*ita i# one of In(ia:# ea(ing *ri!ate #ector financia #er!ice# co'*anie#/ an( ran+# a'ong the to* 3 *ri!ate #ector financia #er!ice# an( %an+ing co'*anie#/ in ter'#
123
of net 8orth= Re iance Ca*ita ha# intere#t# in a##et 'anage'ent an( '"t"a f"n(#/ #toc+ %ro+ing/ ife an( genera in#"rance/ *ro*rietar& in!e#t'ent#/ *ri!ate eF"it& an( other acti!itie# in financia #er!ice#= Re iance Ca*ita Li'ite( .RCL0 i# a Non9Ban+ing Financia Co'*an& .NBFC0regi#tere( 8ith the Re#er!e Ban+ of In(ia "n(er #ection 369IA of the Re#er!e Ban+ of In(ia Act/ 1;33=Re iance Ca*ita #ee# i''en#e *otentia in the ra*i( & gro8ing financia #er!ice# #ector in In(ia an( ai'# to %eco'e a (o'inant * a&er in thi# in("#tr& an( offer f" & integrate( financia #er!ice#= Re iance Life In#"rance i# another #te* for8ar( for Re iance Ca*ita Li'ite( to offer nee( %a#e( Life In#"rance #o "tion# to in(i!i("a # an( Cor*orate= I$portant e'ents 6 (In history of Reliance ,ife Ins(rance Co$pany ,i$ite") Reliance ,ife Ins(rance #ets IR&AQs reco#nition 2 /ebr(ary 233N
Reliance ,ife to #et a##ressi'e
22 -ctober 233J
Anil A$bani snaps (p A5P San$ar
B A(#(st 233J
126
Corporate profile
CE-
5r. P an"a#opal
C/-
5r. RaOesh *ahl
C D J N L K
C5C-%ICE PRESI&E T(#ro(p infrastr(ct(re) APP-I TE& ACT=AR< CHIE/ I %EST5E T -//ICER HEA&6 HR
5r. Rohit ;a(ra' 5(ll 5r. E.%. Srini'asan 5r. E. S(resh *ab( 5s. Po(rni$a ;(pte 5r. R Ran#araOan 5#= 5anee#ha Tha+"r
12>
Str(ct(re of Reliance ,ife Ins(rance Co$pany ,i$ite" at *ara4ha$ba Roa"1 Conna(#ht Place1 e! &elhi.
Regiona %"#ine## hea(
Area hea(
E?ec"ti!e #a e# 'anager
Senior #a e# 'anager
Sa e# 'anager
Trainee #a e# 'anager
12A
Re iance Life In#"rance Co'*an& ha# in a #i? centre# 8hich are ocate( in Conna(#ht place 1 ehr( Place1 Aana4 p(ri1 &!ari4a1 oi"a1 ;(r#aon = - -/ A;E CIES6 K33 -. -/ TIE& A;E CIES6B23 -. -/ C-RP-RATE A;E C<6N3
Pro"(ct of the co$pany

I &I%I&=A, SCHE5ES SERIA, =5*ER 1 2 PR-&=CT A5E &ESCRIPTI-
Reliance 5oney ;(arantee Un(er thi# * an the in!e#t'ent ri#+ Plan Reliance En"o!$ent Plan in the in!e#t'ent *ortfo io i# %orne %& the *o ic&ho (er Thi# * an 8i +ee* &o" financia & *re*are( 3 Reliance En"o!$ent Plan 3 Reliance Cash /lo! Plan for a the #*ecia
occa#ion# in &o"r ife Special Thi# in#"rance *o ic& i# (e#igne( for *eo* e 8ho 8i#h to co'%ine #a!ing# 8ith e?ten(e( #ec"rit& Thi# in#"rance *o ic& i# (e#igne( for *eo* e 8ho 8i#h to #a!e 'one& for a f"t"re ti'e= Thi# in#"rance *o ic& i# (e#igne( for *eo* e 8ho 8i#h to #a!e 'one& for a f"t"re ti'e= Thi# in#"rance *o ic& i# (e#igne(
12E
Reliance Chil" Plan
>
Reliance Ter$ Plan
for tho#e 8ho on & 8ant ife co!er for the *rotection of their fa'i &/ an( (o not 8i#h to #a!e for A Reliance Whole ,ife Plan the'#e !e# Thi# in#"rance *o ic& i# (e#igne( for *eo* e 8ho (o not 8i#h to a!ai of an& %enefit# the'#e !e# %"t 8i#h to create an i''e(iate e#tate to *rotect their fa'i & %& a!ai ing of in#"rance co!er on E Reliance Plan 5ar4et their ife at a !er& o8 co#t= Ret(rn Re iance 5ar+et Ret"rn F"n( i# the "nit9 in+e( *ro("ct that he *# &o" in!e#t in the financia 'ar+et# in a co'%ination of in!e#t'ent ; in#tr"'ent# of &o"r choice Reliance ;ol"en <ears Plan Re iance 2o (en Year# P an i# a f e?i% e *ac+age that *ro!i(e# free(o' of choice in choo#ing the t&*e of in!e#t'ent/ ife co!er/ !e#ting o*tion# #"ch a# co''"ting 1< Reliance Si$ple Ter$ Plan an( ann"it& o*tion# Re iance Si'* e Ter' P an i# a co#t9effecti!e/ *"re ife in#"rance * an that offer# &o" co'*rehen#i!e an( affor(a% e co!erage for a i'ite( *erio( of ti'e to #"it &o"r nee(#
INDIAN INSTITUTE OF FINANCE 12;
11
Reliance Special Ter$ Plan
Re iance S*ecia Ter' P an i# a *"re ife in#"rance * an that offer# &o" co'*rehen#i!e an( affor(a% e co!erage for a i'ite( *erio( of
12
ti'e to #"it &o"r nee(# Reliance Cre"it ;(ar"ian Re iance Cre(it 2"ar(ian P an Plan en#"re# that &o"r ho"#ing oan#/ *er#ona oan# or e!en o"t#tan(ing cre(it car( %i # are *ai( in the e!ent of "nti'e & (e'i#e= Th"# +ee*ing &o" an( &o"r fa'i & *rotecte( fro' the %"r(en an( the 8orr& of (e%t in #"ch a #it"ation Cre"it Re iance S*ecia Cre(it 2"ar(ian P an he *# &o" an( &o"r fa'i & a!oi( #"ch #it"ation# %& #ec"ring &o"r ho"#ing oan#/ *er#ona oan# an( e!en cre(it car( *a&'ent#= Dhat 'a+e# the P an #*ecia i# the fact that on #"r!i!a at 'at"rit&/ a *re'i"'# *ai( for &o"r %a#ic *o ic& 8i %e ret"rne( to &o" Reliance Connect 2 ,ife Re iance Connect 2 Life P an he *#
13
Reliance
Special
;(ar"ian Plan
13
Plan
&o" %"i ( #ec"rit& an( #a!ing# for a %etter to'orro8
13<
E5P,-<EE *E E/IT P,A S
131
SERIA, =5*ER B
PR-&=CT A5E Reliance Ter$ Policy
&ESCRIPTI-
;ro(p Re iance 2ro"* Ter' A##"rance Po ic& i# a Ass(rance one &ear Rene8a% e Ter' A##"rance contract= The %enefit i# *a&a% e on the ha**ening of the contingenc& ("ring one &ear= At the en( of the &ear/ the contract 'a& %e rene8e( E&,I A e#ta% i#h'ent# 8ith at ea#t 1< f" 9ti'e *er'anent e'* o&ee# an( to 8ho' the E'* o&eeR# Pro!i(ent F"n( an( 5i#ce aneo"# Pro!i#ion# Act/ 1;62 a** ie#/ ha!e a #tat"tor& ia%i it& to #"%#cri%e to E'* o&eeR# De*o#it Lin+e( In#"rance Sche'e .EDLI0/ to *ro!i(e for ife in#"rance for a their e'* o&ee#= ;ro(p A grat"it& *o ic& that ref ect# &o"r co'*an&R# i(entit& an( 8hich high ight# the !a "e of the %enefit# &o" *ro!i(e to &o"r e'* o&ee#
Reliance Sche$e
Reliance
;rat(ity Policy
Reliance Policy
;ro(p A #"*erann"ation *o ic& that ref ect# &o"r co'*an&R# i(entit& an( 8hich high ight# the !a "e of the %enefit# &o" *ro!i(e to &o"r e'* o&ee#
S(perann(ation
132
CSR Policy in Reliance ,ife Ins(rance

Re iance Life In#"rance Co'*an& Li'ite( recogni#e# it# cor*orate #ocia re#*on#i%i it& co''it'ent# in it# !ario"# ro e#/ 8hich inc "(e in#"rer/ in!e#tor/ e'* o&er an( con#"'er= The& ref ect the#e co''it'ent# in a fa'i & of eight *o ice#B Stan"ar"s of b(siness con"(ct The& are co''itte( to en#"ring that o"r %"#ine## i# con("cte( in a re#*ect# accor(ing to rigoro"# ethica / *rofe##iona an( ega #tan(ar(#= C(sto$ers The& #ee+ to *ro!i(e o"r c"#to'er# 8ith a #er!ice ha 'ar+e( %&
integrit&/ F"a it& an( care= H($an ri#hts The& re#*ect the Uni!er#a Dec aration of C"'an Right# an( #ee+ to %e g"i(e( %& it# *ro!i#ion# in the con("ct of o"r %"#ine##= Wor4force The& are g"i(e( %& o"r ai' to %e the e'* o&er of choice in a co"ntrie# in 8hich 8e o*erate=
133
Health an" safety The& are co''itte( to *ro!i(ing a 8or+ing en!iron'ent 8hich i# %oth #afe an( fit for the inten(e( *"r*o#e an( en#"re# that hea th an( #afet& i##"e# are a *riorit& for a %"#ine## o*eration#= S(ppliers The& regar( #"** ier# a# o"r *artner# an( 8or+ 8ith the' to he * "# achie!e o"r *o ic& a#*iration# in the (e i!er& of o"r *ro("ct# an( #er!ice#= Co$$(nity The& #tri!e to %e a goo( cor*orate citi1en aro"n( the 8or (/ recogni#ing o"r re#*on#i%i it& to 8or+ in *artner#hi* 8ith the co''"nitie# in 8hich 8e o*erate= En'iron$ent The& are co''itte( to a *rogra''e of 'anage'ent/ contin"o"#
i'*ro!e'ent an( re*orting of o"r (irect an( in(irect i'*act#/ 8hich 'ar+# o"r contri%"tion to i'*ro!ing the 8or ( in 8hich 8e i!e= The& recogni#e that their %"#ine## acti!itie# ha!e (irect an( in(irect i'*act# on the #ocietie# in 8hich 8e o*erate= De en(ea!o"r to 'anage the#e in a re#*on#i% e 'anner/ %e ie!ing that #o"n( an( (e'on#tra% e *erfor'ance in re ation to cor*orate #ocia re#*on#i%i it& *o icie# an( *ractice# i# a f"n(a'enta *art of %"#ine## #"cce##=
133
The&
are co''itte( to contin"o"# i'*ro!e'ent in cor*orate #ocia
re#*on#i%i it& *rogra''e an( enco"rage o"r %"#ine## *artner# to #tri!e for 'atching *erfor'ance= Their %"#ine## "nit# are co''itte( to achie!e'ent of *o ic& o%Kecti!e#= Their *erfor'ance 8i %e *erio(ica & re!ie8e( an( e?terna & !erifie( to he * the' 'eet o"r *o ic& goa #= At a oca e!e / the hea(# of o"r %"#ine##e# 8i re!ie8 *rogre## at ea#t ann"a &= En'iron$ental policy It recogni#e# it# cor*orate re#*on#i%i itie# to8ar(# %oth the en!iron'ent an( the co''"nit& in it# !ario"# ro e# a# in#"rer/ in!e#tor/ e'* o&er an( con#"'er= The& %e ie!e in the i'*ortance of en!iron'enta *rotection an( i'*ro!e'ent= The& %e ie!e that the *"r#"it of %e#t en!iron'enta *ractice 'a+e# #o"n( co''ercia #en#e= Sco*e The cor*orate #ocia re#*on#i%i it& *o ic& a** ie# thro"gho"t the re iance 2ro"* an( go!ern# o"r a**roach to a o"r acti!itie#= Cor*orate o%Kecti!e# To *ro!i(e a reference *oint to g"i(e e'* o&ee# an( #ta+eho (er# on the !a "e# 8hich (ri!e the con("ct of o"r %"#ine## an( re ation#hi*# 8ith the 8or ( in 8hich 8e o*erate=
136
Cor*orate *rinci* e# an( *ractice Re iance Life In#"rance i# co''itte( to (e'on#trating re#*on#i%i it& in it# re ation#hi* 8ith the *eo* e=A %"#ine## "nit# 8i a ocate re#*on#i%i it& for (i##e'ination/ (i#c"##ion an( the e'%e((ing of the *rinci* e# (e#cri%e( in thi# #tate'ent into gro"* c" t"re/ an( *ro!i(e reg" ar an( ti'e & fee(%ac+ on *rogre##= The& 'anner= recogni#e that %"#ine## acti!itie# ha!e (irect an( in(irect The& are co''itte( to a *rogra''e of contin"o"#
en!iron'enta i'*act#/ an( en(ea!o"r to 'anage the#e in a re#*on#i% e i'*ro!e'ent to 'ini'i#e o"r i'*act# on the en!iron'ent an( 8i a #o enco"rage o"r %"#ine## *artner# an( 'e'%er# of the 8i(er co''"nit&/ of 8hich 8e are a *art/ to re("ce their#= Their %"#ine## "nit# thro"gho"t 8i #tri!e toB #ee+ to a** & %e#t *ractice in
en!iron'enta 'anage'ent= Thro"gh it# en!iron'enta *rogra''e/ the&
integrate
en!iron'enta
con#i(eration#
into
(e!e o*'ent
an(
i'* e'entation of cor*orate *o ic&/ %"#ine## (eci#ion 'a+ing/ (e!e o*'ent an( (e i!er& of
in#"rance$in!e#t'ent *ro("ct# an( #er!ice#/ *"rcha#ing an( #"** ier 'anage'ent@ e?* oit o**ort"nitie# to 'a?i'i#e efficienc& an( 'ini'i#e
en!iron'enta i'*act thro"gh o"r 8or+ing *ractice#/ in area# #"ch a#
13>
energ& 'anage'ent/ *a*er "#age/ 8a#te re("ction an( rec&c ing/ an( co''"nication#@ 'anage o"r %"i (ing# an( faci itie# %& integrating 'ea#"ra% e/ 'onitore( en!iron'enta action# into o"r %"#ine## * an#= (e!e o* h"'an re#o"rce# *o icie# 8hich 8i rai#e a8arene##/
enco"rage an( ena% e #taff to 'a+e an effecti!e contri%"tion to en!iron'enta i'*ro!e'ent/ %oth in 8or+ an( 8ithin the oca co''"nit&@ *ro'ote en!iron'enta %e#t *ractice a'ong#t o"r c ient# an( the %roa(er co''"nit&/ a# a**ro*riate@ *artici*ate in e?terna initiati!e# (e#igne( to i'*ro!e en!iron'enta a8arene## an( *erfor'ance= De 8i *erio(ica & re!ie8 o"r *erfor'ance to en#"re that 8e are 'eeting o"r *o ic& goa # an( 8e 8i *"% i#h re*ort# reg" ar &= Re iance Life In#"rance Co'*an& Li'ite( f" & recogni#e that each ha!e o"r *art to * a& in contri%"ting to en!iron'enta i'*ro!e'ent= The& rea(i & acce*t cor*orate co''it'ent# an( 8i contin"o"# & 8or+ to (e'on#trate re#*on#i%i it& in a en!iron'enta / #ocia an( co''"nit& i##"e#=
13A
H($an ri#hts policy Re iance Life In#"rance Co'*an& Li'ite( re#*ect# a f"n(a'enta h"'an right# an( 8i %e g"i(e( in the con("ct of it# %"#ine## %& the *ro!i#ion# of the Unite( Nation# Uni!er#a Dec aration of C"'an Right# .UNUDCR0 an( the Internationa La%o"r Organi#ation .ILO0 core a%o"r #tan(ar(#= P"r*o#e The *"r*o#e of thi# *o ic& i# to #et o"t the f"n(a'enta *rinci* e# on C"'an Right#/ 8hich Re iance Life In#"rance Co'*an& Li'ite( 8i #"**ort an( %e g"i(e( %& in the con("ct of it# %"#ine##= It (eter'ine# the re#*on#i%i itie# of gro"* f"nction# an( %"#ine## "nit# in #"**orting tho#e *rinci* e#= Sco*e Thi# *o ic& a** ie# to a 'e'%er# of the Re iance Life In#"rance Co'*an& Li'ite(=F"rther/ it 8i #ee+ to (ea 8ith %"#ine## *artner# 8ho a #o o%#er!e the *ro!i#ion# of the UNUDCR an( ILO core a%o"r #tan(ar(#= Cor*orate o%Kecti!e# To en#"re that a %"#ine## "nit# 'anage an( con("ct their %"#ine## in ine 8ith f"n(a'enta h"'an right# *rinci* e# an(/ 8ithin the #co*e of the co'*an&R# inf "ence/ to enco"rage it# %"#ine## *artner# to (o the #a'e= Cor*orate *rinci* e# an( *ractice A %"#ine## "nit# 8i (eter'ine ho8 the *rinci* e# of the UNUDCR an( ILO core a%o"r #tan(ar(# i'*act on their o*eration#= B"#ine## "nit hea(# 8i infor' the gro"*R# (irector of cor*orate #ocia re#*on#i%i it& of 'ateria
13E
i##"e# concerning h"'an right# an( 8i re*ort on *erfor'ance again#t thi# *o ic& ann"a &= H($an Ri#hts policy Re iance Life In#"rance Co'*an& Li'ite( re#*ect# a thro"gh it# %"#ine## *artner#= C"'an Right# *o icie# in arge co'*anie# are at a !er& ear & #tage of (e!e o*'ent= The& 8i ho8e!er contin"e to (e!e o* a# ti'e goe# %&= 8e contin"e to 'onitor an( a ign o"r *o ic& accor(ing to internationa & recogni#e( h"'an right# *rinci* e#= De are g"i(e( %& the *ro!i#ion# of the Unite( Nation# Uni!er#a Dec aration of C"'an Right# .UNUDCR0 an( the Internationa La%o"r Organi#ation .ILO0 core a%o"r *rinci* e#= De are a #o a #ignator& of the Unite( Nation# 2 o%a Co'*act/ 8hich in!o !e# "n(erta+ing# on the en!iron'ent/ h"'an right# an( a%o"r re ation# an( 8hich ai'# to *ro!i(e g"i(ance on ho8 the#e "n(erta+ing# #ho" ( %e f" fi e(= Re iance Life In#"rance Co'*an& Li'ite( a #o ha# inf "ence 9 !ia it# f"n( 'anage'ent or *"rcha#ing acti!itie# .#ee 2ro"* P"rcha#ing *o ic&0 9 o!er other co'*anie# an( their a**roach to h"'an right# in the 8a& the& con("ct their %"#ine## %oth interna & an( 8ith their #"** ier#= Thi# inf "ence #ho" ( %e i(entifie( an( a** ie( con#i#tent & aro"n( the gro"*=
=
f"n(a'enta
*rinci* e# on h"'an right#/ %oth in the con("ct of it# o8n %"#ine## an(
13;
Health 0 safety policy The i# co''itte( to *ro!i(ing a 8or+ing en!iron'ent 8hich i# %oth #afe an( fit for the inten(e( %"#ine## *"r*o#e= In (oing #o it 8i en#"re that it co'* ie# 8ith hea th an( #afet& egi# ation an( that hea th an( #afet& i##"e# are a 'atter of *riorit& for a %"#ine## o*eration#=
P"r*o#e The *"r*o#e of thi# *o ic& i# to #et o"t c ear & the 2ro"*R# a**roach to achie!ing it# hea th an( #afet& o%Kecti!e#/ the re#*on#i%i itie# of 2ro"* f"nction# an( %"#ine## "nit# an( the *ara'eter# 8ithin 8hich oca hea th an( #afet& *o icie# #ho" ( %e #et=
Un(er &ing Phi o#o*h& The 2ro"* i# co''itte( to *ro!i(ing a con#i#tent & #afe an( effecti!e 8or+ing en!iron'ent for a #taff/ inc "(ing contractor#/ c"#to'er# an( 'e'%er# of the *"% ic= In (oing #o it 8i / a# a 'ini'"'/ co'* & 8ith oca hea th an( #afet& egi# ation/ %"t 8i e?cee( tho#e reF"ire'ent# #ho" ( it %e nece##ar& to (o #o in or(er to (e i!er the cor*orate o%Kecti!e# #tate( %e o8=
Cor*orate O%Kecti!e# 1= To en#"re that thro"gho"t it# %"#ine## o*eration# the 2ro"* *ro!i(e# 8or+ing con(ition# for it# #taff/ c"#to'er# an( 'e'%er# of the *"% ic 8hich are con#i#tent & #afe an( fit for the inten(e( %"#ine## *"r*o#e=
13<
2= To 'eet/ a# a 'ini'"'/ oca hea th an( #afet& egi# ation/ or e?cee( it a# reF"ire( in or(er to achie!e the 2ro"*R# hea th an( #afet& cor*orate o%Kecti!e#= 3= To en#"re that the re*"tation of the 2ro"* i# not (a'age( %& fai "re# in hea th an( Safet& *ractice an( that the 'anage'ent of hea th an( #afet& 2ro"*8i(e contri%"te# to effecti!e cor*orate go!ernance=
Cor*orate Princi* e# an( Practice The 2ro"* i# co''itte( to e#ta% i#hing an( 'aintaining an effecti!e hea th an( #afet& regi'e thro"gho"t it# %"#ine## o*eration# =A %"#ine## "nit# 8i e#ta% i#h a**ro*riate re#*on#i%i itie#/ organi#ation# an( *roce##e# to ena% e co'* iance 8ith thi# *o ic&= C(sto$er policy Re iance Life In#"rance Co'*an& Li'ite( a'%ition i# to %e the 'o#t tr"#te( #a!ing#/ in!e#t'ent# an( in#"rance *ro!i(er= De #ee+ to earn the tr"#t of o"r c"#to'er# %& i#tening/ "n(er#tan(ing an( *ro!i(ing for their nee(#= Re iance Life In#"rance Co'*an& Li'ite( co''it'ent to c"#to'er# goe# %e&on( oca ega an( reg" ator& reF"ire'ent#= It i# a%o"t %enefiting f" & fro' the co'*etiti!e a(!antage that co'e# fro' *"tting the c"#to'er at the heart of the %"#ine##= Re iance Life In#"rance Co'*an& Li'ite( recogni#e# the i'*ortant ro e of a(!i#er# an( (i#tri%"tor# in the re ation#hi* 8e ha!e 8ith 'an& of o"r c"#to'er#=
Re iance Life In#"rance Co'*an& Li'ite( Perfor'ance again#t thi# *o ic& i# re!ie8e( again#t a c ear #et of 'ea#"re# on an ann"a %a#i# an( a *ercentage of #enior 'anage'ent %on"# 8i (e*en( on thi# c"#to'er 'ea#"re= P"r*o#e To en#"re that it 'a+e# #"#taina% e *rogre## to8ar(# o"r
a'%ition %& i#tening/ "n(er#tan(ing an( *ro!i(ing for the nee(# of o"r c"#to'er#= Thi# *o ic& *ro!i(e# c arit& a# to 8hat thi# 'ean#= To ena% e "# to co''"nicate effecti!e & on o"r *rogre## 8ith o"r +e& #ta+eho (er#/ inc "(ing the reg" ator= Un(er &ing *hi o#o*h& De %e ie!e that %eing c"#to'er foc"#e( i# !ita if 8e are to earn the tr"#t of o"r c"#to'er#= It i# on & %& ha!ing c"#to'er# 8ho tr"#t "# to (e i!er that 8e 8i %e a% e to create #"#taina% e #hareho (er !a "e= C"#to'er# 8ho tr"#t "# are 'ore i+e & toB re'ain 8ith "#B *er#i#tenc& i# a +e& (ri!er of !a "e %"& *ro("ct# fro' "# %eco'e a(!ocate# to co eag"e#/ frien(# an( fa'i ie#=
Beco'ing tr" & c"#to'er9foc"#e( 'ean# that the tota c"#to'er e?*erience 9 the *ro("ct#/ #er!ice an( co''"nication# 9 8or+ together for o"r c"#to'er#= Thi# 8i in!o !e c" t"ra change reF"iring a Rho i#tic a**roachR= For
e?a'* e/ it i# not #"fficient to thin+ that the #a e#*er#on or ca
centre
o*erator i# Tre#*on#i% eT for c"#to'er #er!ice= Thi# nee(# to *er'eate a that 8e (o@ inc "(ing ho8 8e (e#ign o"r *roce##e#/ (e#ign an( *rice o"r *ro("ct#/ an( recr"it an( re8ar( o"r *eo* e=
Cor*orate o%Kecti!e# To achie!e o"r #tate( a'%ition %& #trengthening the tr"#t of o"r c"#to'er# = To ha!e in * ace a c ear fra'e8or+ 8hich #"**ort# co''it'ent to a** &ing high #tan(ar(# acro## it# %"#ine##e# an( o"r co''it'ent Princi* e# for B"#ine##= To ha!e in * ace *roce##e# to 'onitor an( re*ort on *rogre## again#t the a%o!e=
Cor*orate *rinci* e# an( *ractice It 8i en#"re that o"r c"#to'er# are at the core of the 8a& in 8hich 8e r"n o"r %"#ine## %&B (e!e o*ing an( *ro'oting *ro("ct# an( #er!ice# 8hich 'eet the nee(# of o"r c"#to'er# *ro!i(ing c"#to'er# 8ith c ear infor'ation an( goo( #er!ice 8hen the& %"& o"r *ro("ct# 'aintaining a**ro*riate an( effecti!e re ation#hi*# 8ith o"r c"#to'er# an( *ro!i(ing the' 8ith goo( #er!ice after the& ha!e %o"ght a *ro("ct=
133
The& recogni#e the i'*ortant ro e of a(!i#er# an( (i#tri%"tor# in the re ation#hi* 8e ha!e 8ith 'an& of o"r c"#to'er# an( 8e 8i oo+ for 8a&# to '"t"a & %enefit fro' c"#to'er in#ight#= In a((ition 8e 8i 'anage conf ict# of intere#t fair & 8here 8e ha!e an intere#t in an a(!i#or= It i# recogni#e( that %"#ine## "nit# are %e#t * ace( to "n(er#tan( an( re#*on( to the *artic" ar ega / co'*etiti!e an( c" t"ra en!iron'ent# in 8hich the& o*erate= Accor(ing & %"#ine## "nit# ha!e the (i#cretion to (eter'ine ho8 %e#t to inter*ret the o!era fra'e8or+ an( a** & the *rinci* e# an( *ractice# to c"#to'er #trategie# a**ro*riate to their oca 'ar+et#= The 2ro"* %ran( (e!e o*'ent (irector 8i *ro!i(e #"**ort 'ateria # an( goo( *ractice g"i(e# to a##i#t %"#ine##e#/ faci itating the #haring of +no8 e(ge an( e?*erti#e acro## the gro"*= 8i a(o*t a co''on 'ea#"re for re*orting *rogre##= %e %a#e( on c"#to'er a(!ocac&=
U ti'ate &/ thi# 8i
Co8e!er/ gi!en that 'o#t %"#ine##e# c"rrent & 'ea#"re either #ati#faction or a 'i? of #ati#faction an( a(!ocac&/ initia & %oth 'ea#"re# 8i %e 'onitore( an( re*orte(= The #*ecific 'ea#"re# 8i carr& thro"gh to Re'"neration Co''ittee 8ho 8i a##e## *erfor'ance again#t interna an( e?terna co'*arator#= Dor+ 8i %e "n(erta+en to (e!e o* an e?terna %ench'ar+ a'ong o"r +e& co'*etitor#=
133
B"#ine## Unit# 8i
(eter'ine an( 'onitor a**ro*riate 'ea#"re# #itting
%eneath the o!erarching 'ea#"re/ (e*en(ing on their oca nee(#= It i# recogni#e( that retention 8i %e a +e& %"#ine## 'ea#"re=
136
CHAPTER I%:
5ETH-&-,-;<
For the #t"(& of gi!en o%Kecti!e# an( a (etai e( ana &#i# I ha( (e#igne( a F"e#tionnaire to fin( the fact an( fig"re# of re iance in#"rance co'*an&= The #t"(& ai'# to co!er #ta+eho (er# 8hich refer to e'* o&ee#/ 'anager#/ c"#to'er#/ #"** ier#/ the oca co''"nit&/ an( the #toc+ho (er#= Each #ta+eho (er gro"* ha# a contract"a re ation#hi* 8ith the fir'/ #ince the& recei!e the re'"neration the& free & agree( to in a *re9e#ta% i#he( agree'ent .contract0= ,A Stakeholder Theory of the (odern Corporation- gi!en %& Profe##or of B"#ine## A('ini#tration 7 Director of The O ##on Center of A** ie( Ethic# at the Uni!er#it& of Qirginia #a&# that %oth the #toc+ho (er# an( #ta+eho (er# ha!e a right to (e'an( certain action# fro' 'anage'ent %eca"#e a ha!e a !e#te( #ta+e in the cor*oration T8o t&*e# of #ta+eho (er are there 8hich accor(ing to arro! "efinition 9 A #ta+eho (er inc "(e# tho#e gro"*# 8ho are !ita to the #"r!i!a an( #"cce## of the organi1ation= Wi"e "efinition 9 A #ta+eho (er inc "(e# an& gro"* or in(i!i("a 8ho can affect of i# affecte( %& the cor*oration=
&esi#nin# of 9(estionnaire
The F"e#tionnaire ai'# to #t"(& e'* o&ee# an( i# on ten *o##i% e *ara'eter# 8hich areB Dor+/ Interaction 8ith #"*erior/ their co8or+er# ethica *o ice#/ Pro'otion/ Incenti!e#/ Pa&/ C"'an right#/ Cea th an( #afet&= The re#" t
INDIAN INSTITUTE OF FINANCE 13>
ai'# to fin( o"t ho8 '"ch #ta+eho (er# are ta+en care of #*ecifica & of e'* o&ee 8or+ing in the organi1ation=Dith that ai' P"e#tionnaire i# a# (e#igne(B SURVEY ON CORPORATE SOCIAL RESPONSIBILITY Ein"ly $ar4 on fi'e6point scale as yo( feel is appropriate an" relate" to yo(r Oob. (Circle the n($ber) .There is no ri#ht or !ron# ans!er. 5< W-RE
SI5PLE 6 CREATIQE 6 USEFUL 6 UNPLEASANT 1 2 3 3 6 3 3 2 1 3 3 2 1 3 3 2 1
CO5PLEY
ROUTINE
DORTCLESS
PLEASANT
2IQE SENSE OF ACCO5PLISC5ENT 6 3 3 2 1
ENDLESS
5< S=PER%IS-R
CO5PETENT 6 TACTFUL 6 3 3 2 1 3 3 2 1 I5POLITE INCO5PETENT
13A

PRAISE 2OOD DORN 6 2IQES 5E NO FREEDBACN 1 2 3 3 6 3 3 2 1 TELLS 5E DCERE I STAND CARD TO PLEASE
5< C-W-REERS
BORIN2 1 RESPECT 5Y PRIQACY 6 FRIENDLY 6 RESPONSIBLE 6 3 3 2 1 3 3 2 1 IRRESPONSIBLE 3 3 2 1 CARD TO 5EET 2 3 3 6 2IQES NO PRIQACY STI5ULATIN2
5< PA<
2OOD 6 CI2CLY PAID 6 3 3 2 1 3 3 2 1 UNDERPAID BAD
INCO5E PROQIDE NECESSATIES 1 2 3 3 6
INCO5E PROQIDE LUYURIES
13E
5< PR-5-TI- S
UNFAIR .not c ear0 1 RE2ULAR 6 3 3 2 1 ARBITRARY 6 2OOD OPPORTUNITIES 6 3 3 2 1 3 3 2 1 LI5ITED OPPORTUNITIES 2 3 3 6 INFREPUENT FAIR .c ear *o ic&0
PRO5OTIO5N ON ABILTY
HEA,TH A & SA/ET<

SATISFACTORY 6 3 3 2 1 DISSATISFACTORY
/I A CIA, I CE TI%ES -R ;I/TS

ADE PUATE 6 3 3 2 1 INADEPUTE
EYTRA PERNS FOR EYTRA COURS ADEPUATE 6 3 3 2 1 INADEPUATE
13;
H=5A
RI;HTS (Cirle the state$ent accor"in# to the "e#ree of
i$portance in yo(r life 1!here B@ least i$portant an" J @ $ost i$portant)

EF"ita% e treat'ent for a e'* o&ee# of the co'*an&= Right of e'* o&ee# to +no8 a%o"t (anger in the Ko%= In(i!i("a right to *er#ona *ri!ac&= Right to infor'ation re ate( to '& Ko% = = 1 2 3 3 1 2 3 6
3 6 6 6
1 2 3 3 1 2 3 3
In(i!i("a right to co'* ete i%ert& in action a# ong a# other# right# are #i'i ar & re#*ecte(= 1 2 3 3 6
W-REI ; E %IR- 5E T
I# '& 8or+ing en!iron'ent #"ita% e in or(er to con("ct '& 8or+H
UNSUITABLE SUITABLE
1 Are f"rnit"re:# #"ita% eH

2OOD
6
BAD
6 e!e H
2OOD
Do &o" fin( Co'*"ter faci itie# a(eF"ate/ other 8or+ ena% ing too # "* to the (e#ire(
BAD
6 Co"r# of 8or+
ADEPUATE
1
INADEPUATE
2 1 2
1 3 3 6
To 8rite a etter nor'a & ho8 'an& etter# (o I (raftH
16<
A-* E%A,=ATI- (Choose any one an" tic4 it).

5& *erfor'ance i# %a#e( on n($ber of c(sto$er ?9(ality of c(sto$ers? both A' I gi!en a(eF"ate #+i # an( training to *erfor' the Ko% 8e H ;i'en ?not #i'en= Can I K"#tif& '& i'*ortance in organi1ationH Can ? cannot. Ca!e I %een gi!en Ko% (e#cri*tion nice &H ;i'en ?not #i'en Doe# organi1ationa en!iron'ent i# ca*a% e of 'oti!ating for goo( 8or+ <es?no
Calc(lation $etho"
After *i ot #"r!e& I inter!ie8e( e'* o&ee# of Re iance Life In#"rance TCS an( #at&a' regar(ing e!er& *ara'eter in '& F"e#tionnaire an( co ecte( #a'* e# fro' re iance ife in#"rance at three hierarchica e!e #=I a #o co ecte( #a'* e# (e*icting o*inion of e'* o&ee# of TATA CONSULTANCY AND SATYA5 CO5PUTERS 8hich are co'*anie# +no8n for their CSR *o icie#= I then co"nte( #core# of each e'* o&ee for each *ara'eter an( fo"n( 'ean #core of the *eo* e con#i(ere( for each categor&= I then co'*are( their 'ean an( %a#e( '& inter*retation on that %a#i#= I trie( to %ring c ear *ict"re of the e!e of CSR 8hich the#e co'*anie# 8ere rea & i'* e'enting =In thi# *roce## the for'" a "#e( areB 5EAN Z S"' of #core# of a e'* o&ee# "n(er a *ara'eter N"'%er of e'* o&ee# STANDARD DEQIATIONZ
161
CHAPTER %
&ATA
-bser'ation of Reliance Life Insurance
5< PA< B 2 C D J $ean stan"ar" "e'iation 5< PR-5-TIB 13 2 12 C 13 D 12 J 13 $ean B2.K stan"ar" "e'iation 3.LDKCCBDLL HEA,TH A & SA/ET< B 3 2 3 C 3 D 3 J 6 $ean D.2 stan"ar" "e'iation 3.D 1st level (ag ! E ; ; E A K.2 3.LDKCCBDLL "n# level ss ! 13 16 1A 13 16 BD.K B.C2NNDMMBN 13 13 13 13 11 B2.K 3.MLMLMJKML 3 3 3 2 3 C 3.NC2DJJJC2 $r# level(s ! 13 13 13 16 13 BC.K 3.LDKCCBDLL 13 16 1A 1A 13 BJ.2 B.N 3 3 3 6 2 C.N B.3BMK3CM3C
162
/I A CIA, I CE TI%ES A & ;I/TS B 2 C D J $ean stan"ar" "e'iation H=5A RI;HTS B 2 C D J $ean stan"ar" "e'iation B 2 C D J $ean stan"ar" "e'iation 1> 1; 1> 1E 1A BL.2 B.BNNBM3CLM 16 1> 13 16 16 BJ 3.NC2DJJJC2 13 13 13 13 13 BC.D 3.DKMKMLMDM 13 13 12 13 13 BC.D 3.K 1E 1A 1E 1; 1A BL.K 3.LDKCCBDLL 13 13 16 13 13 BC.N 3.K > A E 6 > N.D B.3BMK3CM3C > 6 > A > N 3.NC2DJJJC2 3 3 3 6 2 C.N B.3BMK3CM3C
W-REI ; E %IR- 5E T
163
Co$parati'e "ata of three co$panies:

PARA5ETERS W-RE B 2 C D J N L K M B3 5EA STA &AR& &E%IATI5< S=PER%IS-R B 2 C D J N L K M B3 5EA STA &AR& &E%IATIR,I TCS SAT<A5
1A 13 2< 2< 13 16 1A 13 1E 1; BN.N 2.JLNKBMLDJ 1E 16 16 1; 1> 1> 1E 16 1; 1A BN.K B.JCN22MBJ
13 13 13 16 1> 1> 16 13 13 1> BD.D B.2K3N2DKDL ; 13 A 1> 12 13 12 12 13 13 B2.B 2.CKJCL23KK
1E 16 1E 1E 1A 1; 1E 1A 1E 1A BL.J B.32DNMJ3LL 13 13 13 13 16 11 13 16 13 13 BC.K B.3LL3C2MNB
163
5< C-W-REER B 2 C D J N L K M B3 5EA STA &AR& &E%IATI5< PA< B 2 C D J N L K M B3 5EA STA &AR& &E%IATI-
R,I 16 13 16 13 13 13 13 16 13 1A BD.J B.32DNMJ3LL E ; ; E A E E ; ; ; K.D 3.NNCC2DMJK
TCS 12 16 E 1A 1> 1< 16 1< 11 11 B2.J 2.KL22KBC2C ; ; A 12 > E E ; ; 11 K.K B.NNBC2DLLC
SAT<A5 1; 1> 1E 1; 1< 1E 16 16 1; 1; BN.K 2.LDMJDJDBL ; 1< 11 11 ; > E 1< ; E M.B B.DDJNKC22M
166
5< PR-5-TIB 2 C D J N L K M B3 5EA STA &AR& &E%IATIHEA,TH A & SA/ET< B 2 C D J N L K M B3 5EA STA &AR& &E%IATI-
R,I 13 13 12 13 13 13 12 12 13 13 BC 3.LLDJMNNNM 3 3 3 3 3 3 3 3 3 3 C.L 3.DJK2JLJNM
TCS E 1< ; 13 ; E 12 1< 1< ; M.M B.LJLKCMJKC 2 3 2 3 3 3 3 3 3 3 C.2 3.LDKCCBDLL
SAT<A5 12 13 1A 16 16 12 1< 16 12 1A BC.M 2.2BBCCDDCM 6 3 6 6 3 6 3 3 6 6 D.N 3.DKMKMLMDM
16>
/I A CIA, I CE TI%ES A & ;I/TS B 2 C D J N L E ; B3 5EA STA &AR& &E%IATIH=5A RI;HTS B 2 C D J N L K M B3 5EA STA &AR& &E%IATI> > A A A > > 6 E A >=6 3.K3N22JLLJ 1E 13 23 1E 2< 2< 1A 1E 21 13 BK.B C.3DLMJ3BCB TCS 3 3 2 A 2 C 3 3 3 6 3=E B.D 11 22 26 22 16 26 16 1> 1E 13 BK.C D.NDKNJJL2 SAT<A5 3 6 A M 6 2 > 6 3 > 6=3 B.LMBNDL2KL 2< 21 1; 2< 23 2< 1A 1E 2< 2< BM.M B.LJLKCMJKC
16A
W-REI ; E %IR- 5E T 1 2 3 3 6 > A E ; 1< 5EA STA &AR& &E%IATI-
R,I 16 13 1E 16 16 16 13 1E 1E 13 BJ.J B.LDND2DM2
TCS 11 13 A 21 12 11 16 13 11 12 B2.L C.DCNJNK3JJ
SAT<A5 1A 1; 1E 21 21 22 1; 1E 1> 2< BM.B B.KBCKCJLBJ
16E
CHAPTER %I
A A,<SIS -/ THE &ATA
Interpretation of reliance life ins(rance
W-RE
20 15 sc%res 10 mean 5 0 mean
1 19.4
2 13.4 &ierarc&'
3 20
Dhi e ana &1ing CSR in re iance ife in#"rance fo o8ing *oint# are reF"ire( to %e +e*t in 'in(= Para'eter "n(er con#i(erationB DORN 5a?i'"' 'ar+#B 26 P"e#tion# a#+e( co!ere( that 8hether their 8or+ i# #i'* e9 co'* e?/ Creati!e 9ro"tine/ "#ef" 98orth e##/ "n* ea#ant9 * ea#ant/ gi!e #en#e of acco'* i#h'ent or i# en( e##= The o%#er!e( (ata regar(ing fir#t *ara'eter DORN #ignifie# fo o8ing *oint#B Agenc& (e!e o*'ent 'anager e!e B 1;=3 Senior Sa e# 5anager Le!e B 13=3 Sa e# 5anager Le!e B 2<
INDIAN INSTITUTE OF FINANCE 16;
Since thir( categor& of #' #ho8e( 'a?i'"' #ati#faction/ their 8or+ing con(ition i# %e#t a'ong a three/ %"t ##' e!e #ho8e( (i#content'ent #o co'*an& '"#t concentrate at that e!e an( #ee+ 'ea#"re to #ort o"t their *ro% e' to get a %etter #core/ ag' e!e i# a #o #ati#fie( 8ith 8or+ing con(ition #o K"#t %& chec+ing *re!ai ing con(ition# at the e!e of ##' co'*an& can i'*ro!e it# efficienc& an( can #ho8 %etter re#*on#i!ene##= to8ar(# e'* o&ee#=
1><
5< C-W-REER
15
10 SCORES 5 MEAN
0 MEAN
1 8.2
2 14.8 (IERARC(Y
3 13.8
Dhi e ana &1ing CSR in re iance ife in#"rance fo o8ing *oint# are reF"ire( to %e +e*t in 'in(= Para'eter "n(er con#i(erationB 5Y CODORNER 5a?i'"' 'ar+#B 2< P"e#tion# a#+e( co!ere( that 8hether their co8or+er# 8ere %oring or #ti'" ating/ re#*ect their *ri!ac& or gi!e# no *ri!ac& frien( & or har( to 'eet/ re#*on#i% e or irre#*on#i% e= The o%#er!e( (ata regar(ing the *ara'eter 5Y CODORNER #ignifie# fo o8ing *oint#B Agenc& (e!e o*'ent 'anager e!e B E=2 Senior Sa e# 5anager Le!e B 13=E Sa e# 5anager Le!e B 13=E Since #econ( categor& of ##' #ho8e( 'a?i'"' #ati#faction/ their co8or+er# are %e#t a'ong a three/ %"t ag' e!e #ho8e( !er& high (i#content'ent #o co'*an& '"#t concentrate at that e!e an( #ee+ #erio"# 'ea#"re# to #ort o"t their *ro% e' to get a %etter #core/ #' e!e i# a #o #ati#fie( 8ith co8or+er# #o K"#t %& chec+ing *re!ai ing con(ition# at the
1>1
e!e of ag' co'*an& can i'*ro!e it# efficienc& an( can #ho8 %etter re#*on#i!ene## to8ar(# e'* o&ee#= 5< PA<
15
10 SCORES 5 0 mean mean
1 8.2
2 14.8 (IERARC(Y
3 13.8
Dhi e ana &1ing CSR in re iance ife in#"rance fo o8ing *oint# are reF"ire( to %e +e*t in 'in(= Para'eter "n(er con#i(erationB 5Y PAY 5a?i'"' 'ar+#B 16 P"e#tion# a#+e( co!ere( that 8hether their co8or+er# 8ere %oring or #ti'" ating/ re#*ect their *ri!ac& or gi!e# no *ri!ac& frien( & or har( to 'eet/ re#*on#i% e or irre#*on#i% e= The o%#er!e( (ata regar(ing the *ara'eter 5& PAY #ignifie# fo o8ing *oint#B Agenc& (e!e o*'ent 'anager e!e B E=6 Senior Sa e# 5anager Le!e B 13=E Sa e# 5anager Le!e B 13=E Since #econ( categor& of ##' #ho8e( 'a?i'"' #ati#faction/ their *a& e!e i# %e#t a'ong a three/ %"t ag' e!e #ho8e( high (i#content'ent #o co'*an& '"#t concentrate at that e!e an( #ee+ #erio"# 'ea#"re# to #ati#f&
1>2
the' to get a %etter #core/ #' e!e i# a #o #ati#fie( 8ith *a& #o K"#t %& chec+ing the e!e of ag' an( #ati#f&ing the'/ co'*an& can i'*ro!e it# efficienc& an( #ho8 %etter re#*on#i!ene##= 5< PR-5-TI-
16 15 SCORES 14 13 12 11 mean 1 12.8 2 12.8 (IERARC(Y 3 15.2 mean
Dhi e ana &1ing CSR in re iance ife in#"rance fo o8ing *oint# are reF"ire( to %e +e*t in 'in(= Para'eter "n(er con#i(erationB 5Y PRO5OTION 5a?i'"' 'ar+#B 2< P"e#tion# a#+e( co!ere( that 8hether their *ro'otion# are "nfair9fair/ reg" ar9infreF"ent/ *ro'otion i# on a%i it& or i# ar%itrar&/ are their goo( o**ort"nitie# or i'ite( o**ort"nitie#= The o%#er!e( (ata regar(ing thi# *ara'eter #ignifie# fo o8ing *oint#B Agenc& (e!e o*'ent 'anager e!e B 12=E Senior Sa e# 5anager Le!e B 12=E Sa e# 5anager Le!e B 16=2 Since thir( categor& of #' #ho8e( 'a?i'"' #ati#faction/ their *ro'otion *o icie# are %e#t a'ong a three/ %"t ##' an( ag' e!e #ho8e( #a'e
1>3
reaction #o co'*an& '"#t ta+e #te*# to get a %etter #core= 12=E i# #ati#factor& e!e %"t there are chance# of i'*ro!e'ent to a great e?tent= Thi# can i'*ro!e o!era CSR #core/ #ince *ro'otion# ha!e great 'oti!ating *o8er= HEA,TH A & SA/ET<
mean
6 4 SCORES 2 0 mean mean 1 4.2 2 3 (IERARC(Y 3 3.6
Dhi e ana &1ing CSR in re iance ife in#"rance fo o8ing *oint# are reF"ire( to %e +e*t in 'in(= Para'eter SAFETY 5a?i'"' 'ar+#B 6 P"e#tion# a#+e( co!ere( that 8hether their hea th an( #afet& 'ea#"re# an( *o icie# are a(eF"ate or ina(eF"ate= The o%#er!e( (ata regar(ing fir#t *ara'eter DORN #ignifie# fo o8ing *oint#B Agenc& (e!e o*'ent 'anager e!e B 3=2 Senior Sa e# 5anager Le!e B 3 Sa e# 5anager Le!e B 3=> "n(er con#i(erationB CEALTC AND
1>3
Since fir#t categor& of ag' #ho8e( 'a?i'"' #ati#faction/ their hea th an( #afet& con(ition# are %e#t a'ong a three/ %"t ##' e!e #ho8e( # ight (i#content'ent #o co'*an& '"#t concentrate at thi# e!e an( #ee+ 'ea#"re to #ort o"t their *ro% e' to get a %etter #core/ #' e!e i# a #o #ati#fie( 8ith hea th *o icie# %"t #ti there i# ho*e for i'*ro!e'ent= /I A CIA, I CE TI%ES A & ;I/TS
8 6 SCORES 4 2 0 mean 1 6.4 2 6 (IERARC(Y 3 3.6 mean
Dhi e ana &1ing CSR in re iance ife in#"rance fo o8ing *oint# are reF"ire( to %e +e*t in 'in(= Para'eter "n(er con#i(erationB FINANCIAL
INCENTIQES AND 2IFTS= 5a?i'"' 'ar+#B1< P"e#tion# a#+e( co!ere( that 8hether their financia incenti!e an( gift# are a(eF"ate9ina(eF"ate/ (o the& get e?tra *er+# for e?tra ho"r# or not= The o%#er!e( (ata regar(ing thi# *ara'eter FINANCIAL INCENTIQES AND 2IFTS #ignifie# fo o8ing *oint#B Agenc& (e!e o*'ent 'anager e!e B >=3
1>6
Senior Sa e# 5anager Le!e B > Sa e# 5anager Le!e B 3=> Since thir( categor& of #' #ho8e( 'a?i'"' (i##ati#faction/ their *er+# are 8or#t a'ong a three/ %"t ##' e!e an( ag' e!e #ho8e( content'ent #o co'*an& '"#t concentrate at #a e# 'anager e!e an( #ee+ 'ea#"re# to #ort o"t their *ro% e' to get a %etter #core/ co'*an& can i'*ro!e it# efficienc& an( can #ho8 %etter re#*on#i!ene## to8ar(# e'* o&ee# %& #ati#f&ing the'= H=5A RI;HTS
20 15 SCORES 10 5 0 mean 1 17.2 2 13.4 (IERARC(Y 3 17.8 mean
Dhi e ana &1ing CSR in re iance ife in#"rance fo o8ing *oint# are reF"ire( to %e +e*t in 'in(= Para'eter "n(er con#i(erationB CU5AN RI2CTS 5a?i'"' 'ar+#B 26 P"e#tion# a#+e( co!ere( that 8hether h"'an right nor'# are fo o8e( or not an( the F"e#tion# in!o !e( co'*ri#e 8hether the& are treate( eF"a & or not/ are the& a8are of (anger a##ociate( 8ith their Ko%/ are their right for *er#ona *ri!ac&/ right of infor'ation / i%ert& of action i# grante( or not= The o%#er!e( (ata regar(ing thi# *ara'eter CU5AN RI2CTS #ignif& fo o8ing *oint#B Agenc& (e!e o*'ent 'anager e!e B 1A=2 Senior Sa e# 5anager Le!e B 13=3
INDIAN INSTITUTE OF FINANCE 1>>
Sa e# 5anager Le!e B 1A=E Since #econ( categor& of ##' #ho8e( 'a?i'"' (i##ati#faction/ their h"'an right# con(ition# are 8or#t a'ong a three/ #o the& nee( 'a##i!e i'*ro!e'ent an( a *ro*er re!ie8 of h"'an right *o icie# %"t #' an( ag' e!e #ho8e( content'ent %"t that #core can a #o %e enhance( %& #ati#f&ing the' 8ith i'*ro!e( con(ition# an( 'a+ing the' the en!iron'ent 'ore h"'ane an( a**ro*riate= W-REI ; E %IR- 5E T
15 14.5 SCORES 14 13.5 13 12.5 mean 1 15 2 13.4 (IERARC(Y 3 13.6 mean
Dhi e ana &1ing CSR in re iance ife in#"rance fo o8ing *oint# are reF"ire( to %e +e*t in 'in(= Para'eter "n(er con#i(erationB DORNIN2 ENQIRON5ENT 5a?i'"' 'ar+#B 26 P"e#tion# a#+e( co!ere( that 8hether faci itie# nece##ar& for 8or+ are a**ro*riate or not =the F"e#tion in!o !e( in!e#tigate their f"rnit"re:# co'*"ter an( other 8or+ ena% ing too #/ ho"r# of 8or+/ 8or+ing en!iron'ent/ *a*er rec&c ing= The o%#er!e( (ata regar(ing thi# *ara'eter #ignifie# fo o8ing *oint#B Agenc& (e!e o*'ent 'anager e!e B 16
1>A
Senior Sa e# 5anager Le!e B 13=3 Sa e# 5anager Le!e B 13=> Since a categor& #ho8e( #a'e #ati#faction e!e / 8hich i# !er& e## #o re iance '"#t #ee that %& chec+ing the *ro% e'# of e'* o&ee# the& co" ( increa#e the efficienc& an( *rofita%i it& #ince 8or+ ena% ing too #/ f"rnit"re:# on 8hich e'* o&ee# #it are (irect & re ate( in increa#ing the o"t*"t of the co'*an&/ #o the& '"#t a#+ the e'* o&ee#/ fin( o"t their *ro% e'# an( #ort o"t the' an( i'* e'ent %etter cor*orate #ocia re#*on#i%i it&= A-* E%A,=ATITenth *ara'eter 8a# re ate( to Ko% e!a "ation an( F"e#tion# a#+e( 8ere 8hether their *erfor'ance 8a# %a#e( on n"'%er of c"#to'er# or F"a it& of c"#to'er/ are the& traine( 8e for their Ko% or not/can the& K"#tif& their ro e in the co'*an& or not /8a# Ko% (e#cri*tion gi!en 8e or not /an( fina & i# the en!iron'ent of cor*orate office a% e to 'oti!ate the' to *erfor' %etter or not= The o"tco'e# 8ere a 'o#t #a'e of *eo* e at the #a'e e!e = The#e are a# fo o8#B Peo* e at #' e!e an( ##' #ai( that n"'%er of c"#to'er# an( F"a it& of c"#to'er/ %oth are i'*ortant for their Ko% a**rai#a = 6<X of the *eo* e at Ag' e!e #ai( that n"'%er of c"#to'er# are i'*ortant than F"a it& of c"#to'er= B"t other 6<X e'*ha#i1e on %oth the *ara'eter=
1>E
There 8a# co''on con#en#"# that the co'*an& i'*art# a(eF"ate training to eF"i* it# e'* o&ee# 8ith #+i # nece##ar& to *erfor' a Ko%= Regar(ing Ko% (e#cri*tion a #o *eo* e 8ere at co''on con#en#"# that Ko% (e#cri*tion 8a# gi!en 8e an( the& +no8 8e 8hat ha# to %e (one an( 8hat i# e?*ecte( o"t of the'= A the *eo* e 8ere a% e to K"#tif& their *re#ence in the organi1ation an( it #ee'# are ha**& 8ith their Ko% *rofi e= There 8a# a #o co''on con#en#"# that en!iron'ent of re iance ife in#"rance 8a# a% e to 'oti!ate the' 8e to *erfor' %etter/ 8hich i# a great #&'%o = The o"t*"t 8hich 8e (eri!e( on the Ko% e!a "ation *ara'eter i# that co'*an& ha# goo( *erfor'ance in thi# re#*ecti!e area= The e'* o&ee# #ee' to %e #ati#fie( regar(ing the#e con(ition#=
1>;
Co$parison bet!een a!ar" !inners in area of corporate social responsibility

A brief intro"(ction of co$panies co$pare": Abo(t Tata Cons(ltancy Ser'icesB Tata Con#" tanc& Ser!ice# .TCS0/ a (i!i#ion of Tata Son# Li'ite(/ i# one of the 8or (:# arge#t g o%a #oft8are #o "tion# an( con#" ting #er!ice# enter*ri#e an( In(ia:# fir#t g o%a %i ion9(o ar IT organi1ation= One of the to* 26 IT con#" ting organi1ation# in the 8or (/ TCS e'* o&# o!er 23/<<< *rofe##iona # at o!er 1<< %ranche# acro## 66 co"ntrie#= It #er!ice# 'ore than 1/<<< g o%a c ient# inc "(ing E of the US Fort"ne 1< co'*anie#= TCS ha# 16 De!e o*'ent Center# a##e##e( at SEI9C55 Le!e 6 ) the highe#t n"'%er in the 8or (= TCS ha# e#ta% i#he( the Tata Re#earch De!e o*'ent an( De#ign Center .TRDDC0 in P"ne / In(ia/ (e(icate( to #oft8are re#earch an( (e!e o*'ent 9 the on & one of it# +in( in A#ia= 5ain achie!e'ent of TCS in CSR
1A<
TCS Din# A#ian Cor*orate Socia Re#*on#i%i it& A8ar( for A(" t Literac& Progra' for it# co''"nit& 8or+ to #"**ort the i'*ro!e'ent of e("cation an( rai#e the iterac& of In(ian# in In(ia= TCS recei!e# ac+no8 e(ge'ent in S"**ort an( I'*ro!e'ent of E("cation categor& Singa*ore/ 23 Se*te'%er 2<<3=TCS 8on the a8ar( in the LS"**ort an( I'*ro!e'ent in E("cation: categor&= Thi# a8ar( recogni1e# the contri%"tion of co'*anie# thro"gh their en(o8'ent or contri%"tion to8ar( i'*ro!ing the e!e of e("cation of their e'* o&ee#/ their co''"nit& an( their nation= At TCS/ the& %e ie!e in (e!e o*ing inno!ati!e 'etho(# "#ing theorie# of cognition/ ang"age an( co''"nication to 'a+e *eo* e iterate 8ithin the ne?t fi!e &ear#= TCS i# co''itte( in "#ing co'*"ter# an( IT a# the 'e(i"' to faci itate the *roce##/ 'onitor a('ini#tration an( 'anage ogi#tic#= Literac& increa#e# a8arene## an( faci itate# re#*on#i% e action= A(" t iterac& e'*o8er# an( 8i for8ar(=Satya$8s Corporate Social Responsibility Creating !a "e for the #ociet& i# an integra *art of Sat&a':# %"#ine##/ an( contri%"ting to the 8e 9%eing an( (e!e o*'ent of the #ociet& i# con#i(ere( a# an o%!io"# e?ten#ion of 8hat Sat&a' (oe#= Tran#for'ing Li!e# %e +e& in 'o!ing the *eo* e an( co"ntr&
Reaffir'ing it# ro e a# a contri%"ting 'e'%er of the #ocia an( econo'ic 'i ie" it occ"*ie#/ Sat&a' %e ie!e# in a igning it# %"#ine## o*eration# 8ith #ocia !a "e#= A# a re#*on#i% e Cor*orate Citi1en/ Sat&a' i# co''itte( to e!erage the *o8er of IT to %ri(ge the L(igita (i!i(e: that i'it#
1A1
o**ort"nitie# for #"cce## an( *ro#*erit&/ an( there%&/ tran#for' i!e# of the e## *ri!i ege(= In'estin# in the Society
Sat&a' ren(er# #*ecific #er!ice# thro"gh !ario"# (e!e o*'ent *roKect# (e i!ere( %& it# Cor*orate Socia Re#*on#i%i it& .CSR0 ar'/ Sat&a' Fo"n(ation= Sat&a' Fo"n(ation i# co''itte( to tran#for'ing the i!e# of the "n(er*ri!i ege( in "r%an area#=In a((ition/ Sat&a' a #o reache# o"t to the #ociet& thro"gh it# Cor*orate Socia Re#*on#i%i it& *artner#= Sat&a' The re#*on#i%i it& %ag# Te egra*h/ .CSR0 a8ar( fro' 5arch CSR A/ a8ar( 2<<> an(
Sat&a' Co'*"ter Ser!ice# Lt( ha# %agge( the cor*orate #ocia B"#ine##8or (9FICCI9Socia Econo'ic De!e o*'ent Fo"n(ation for %eing Cor*orate Citi1en 1 for the &ear 2<<6= The fir#t an( #econ( r"nner# "* a8ar(# 8ere gi!en to Ninetic Engineering Lt( an( Dee*a+ Ferti i#er# an( Petroche'ica # Lt(/ re#*ecti!e &= SATYA5 ren(er# #*ecific #er!ice# thro"gh !ario"# (e!e o*'ent *roKect# (e i!ere( %& the fo o8ing Cor*orate Socia Re#*on#i%i it& .CSR0 ar'# C"rrent Practice# Re ate( to CSR: Initiati!e# %& Tata#/ Bir a#/ Ban+# .UBI/ NABARD/ BoB0/ Di*ro/ ITC/ ACC/ II5#/ etc= St"(& %& In(ian N2O#=co' .2<<19<20/ gi!e# area# of in!e#t'ent %& co'*anie# = Moint #t"(& %& UNDP/ BC/ CII/ P8C %et8een Se*9Oct 2<<2 PIC .Partner# in Change0/ In(ia
1A2
O%Kecti!eB Trac+ *ractice# 7 c"rrent attit"(e# of %"#ine##'en to8ar(# their ro e in #ocia 7 co''"nit& (e!e o*'ent Fin(ingB 1<<X PSU# contin"e( 8ith CSR acti!it& once initiate( again#t E3X in 5NC# 2ro8ing 7 e?*an(ing #ector in a econo'ie# Ser!ice# 'ore #en#iti!e than *ro("ct# SR i(entifie( a# critica (i'en#ion for in#tit"tion of TP5
en!iron'ent in #er!ice organi1ation# %& S"re#hchan(er et a .2<<20 Lac+ of re#earch (ata for CSR in #er!ice organi1ation# Corre ation %et8een R7D 7 CSP .5cDi ia'# 7 Siega 0 an( f"t"re of CSR in #er!ice# in that re#*ect fro' ABN A'ro .Sch"&t et a / 2<<60 regar(ing attit"(e an( %eha!io"r to8ar(# organi1ation ("e to
O%#er!ation# e'* o&ee
e'* o&ee !o "nteering= Reliance life ins(rance Organi1ation#/ i+e in(i!i("a #/ (e*en( for their #"r!i!a / #"#tenance an( gro8th on the #"**ort an( goo(8i of the co''"nitie# of 8hich the& are an integra *art/ an( '"#t *a& %ac+ thi# genero#it& in e!er& 8a& the& can===
1A3
Thi# ethica #tan(*oint/ (eri!e( fro' the !i#ion of o"r fo"n(er/ ie# at the heart of the CSR *hi o#o*h& of the Re iance ) ADA 2ro"*= #trong & %e ie!e that o"r *ri'ar& o% igation or ("t& a# cor*orate entitie# i# to o"r #hareho (er# ) 8e are K"#t a# 'in(f" of the fact that thi# i'*erati!e (oe# not e?i#t in i#o ation@ it i# *art of a '"ch arger co'*act 8hich 8e ha!e 8ith o"r entire %o(& of #ta+eho (er#B Fro' e'* o&ee#/ c"#to'er# an( !en(or# to %"#ine## *artner#/ eco9#&#te'/ oca co''"nitie#/ an( #ociet& at arge= E!a "ate an( a##e## each critica %"#ine## (eci#ion or choice fro' the *oint of !ie8 of (i!er#e #ta+eho (er intere#t/ (ri!en %& the nee( to 'ini'i1e ri#+ an( to *ro9acti!e & a((re## ong9ter' #ocia / econo'ic an( en!iron'enta co#t# an( concern#=
C-5PARATI%E A A,<SIS W-RE

SATYAM TCS RLI 0 5 10 SCORES RLI MEAN 16.6 TCS 14.4 SATYAM 17.5 15 20
CO)PANIES
1A3
Co'*arati!e #t"(& of CSR in RELIANCE LIFE INSURANCE/ TCS/ SATYA5 reF"ire# fo o8ing *oint#B Para'eter "n(er con#i(erationB DORNIN2 ENQIRON5ENT 5a?i'"' 'ar+#B 26 Dhi e co'*aring the three to* notch co'*anie# +no8n for their re#*on#i!ene## to8ar(# #ta+eho (er# I ha!e (i#co!ere( fo o8ing *oint#= Cighe#t #core i# of #at&a'/ 8hich 'ean# their e'* o&ee# are '"ch ha**ier 8ith their 8or+ing en!iron'ent an( the& contri%"te to a !er& high e?tent in the *erfor'ance of their co'*an&= Co'*an& i# a% e to "ti i1e the 'a?i'"' *otentia of it# e'* o&ee#= 5ini'"' i# of TC# an( fro' thi# +in( of #core 8e can c ear & infer# (i#content'ent 8hich #ho8# inefficient/ ina(eF"ate #&#te' an( *o icie# 8hich (e9'oti!ate the e'* o&ee# an( the& (o not *erfor' "* to the 'a?i'"' *otentia = RLI ha# a #o a #core 8hich co" ( %e f"rther enhance(= De can ho*e a higher #core if co'*anie# i(entifie# the *ro% e'atic area# an( ca"#e# an( tr& to "*root the *ro% e' rather than 8ee(ing the' fro' #"rface= 5< S=PER%IS-R
SATYAM CO)PANIES
TCS
RLI 0 5 10 SCORES RLI MEAN 16.8 TCS 12.1 SATYAM 13.8 15 20
1A6
Co'*arati!e #t"(& of CSR in RELIANCE LIFE INSURANCE/ TCS/ SATYA5 reF"ire# fo o8ing *oint# to %e note(B Para'eter "n(er con#i(erationB 5Y SUPERQISOR 5a?i'"' 'ar+#B 2< Dhi e co'*aring the three to* notch co'*anie# +no8n for their re#*on#i!ene## to8ar(# #ta+eho (er# I ha!e (i#co!ere( fo o8ing *oint#= Cighe#t #core i# of RLI 8hich 'ean# their e'* o&ee# are '"ch ha**ier 8ith their #"*erior# an( the& are 'oti!ate( to contri%"te to a !er& high e?tent %eca"#e #"*erior# enco"rage the' for goo( *erfor'ance#= Co'*an& i# a% e to "ti i1e the 'a?i'"' *otentia of it# e'* o&ee#= 5ini'"' i# of TC# an( fro' thi# +in( of #core 8e can c ear & infer# (i#content'ent 8hich #ho8# inefficient #"*erior# 8ho (e9'oti!ate their #"%or(inate e'* o&ee#= SATYA5 ha# a #o not a goo( #core an( #ho" ( %e f"rther i'*ro!e(= De can ho*e a higher #core if co'*anie# i(entifie# the *ro% e'atic area# an( tr& to "*root the *ro% e' %& training #"*erior# ho8 to (ea 8ith #"%or(inate th"# a((ing to their *rofit fig"re#= 5< C-W-REER
SATYAM CO)PANIES
TCS
RLI 0 5 10 SCORES RLI MEAN 16.6 TCS 14.4 SATYAM 17.5 15 20
1A>
Co'*arati!e #t"(& of CSR in RELIANCE LIFE INSURANCE/ TCS/ SATYA5 reF"ire# fo o8ing *oint# to %e note( Para'eter "n(er con#i(erationB 5Y CODORNER 5a?i'"' 'ar+#B 2< Dhi e co'*aring the three to* notch co'*anie# +no8n for their re#*on#i!ene## to8ar(# #ta+eho (er# I ha!e (i#co!ere( fo o8ing *oint#B Cighe#t #core i# of SATYA5 8hich 'ean# their e'* o&ee# are '"ch ha**ier 8ith their Co8or+er# an( the& contri%"te to a !er& high e?tent %eca"#e *eer# enco"rage the' for goo( *erfor'ance#= 5ini'"' i# of TC# an( fro' thi# +in( of #core 8e can c ear & infer# (i#content'ent 8hich #ho8# co8or+er 8ho (e9'oti!ate the e'* o&ee#= RLI a #o a nice #core= Co'*anie# can ho*e a higher *rofita%i it& if the co8or+er are enco"raging to e'* o&ee#/#o that +in( of co'*ati%i it& #ho" ( %e *ro'ote(= 5< PA<
SATYAM CO)PANIES
TCS MEAN 8 8.2 8.4 8.6 SCORES RLI TCS 8.8 SATYAM 9.1 8.8 9 9.2
RLI
MEAN
8.4
1AA
Co'*arati!e #t"(& of CSR in RELIANCE LIFE INSURANCE/ TCS/ SATYA5 reF"ire# fo o8ing *oint# to %e note( Para'eter "n(er con#i(erationB 5Y PAY 5a?i'"' 'ar+#B 16 Dhi e co'*aring the three to* notch co'*anie# +no8n for their re#*on#i!ene## to8ar(# #ta+eho (er# I ha!e (i#co!ere( fo o8ing *oint#B Cighe#t #core i# of SATYA5 8hich 'ean# their e'* o&ee# are '"ch #ati#fie( 8ith their *a& an( the& contri%"te to a !er& high e?tent to gro8th of the %eca"#e *a& i# #trong 'oti!ating force 5ini'"' i# of RLI an( fro' thi# +in( of #core 8e can c ear & infer# (i#content'ent 8hich #ho8# *a& i# not honora% e 8hich (e9'oti!ate# the e'* o&ee#= TCS a #o a *oor #core an( #ho" ( %e f"rther i'*ro!e(/ #ince e'* o&ee# are not K"#tifie( 8ith the *a& that i# gi!en to the'/ #o 8hat co'*an& '"#t (o i# K"#tif& the *eo* e 8ith #a arie# or thin+ of re!i!ing the *a& #tr"ct"re #o that gro8th of co'*an& i# not ha'*ere( 5< PR-5-TISATYAM CO)PANIES TCS RLI 0 2 4 6 8 10 12 14 MEAN
SCORES RLI MEAN 13 TCS 9.9 SATYAM 13.9
1AE
Co'*arati!e #t"(& of CSR in RELIANCE LIFE INSURANCE/ TCS/ SATYA5 reF"ire# fo o8ing *oint# to %e note( Para'eter "n(er con#i(erationB 5Y PRO5OTIONS 5a?i'"' 'ar+#B 2< Dhi e co'*aring the three to* notch co'*anie# +no8n for their re#*on#i!ene## to8ar(# #ta+eho (er# I ha!e (i#co!ere( fo o8ing *oint#= Fir#t & the #core are not a** a"(a% e for a the three co'*anie# no8 if 8e (o co'*ari#on TCS e'* o&ee# are not at a ha**& 8ith the *ro'otion *o icie# of the 'anage'ent =#o it 8i not %e 8rong to #a& that a# #oon a# the& get a %etter o**ort"nit& the& 8i not he#itate ea!ing the co'*an&= The ca#e 8ith SATYA5 AND RLI i# a 'o#t #a'e/ e'* o&ee# are #ati#fie( %"t not to e?tent that the& ha!e great o&a t& for the co'*an& an( attrition rate can %e a *ro% e' here a #o= Co'*anie# '"#t #erio"# & thin+ of thi# i##"e# an( #ort the' o"t/ %eca"#e it can %ring tro"% e for the'= HEA,TH A & SA/ET<
SATYAM CO)PANIES
TCS
RLI 0 1 2 3 4 5
SCORES
INDIAN INSTITUTETCS OF FINANCE RLI

MEAN 3.7 3.2
SATYAM 4.6
1A;
Co'*arati!e #t"(& of CSR in RELIANCE LIFE INSURANCE/ TCS/ SATYA5 reF"ire# fo o8ing *oint# to %e note( Para'eter "n(er con#i(erationB CEALTC AND SAFETY 5a?i'"' 'ar+#B 6 Dhi e co'*aring the three to* notch co'*anie# +no8n for their re#*on#i!ene## to8ar(# #ta+eho (er# I ha!e (i#co!ere( fo o8ing *oint#B Cighe#t #core i# of SATYA5 8hich 'ean# their e'* o&ee# are '"ch #ati#fie( 8ith hea th *o icie# of the co'*an& an( the& thin+ that co'*an& i# concerne( a%o"t the hea th an( #afet& of the e'* o&ee#= 5ini'"' i# of TC# an( RLI a #o ha# a**ro?i'ate eF"i!a ent #core/ e'* o&ee# thin+ that co'*an& ha!e re#*on#i% e attit"(e to8ar(# the' %"t co'*arati!e & e## than e'* o&ee# of #at&a' 8hich #ho8# there i# #co*e of i'*ro!e'ent #ti = S"ch +in( of inti'ate fee ing# of e'* o&ee# *ro'ote o&a t& a'ong *eo* e 8or+ing there 8hich in(irect & i# %eneficia to co'*anie#= /I A CIA, I CE TI%ES A & ;I/TS
SATYAM CO)PANIES TCS RLI 0 1 2 3 4 5 6 7
INDIAN INSTITUTE OF FINANCE RLI TCS SATYAM

MEAN 6.5 3.8 5.3
SCORES
1E<
Co'*arati!e #t"(& of CSR in RELIANCE LIFE INSURANCE/ TCS/ SATYA5 reF"ire# fo o8ing *oint# to %e note( Para'eter "n(er con#i(erationB FINANCIAL INCENTIQES AND 2IFTS 5a?i'"' 'ar+#B 1< Dhi e co'*aring the three to* notch co'*anie# +no8n for their re#*on#i!ene## to8ar(# #ta+eho (er# I ha!e (i#co!ere( fo o8ing *oint#= Cighe#t #core i# of RLI 8hich 'ean# their e'* o&ee# are '"ch ha**ier 8ith incenti!e# an( gift# an( the#e factor# contri%"te to a !er& high e?tent for goo( *erfor'ance# %eca"#e the& can generate #trong 'oti!ating force to 8or+= 5ini'"' i# of TC# an( fro' thi# +in( of #core 8e can c ear & infer# (i#content'ent 8hich #ho8# (e9'oti!ate( e'* o&ee# 8ho (o not ha!e attracting force# for higher a%or an( goo( 8or+= Sat&a' a #o a *oor #core an( #ho" ( %e f"rther i'*ro!e(= De can ho*e a higher #core if co'*anie# oo+ #erio"# & to #"ch i##"e#= H=5A RI;HTS
CO)PANIES SATYAM
TCS MEAN 0 2 4 SCORES 6 8
RLI

MEAN 6.5 3.8 5.3
1E1
Co'*arati!e #t"(& of CSR in RELIANCE LIFE INSURANCE/ TCS/ SATYA5 reF"ire# fo o8ing *oint# to %e note( Para'eter "n(er con#i(erationB CUAN RI2CTS 5a?i'"' 'ar+#B 26 Dhi e co'*aring the three to* notch co'*anie# +no8n for their re#*on#i!ene## to8ar(# #ta+eho (er# I ha!e (i#co!ere( fo o8ing *oint#B Cighe#t #core i# of RLI 8hich 'ean# their e'* o&ee# are gi!en *ro*er h"'an right con(ition= right# he * e'* o&ee# to fee their free(o' an( *ro'ote the char' of 8or+ing not i+e a %on(e( a%or %"t a# a honora% e citi1en= Sat&a' a #o ha# eF"i!a ent #core %"t '"#t thin+ to i'*ro!e it= 5ini'"' i# of TC# an( fro' thi# +in( of #core 8e can c ear & infer# that the& '"#t ha!e *ro*er fee( %ac+ fro' their *eo* e an( '"#t #ee #erio"# & 8hat i# 8rong 8ith the' =thi# c ear & in(icate# a inefficient CRD (e*art'ent an( #trategic *o icie# for e'* o&ee# 8e fare=
SATYAM
W-REI ; E %IR5E T TCS

RLI 0 5 10 SCORES 15 20 MEAN
CO)PANIES

MEAN 15.5 12.7 19.1
1E2
Co'*arati!e #t"(& of CSR in RELIANCE LIFE INSURANCE/ TCS/ SATYA5 reF"ire# fo o8ing *oint# to %e note(B Para'eter "n(er con#i(erationB DORNIN2 ENQIRON5ENT 5a?i'"' 'ar+#B 26 Dhi e co'*aring the three to* notch co'*anie# +no8n for their re#*on#i!ene## to8ar(# #ta+eho (er# I ha!e (i#co!ere( fo o8ing *oint#B Cighe#t #core i# of SATYA5 8hich 'ean# their e'* o&ee# are '"ch #ati#fie( 8ith the 8or+ ena% ing faci itie# reF"ire( for goo( *erfor'ance#= 5ini'"' i# of TCS an( thi# #ho8# that the& care ea#t of 'ean# %"t K"#t the en(#= Ditho"t ena% ing the e'* o&ee# 8ith reF"ire( too #/ the& e?*ect o"t*"t 8hich i# a 'atter of critici1ing= If e'* o&ee# are not gi!en their o8n * ace# an( #eat# an( faci itie# ho8 can 8e e?*ect o"t*"t fro' the'= E!en the RLI e'* o&ee# are not ha**& 8ith the *re!ai ing con(ition# of 8or+ =thing 8hich #ee'# tri!ia ha!e great i'*ortance 8hich #o'eti'e# *eo* e ignore or fai to #ee= A-* E%A,=ATI-
1E3
Tenth *ara'eter 8a# re ate( to Ko% e!a "ation an( F"e#tion# a#+e( 8ere 8hether their *erfor'ance 8a# %a#e( on n"'%er of c"#to'er# or F"a it& of c"#to'er/ are the& traine( 8e for their Ko% or not/ can the& K"#tif& their ro e in the co'*an& or not/ 8a# Ko% (e#cri*tion gi!en 8e or not/ an( fina & i# the en!iron'ent of cor*orate office a% e to 'oti!ate the' to *erfor' %etter or not= The o"tco'e# 8ere a 'o#t #a'e of *eo* e at the #a'e e!e = The#e are a# fo o8#B Peo* e at #' e!e an( ##' #ai( that n"'%er of c"#to'er# an( F"a it& of c"#to'er/ %oth are i'*ortant for their Ko% a**rai#a =6<X of the *eo* e at Ag' e!e #ai( that n"'%er of c"#to'er# are i'*ortant than F"a it& of c"#to'er= B"t other 6<X e'*ha#i1e on %oth the *ara'eter= In #at&a' >AXe'*ha#i#e( on %oth 8here a# 33X#ai( that F"a it& of c"#to'er ha# a far i'*ortant ro e to * a&= In TCS 13X #ai( F"a it& i# i'*ortant/ for 6EX %oth F"a it& an( F"antit& 8a# i'*ortant factor %"t for 2EX an( re'aining #ai( that F"e#tion i# not re ate( to their Ko% *rofi e= In re iance there 8a# co''on con#en#"# that the co'*an& i'*art# a(eF"ate training to eF"i* it# e'* o&ee# 8ith #+i # nece##ar& to *erfor' a Ko%= In #at&a' AEX 8ere of thi# !ie8 *oint %"t re'aining #ai( that training i# ina(eF"ate= In TCS A1X of *eo* e #"**orte( the i(ea of goo( training %"t 2;X tota & reKecte( the conce*t of a(eF"ate training for a Ko%=
1E3
In re iance a the *eo* e 8ere a% e to K"#tif& their *re#ence in the organi1ation an( it #ee'# are ha**& 8ith their Ko% *rofi e= In #at&a' E;X of *eo* e 8ere a% e to K"#tif& their *re#ence in the organi1ation/ re'aining #ee'e( to %e "nha**&= In TCS on & A2X co" ( K"#tif& their *re#ence an( re'aining 2EX #ee'# that the& are in 8rong * ace an( a#*ire #o'ething (ifferent= Regar(ing Ko% (e#cri*tion a #o *eo* e 8ere at co''on con#en#"# that Ko% (e#cri*tion 8a# gi!en 8e an( the& +no8 8e 8hat ha# to %e (one an( 8hat i# e?*ecte( o"t of the'= In Sat&a' >AX #ai( that the& ha!e %een gi!en *ro*er Ko% (e#cri*tion %"t re'aining 33X 8ere not #ati#fie( 8ith the gi!en Ko% (e#cri*tion= In TCS 33X 8ere of the !ie8 that Ko% (e#cri*tion i# gi!en 8e %"t re'aining 6AX#ai( that Ko% (e#cri*tion i# ina(eF"ate= In re iance ;6X 8ere of the !ie8 that en!iron'ent of their office i# 'oti!ating %"t re'aining (enie( the fact= In #at&a' AEX of *eo* e 8ere of the !ie8 that 8or+ing their in #at&a' i# 'oti!ating %"t 22X reKecte( the i(ea of 'oti!ating c" t"re= In TCS 33X of *eo* e 8ere of the !ie8 that 8or+ing in TCS i# 'oti!ating %"t 22X reKecte( the i(ea of 'oti!ating c" t"re= So it #ee'# that TCS nee(# to caref" & 8or+ on the#e (eficiencie#=
1E6
CHAPTER %II:
/I &I ;S
In the #t"(& 8e #a8 the *erfor'ance of re iance a# a 8ho e in area of CSR an( 8ere a% e to i(entif& the hierarcha e!e 8hich 8a# (i##ati#fie( 'o#t an( the hierarchica e!e 8hich 8a# #ati#fie(= The e'* o&ee:# content'ent (irect & inf "ence# the co'*an&:# *erfor'ance #o it cannot %e ignore( in an& ca#e %& the 'anage'ent= 5& fin(ing# an#8er the F"e#tion# rai#e( in '& o%Kecti!e# of the *roKect= If 8e 'o!e #eF"entia & 8e ha!e an#8er# a# fo o8#B Co8 '"ch Re iance Life In#"rance !a "e# cor*orate #ocia re#*on#i%i it&/ e!e of integration %et8een cor*orate *rofit# an( a tho"ght for #ociet& an( it# "* ift'ent an( a #o to fin( o"t ho8 '"ch #ta+eho (er# are ta+en care of #*ecifica & of e'* o&ee 8or+ing in the organi1ationH De can #ee that o!era CSR a**ear# to %e #ati#factori & i'* e'ente( in re iance ife in#"rance %eca"#e no8here the #core# 8ere e## than c"toff #core 8hich i# 6<X of the tota #core= So'e of the *ara'eter# i+e , '& #"*er!i#or#- /- '& *a&- ha!e e?tra or(inari & goo( re#*on#e 8hich c ear & #ho8# the concern of re iance gro"* to8ar(# their e'* o&ee# %"t #o'e 8ere of the *ara'eter nee(# great i'*ro!e'ent i+e ,8or+ing en!iron'ent-/ ,financia incenti!e#-/ re'aining other# #ee' to ha!e rea#ona% e goo( o"tco'e# /8hich (e*ict# c ear & that re iance i# re#*on#i!e to8ar(# #ta+eho (er# an( &e# there i# tight in+ %et8een cor*orate *rofit# an( a
INDIAN INSTITUTE OF FINANCE 1E>
tho"ght for #ociet& %eca"#e thi# co'*an& i# *rogre##ing an( i# a% e to ta* 'ar+et aggre##i!e & %eca"#e of it# "n(er#tan(ing a**roach to8ar(# a #ta+eho (er#/ #o a co'*an& K"#t one &ear %ac+ i# f o"ri#hing #o great= Dhether the i(eo ogie# of 5i ton Frie('an ho (# tr"e for %"#ine##e# or act"a & o**o#e hi# *oint of !ie8 8hich a##erte( that a cor*orationR# *ri'ar& an( *erha*# #o e *"r*o#e i# to 'a?i'i1e *rofit# for the #toc+ho (er= 5i ton Frie('an (ec are( that the #o e %"#ine## of the 'anager# of a *"% ic & he ( cor*oration 8a# to 'a?i'i1e the !a "e of it# o"t#tan(ing #hare#= An& effort to "#e cor*orate re#o"rce# for *"re & a tr"i#tic *"r*o#e# he eF"ate( to #ocia i#'= That i#/ acting Tre#*on#i% &T ri#+# re("cing *rofit# or forgoing re!en"e in the na'e of #ocia goo(= Refrain fro' increa#ing the *rice of the *ro("ct in or(er to contri%"te to the #ocia o%Kecti!e of *re!enting inf ation/ e!en tho"gh a *rice increa#e 8o" ( %e in the %e#t intere#t# of the cor*oration= Or that he i# to 'a+e e?*en(it"re# on re("cing *o "tion %e&on( the a'o"nt that i# in the %e#t intere#t# of the cor*oration or that i# reF"ire( %& a8 in or(er to contri%"te to the #ocia o%Kecti!e of i'*ro!ing the en!iron'ent= Or that/ at the e?*en#e of cor*orate *rofit#/ he i# to hire Rhar(coreR "ne'* o&e( in#tea( of %etter9F"a ifie( a!ai a% e 8or+'en to contri%"te to the #ocia o%Kecti!e of re("cing *o!ert&= TIn each of the#e ca#e#/ the cor*orate e?ec"ti!e 8o" ( %e #*en(ing #o'eone e #eR# 'one& for a genera #ocia intere#t= In#ofar a# hi# action# in accor( 8ith hi# R#ocia re#*on#i%i it&R re("ce ret"rn# to #toc+ho (er#/ he i# #*en(ing their 'one&= Ci# action# rai#e the *rice to c"#to'er#@ he i# #*en(ing the c"#to'er#R 'one&= In#ofar a# hi# action# o8er the 8age# of #o'e e'* o&ee#/ he i#
1EA
#*en(ing their 'one&=T Frie('an arg"e( that #"ch action# in effect t"rne( e?ec"ti!e# into *"% ic e'* o&ee# or ci!i #er!ant#/ e!&ing Tta?e#= If 8e thin+ %roa( &/ in a g o%a i1e 8or (/ co'*anie# are free to e?* oit or *o "te a oca co''"nit&/ then 'o!e on to the ne?t * ace= Unfettere( 'ar+et# an( e?* oitation9frien( & ta? #che'e# re8ar( co'*anie# for acting in their o8n intere#t# in the na'e of econo'ic gro8th an( co'*etiti!ene##= ignoring en!iron'enta an( #ocia i##"e# can %e %a( for %"#ine##= Co'*anie# *o "te their oca co''"nitie# ri#+ *oi#oning their c"#to'er#/ ignoring the #tate of the oca #choo #&#te' ri#+# (e* eting the *oo of F"a ifie( 8or+er#= A%"#ing 8or+er# ri#+# higher t"rno!er an( training co#t#/ not to 'ention greater (iffic" t & are attracting the 'o#t F"a ifie( can(i(ate#= Accor(ing to 'e 'a+ing *rofit i# no 'ore the *"r*o#e of a cor*oration than getting eno"gh to eat i# the *"r*o#e of ife= 2etting eno"gh to eat i# a reF"ire'ent of ife@ ifeR# *"r*o#e/ one 8o" ( ho*e/ i# #o'e8hat %roa(er an( 'ore cha enging= Li+e8i#e 8ith %"#ine## an( *rofit=T Dhat %"#ine## ea(er# too often forget i# a the a##et# e'* o&e( 99 not K"#t the financia a##et# %"t a #o the %rain# e'* o&e(/ the a%or e'* o&e(/ the 'ateria # e'* o&e(/ an( the an(/ air/ an( 8ater e'* o&e(=T
An( there i# c ear #"**ort for thi# i(ea fro' co'*anie# "n(er #t"(& that co'*anie# can o*erate in a 8a& that #trengthen# their !ario"# #ta+eho (er# an( #ti goo(# *ro!i(e #o i(/ #"#taina% e ret"rn# for their #hareho (er# To(a&R# at %e o89'ar+et *rice#/ 8eather 'o(ification/ co''"nit& fa!orite ca"#e# are en!iron'enta *rotection/ e'* o&ee hea th/ #a e# of (e!e o*'ent/ *ri!ate enforce'ent of .not 'ere & a%i(ing %&0 go!ern'ent
INDIAN INSTITUTE OF FINANCE 1EE
reg" ation# an( #"**ort of c" t"ra / e("cationa an( 'e(ica faci itie#= A thi# cannot %e ignore( for *rofit 'a+ing %eca"#e *rofit# are not going to #o !e the *ro% e' of g o%a 8ar'ing /(e* etion of o1one/ en!iron'ent *rone to fata (i#ea#e# /!io ation of h"'an right# /8e certain & nee( to thin+ %roa( & = After thi# #t"(& I co"nter the 5i ton Frie('an !ie8*oint=
Dhat i# the o"tco'e of co'*arati!e #t"(& of cor*orate #ocia re#*on#i%i it& in Re iance Life In#"rance an( Sat&a' Co'*"ter#/ Tata Con#" tanc&= The #t"(& re!ea # that TCS e'* o&ee# 8ere high & (i##ati#fie( a'ong e'* o&ee# of a the three co'*anie#= Their #core# 8ere *oor in ter'# of #"*er!i#or#/ co8or+er#/ 8or+/ *ro'otion#/ 8or+ing en!iron'ent /#ince their #core 8a# !er& near to 6<X 8hich cannot %e a**reciate( = Dhi e con#i(ering re iance an( #at&a'/ #at&a' ha# %etter #core# 8hen 8or+ing en!iron'ent/ h"'an right#/ hea th #afet&/ *ro'otion#/ 8or+/ co8or+er an( *a& are concerne( an( in re'aining *ara'eter# i+e financia gift#/ #"*er!i#or# re iance ha# #core( 'ore 8hich !er& c ear & in(icate# that #at&a' co'*"ter fo o8# %e#t cor*orate #ocia co'*are( 8ith TCS an( Re iance= re#*on#i%i it& 8hen
1E;
TRA SITI-
PERI-&
AREA
-/
C-RP-RATE
S-CIA, RESP- SI*I,IT<

CSR a# a ,goo( %"#ine## 'o(e -= I bel%e e %n s*a!e*ol#e! "!%&acy( On t*e ot*e! *an#1 I )%!&ly bel%e e t*at1 unless you a!e *onest an# take ca!e o) t*e ot*e! stake*ol#e!s %n t*e bus%ness -e&"loyees1 custo&e!s1 su""l%e!s1 co&&un%ty you +%ll ne e! c!eate t*e "!o)%tab%l%ty )o! you! s*a!e*ol#e!s t*at you a!e !e.u%!e# to un#e! t*e la+ o) )%#uc%a!y !es"ons%b%l%ty($ G Char e# E #on/ Director/ Uni!er#it& of De a8are Center for Cor*orate 2o!ernance= The 23th Cent(ry CSR *(siness 5o"el
1;<
The 2Bst Cent(ry Circ(lar1 CSR?S(stainable *(siness 5o"el
1;1
Sta+eho (er
,Intere#te(
Partie#-
1;2
P=*,IC
%ERS=S
PRI%ATE
C-RP-RATE
S-CIA,
RESP- SI*I,T<
Dhen CSR i# (i#c"##e( in re ation to the *"% ic #ector/ it i# "#"a & %a#e( aro"n( the a##"'*tion that the *"% ic #ector re*re#ent# the , good guys- 8ho ha!e a *o icing ro e to c"r% the e?ce##e# of the , bad guys- in the *ri!ate #ector= Thi# i# an "nhe *f" & o!er9#i'* ifie( !ie8/ an( 8ith recent change# to the reg" ation of ga'% ing an( ga'ing an( the icen#ing a8#/ c&nic# 'ight arg"e that e!en in their ro e of referee/ the *"% ic #ector i# not engage( eno"gh 8ith CSR= Dhen *eo* e "#e the 8or( ,corporate-/ it i# genera & ta+en to 'ean a# to (o 8ith ,big business-/ a tho"gh the 8or( it#e f 'ean# neither co''ercia nor arge= It re ate# to the for'a i1ation of a %o(& to act or %e treate( a# tho"gh it 8ere an in(i!i("a / an( in re ation to CSR it can %e he *f" to thin+ of it in ter'# of 'eaning the #ocia re#*on#i%i it& of the %eha!io"r of an organi1ation a# a 8ho e= Thi# a o8# "# to con#i(er (ifferent #ta+eho (er gro"*#/ an( 8hether it i# the *"% ic or *ri!ate #ector treat# the' 8ith the greate#t re#*on#i%i it& an( *rofe##iona i#'= In ter'# of the treat'ent of #"** ier#/ there are t8o +e& (i'en#ion# to con#i(er .a0 ho8 re#*on#i% & an( *rofe##iona & &o" treat &o"r #"** ier#
1;3
.%0 ho8 .an( 8hether0 &o" "#e &o"r *o8er a# a *"rcha#er to inf "ence &o"r #"** ier:# %eha!ior= In the *ri!ate #ector the arge#t of co'*anie# are often on & too a8are of the a%i it& the& can ha!e to #F"ee1e their #"** ier# in negotiation#/ an( in certain in("#trie# there are #o'e (i#t"r%ing tren(# in the *a##ing of contract"a ri#+ "* the #"** & chain to #'a #"** ier#= Again#t that/ #o'e of the 'o#t *roacti!e 8or+ in organi1ation# 8or+ing 8ith their #"** & chain# to rai#e ethica or en!iron'enta #tan(ar(# ha# co'e fro' the *ri!ate #ector= De#*ite #"ch %right #*ot#/ a'ong#t the 'aKorit& of the *"% ic #ector for too ong there ha# %een a ten(enc& to hi(e %ehin( , %est /alue- to *"r#"e o8e#t *rice at an& co#t= Co'*are( to the *ri!ate #ector/ *"% ic #ector *"rcha#ing 'a& %e gaining gro"n( in re#*on#i%i it& an( the integration of #"#taina%i it& *rinci* e#/ %"t e?*erience #"gge#t# that it *erha*# ha# f"rther to go in ter'# of *rofe##iona i#'= 5o#t *eo* e 8ho #"** & go!ern'ent (e*art'ent#/ oca a"thoritie# an( "ni!er#itie# #ee' to ha!e horror #torie# to te of o#t or (e a&e( contract#/ genera ,messing about0 o!er contract ter'# an( ten(ering/ an( a ha*ha1ar( a**roach to getting *ai(= A tho"gh *"% ic #ector *"rcha#ing #er!ice# are often "n(er9re#o"rce( an( o!er9#tretche(/ the& #ee' to e?*ect #"** ier# to acce*t %eha!ior that 8o" ( not %e to erate( in the %"#ine##9to9%"#ine## #ector/ an( that the& 8o" ( not to erate fro' their #"** ier#= Dhen it co'e# to e'* o&ee#/ the tra(itiona !ie8 i# that in the *"% ic #ector the Ko% #ec"rit& an( #o i( *en#ion %enefit# 'a(e "* for the co'*arati!e &
INDIAN INSTITUTE OF FINANCE 1;3
o8er rate# of *a&= Co8e!er/ the#e r" e# no onger #ee' to a** &= De ha!e recent & #een #tri+e action ca e( o!er *"% ic #ector *en#ion#/= Thi# rather negate# the conce*t of Ko% #ec"rit&/ an( 8hen K"?ta*o#e( 8ith recor( go!ern'ent #*en(ing on con#" tant# it i# (e%ata% e ho8 re#*on#i% e thi# 8i fee in#i(e the *"% ic #ector/ or a**ear fro' o"t#i(e it= In ter'# of 8age#/ if 8e #tri* o"t the ,Top 1ogs- .or 'ore acc"rate & *erha*#/ the ,#at Cats-0/ then CIPD re#earch #ho8e( that in 2<<3/ *"% ic #ector 8or+er# act"a & earne( an a!erage of 3=6X 'ore *er 8ee+ than their *ri!ate #ector co"nter*art# ta+ing on co'*ara% e 8or+= Co8e!er/ the& *erha*# *ai( for it in other 8a&#/ in ter'# of *re##"re an( i'*act on their hea th= P"% ic #ector 8or+er# too+ an a!erage of 1<=3 (a&# off co'*are( to >=E for *ri!ate #ector 8or+er#=-= A oo+ 8ithin the fig"re# #ho8# that the *"% ic #ector gro"* ta+ing the greate#t n"'%er of #ic+ (a&#/ 8hich #+e8e( the fig"re# "*8ar(#/ are n"r#e#= An&one 8ho i'agine# that 'an& n"r#e# ta+e "nnece##ar& #ic+ (a&#/ ha# rea & not %een *a&ing attention= The *"% ic #ector i# often !er& goo( on the rhetoric of oo+ing after e'* o&ee# in ter'# of *o icie# an( *roce("re#= Co8e!er the rea itie# of con#tant change#/ re.(i#0organi1ation#/ an( a 8a&# ha!ing to tr& to (o 'ore 8ith e## 'ean the rea it& i# often !er& (ifferent= Con#i(ering in!e#tor# a# a #ta+eho (er/ here there 'ight a**ear to %e no co'*ara% e re ation#hi* to 'anage in %oth the *"% ic an( *ri!ate #ector#= In the *ri!ate #ector &o" ha!e tho#e 8ith financia ca*ita in!e#te( in organi1ation# *re##"ring the' to *ro!i(e e!er9increa#ing ret"rn#/ 8ith an e'*ha#i# on the #hort9ter'/ an( often in#i#ting on re#tr"ct"ring .Ko% c"t#0 8hen thing# get (iffic" t= B& contra#t/ in the *"% ic #ector &o" ha!e tho#e 8ith *o itica ca*ita in!e#te( *re##"ring organi1ation# to *ro!i(e e!er9 increa#ing ret"rn# 8ith an e'*ha#i# on the #hort9ter'/ an( often in#i#ting on re#tr"ct"ring .Ko% c"t#0 8hen thing# get (iffic" t J= Act"a & *erha*# the&
INDIAN INSTITUTE OF FINANCE 1;6
are not that (ifferent= Neither #i(e ten( to (o eno"gh a%o"t con#i(ering the ong9ter' #"#taina%i it& of ret"rn# on their in!e#t'ent#/ #o *erha*# 8e: ca that a (ra8= Dhen con#i(ering the en!iron'ent a# a #ta+eho (er/ gi!en the *"% ic #ector:# ro e in en!iron'enta *rotection/ one 'ight e?*ect the *"% ic #ector to 8in han(#9(o8n in the en!iron'enta re#*on#i%i it& #ta+e#= Co8e!er/ in *ractice that i# not a 8a&# tr"e= P"% ic #ector organi1ation# #"ch a# "ni!er#itie#/ oca go!ern'ent office# an( ho#*ita # can %e re'ar+a% & # o8 at ta+ing #o'e !er& %a#ic/ an( co#t effecti!e/ #te*# to c"t 8a#te an( energ& an( re("ce their en!iron'enta i'*act#= La#t %"t not ea#t/ co'e# the treat'ent of c"#to'er# .or , service users- in *"% ic #ector *ar ance0= Thi# i# an area 8here the (ifference# *erha*# re*re#ent a c a#h of #t& e o!er #"%#tance= Fro' '& *er#ona e?*erience of the e("cation #&#te'/ ha!ing *"t t8o chi (ren thro"gh three (ifferent #choo #/ I a' a#toni#he( %& the e?tent to 8hich their teacher# are a 8i ing to rea & +noc+ the'#e !e# o"t in their effort# to e("cate '& chi (ren= Si'i ar & 8ith the hea th #er!ice#/ 8hich circ"'#tance# ha!e force( "# to 'a+e "#e of recent &/ the F"a it& an( #tan(ar( of ,customer care- 8e ha!e e?*erience( ha# %een e?e'* ar&= A co''on (eno'inator here tho"gh i# the fee ing that 8here e?ce ent #er!ice 8a# %eing *ro!i(e( to "#/ it 8a# 'ore (e#*ite the #&#te' an( organi1ation %ehin( the in(i!i("a # than %eca"#e of the'= B& contra#t/ in co''ercia co'*anie#/ the& often ha!e a the #&#te'#/ #tr"ct"re# an( #t& e in * ace orientate( to c"#to'er#= The on & *ro% e' i# that %& the ti'e &o" reach the front ine of the c"#to'er he * (e#+/ &o" fin( &o"r#e f (ea ing 8ith
INDIAN INSTITUTE OF FINANCE 1;>
a (i#intere#te( &o"th 8ho 8a# not *a&ing attention ("ring a the training %it# a%o"t the c"#to'er %eing a i'*ortant= So *erha*# the *"% ic #ector ha# a *ro% e' in re ation to c"#to'er #er!ice that i# far 'ore to (o 8ith i'age .an( *erha*# a #o 'e(ia *ortra&a 0 than F"a it&= Co8e!er/ I thin+ the *"% ic #ector can *erha*# earn t8o !er& i'*ortant e##on# a%o"t re#*on#i%i itie# to8ar(# c"#to'er# fro' the *ri!ate #ectorB 1= It i# a%o"t gi!ing c"#to'er# 8hat the& 8ant/ not 8hat &o" thin+ the& 8ant= A *erfect e?a'* e of thi# i# ,choice- in the hea th #er!ice= Thi# #ee'# to %e e?act & 8hat the *o itician# thin+ that *eo* e 8ant/ &et Con#"'er#: A##ociation re#earch #ho8# that 'ore than E< X of *atient# (o not 8ant to ha!e to 'a+e choice# a%o"t their hea thcare/ the& K"#t 8ant goo( oca #er!ice# to %e a!ai a% e= 2= Sati#faction co'e# fro' 'eeting e?*ectation#/ not fro' h&*ing e?*ectation# "* B"#ine##e# ha!e earnt that &o" ha!e to either (e i!er/ or 'anage e?*ectation# (o8n to 'eet 8hat &o" can (e i!er= In the *"% ic #ector there #ee'# to %e too '"ch ref"#a to ta + a%o"t co#t#/ or co'*ro'i#e#/ or to con#i(er non9,8in9 8in- #cenario#= Sa&ing that 8e are going to ha!e %etter #choo #/ %etter hea thcare/ a %etter tran#*ort #&#te' an( a c eaner en!iron'ent an( &et ta?e# 8i #"#taina% e= U ti'ate & the rea#on 8h& CSR i# i'*ortant/ for %oth the *ri!ate an( *"% ic #ector/ i# in ter'# of %"i (ing tr"#t= Tr"#t i# a *recio"# co''o(it&/ an( it 8a# intere#ting to note recent & the e'*ha#i# * ace( %& Sir 2"# O:Donne /
INDIAN INSTITUTE OF FINANCE 1;A
not %e going "* to *a& for it a / i# not
creating rea i#tic e?*ectation#/ an( i# " ti'ate & neither re#*on#i% e nor
in hi# !ie8 of hi# 'i##ion a# Ca%inet Secretar&/ on the nee( to enhance tr"#t in the *"% ic #ector= In the %"#ine## #ector/ 5ori *o # contin"e to #ho8 tr"#t in %"#ine##e# an( %"#ine## ea(er# reaching ne8 o8#= Dhen it co'e# to %"i (ing tr"#t/ 'an& of the thing# that nee( to %e (one are o%!io"#B a!oi( #*in/ a!oi( %an(8agon K"'*ing/ an( 'o#t i'*ortant &/ if &o" are going to (o #o'ething/ 'a+e #"re it i# 8ith c ear an( gen"ine 'oti!e#= In the *"% ic #ector thi# 'ean# a!oi(ing the a 9too co''on #te* of ho (ing con#" tation e?erci#e# in 8hich the ai' i# not to earn or to #ha*e #trateg&/ %"t a# an a ternati!e to 'a+ing *rogre## or a# a 'ean# to co''"nicate/ K"#tif& or egiti'i1e a #trateg&= In '& e?*erience/ 'o#t *eo* e in the *"% ic an( *ri!ate #ector (o 8ant to 8or+ re#*on#i% & 8ithin a re#*on#i% e organi1ation/ an( to %e a'ong#t the ,good guys-/ %"t *re##"re# an( *erce*tion# often get in the 8a&= Dhat *eo* e nee( i# he * in tac+ ing the CSR agen(a in a coherent 8a& that i# 'eaningf" to their organi1ation/ an( thi# i# 8hat 2oo( Cor*oration Stan(ar( offer#= In the &ear# to co'e/ '& ho*e i# that the BRASS Re#earch Centre 8i contri%"te re#earch that he *# tho#e in %"#ine## an( the *"% ic #ector to (e!e o* a 'ore #ocia & re#*on#i% e a**roach to 'anage'ent/ an( that the 8or+ of 2oo( Cor*oration 8ith it# *artner# in %oth the co''ercia an( *ri!ate #ector# 8i he * to (e i!er it in *ractice=
1;E
CHAPTER %III
C- C,=SIFro' the (i#c"##ion in *re!io"# cha*ter# 8e co'e to a *oint that the ro e of the %"#ine## in #ociet& ha# %een (e%ate( for a ong ti'e= B& the ter' CSR 8hat i# genera & "n(er#too( i# that %"#ine## ha# an o% igation to #ociet& that e?ten(# %e&on( it# narro8 o% igation to it# o8ner# or #hare ho (er= Cor*orate #ocia re#*on#i%i it& i# nothing %"t 8hat an organi1ation (oe# to *o#iti!e & inf "ence the #ociet& in 8hich it e?i#t#= It co" ( ta+e the for' of co''"nit& re ation#hi*/ !o "nteer a##i#tance *rogra''e/ hea thcare initiati!e/ #*ecia e("cation$training *rogra''e# an( #cho ar#hi*#/ *re#er!ation of c" t"ra heritage an( %ea"tification of citie#= The *hi o#o*h& i# %a#ica & to gi!e %ac+ to the #ociet& 8hat %"#ine## ha# ta+en fro' it/ in the co"r#e of it# F"e#t for creation of 8ea th= Socia re#*on#i%i it& %eco'e# an integra *art of the 8ea th creation *roce##98hich if 'anage( *ro*er & #ho" ( enhance the co'*etiti!ene## of %"#ine## an( 'a?i'i1e the !a "e of 8ea th creation to #ociet&= E?*ecte( o"tco'e of #ocia re#*on#i%i it& are i'*ro!e( financia
*erfor'ance/ increa#e( c"#to'er o&a t&/ higher a%i it& to attract an( retain e'* o&ee#/ re("ce( reg" ator& o!er#ight an( (ecrea#e( ia%i it&/ e'* o&ee !o "nteer *rogra''e# an( greater "#e of rene8a% e re#o"rce#=
1;;
In(ia ran+# !er& o8 ("e to the e?i#ting #ocia *ro% e'# an( there i# a nee( for co'*anie# to Koin han(# to rai#e the co'*etiti!ene## e!e of the co"ntr&/ thro"gh a %igger ro e of CSR initiati!e= In(ian 5NC:# i+e the/ ITC/ Ran%a?& an( D"*ont In(ia ha# en(ea!ore( to create a %etter #ocia or(er/ %"t #ti there i# ot to %e (one= Tho"gh a ot of In(ian *ri!ate #ector co'*anie# #"ch a# Tata# an( Info#&# ha!e (one 8or+ on cor*orate *hi anthro*&/ CSR in In(ia ha# #ti not ta+en root= 5o#t co'*anie#R effort# are i+e *"tting 'a+e9"* on a 8o f= Nonethe e##/ goo( %eginning# are %eing 'a(e %& a n"'%er of co'*anie#= Di*ro/ Tata#/ Info#&#/ Re iance/ NTPC an( ONC2 are #etting goo( e?a'* e#= There i# a h"ge (ri!e on CSR in PSU# an( #o'e of the oi co'*anie# i+e ON2C an( Oi In(ia ha!e %eg"n to #erio"# & engage 8ith oca ci!i #ociet& gro"*#= The reci*ient# of 2o (en Peacoc+ A8ar( a#t &ear 8ere Re iance In("#trie# in *ri!ate #ector an( NTPC in *"% ic #ector= The *ri!ate #ector can %eco'e in!o !e( in fighting corr"*tion/ #"**orting goo( go!ernance/ an( *ro'oting h"'an right# thro"gh i'* e'enting interna Co'* iance an( Ethic# *rogra'#= Organi1ation# #"ch a# the Societ& of Cor*orate Co'* iance an( Ethic# can he * enco"rage go!ern'ent# to #"**ort an( re8ar( the *ri!ate #ector:# co'* iance an( ethic# effort# In(ia nee(# a #trong in#tit"tiona fra'e 8or+ for 'eeting the '" ti* e o%Kecti!e# of econo'ic gro8th an( (e!e o*'ent= The #econ( reF"ire'ent i# the co''it'ent of the to* 'anage'ent of the *"% ic enter*ri#e an( the cor*orate #ector to 'o!e a8a& fro' a 'ere *hi o#o*h& to cor*orate #ocia action= in the *"% ic enter*ri#e CSR i# *ractice( arge & a# *er 'an(ate of
INDIAN INSTITUTE OF FINANCE 2<<
the contro ing 'ini#tr& an( i# %a#e( #ignificant & on the %a#i# of co''ercia con#i(eration #"ch a# (i#* ace'ent an( reha%i itation of co''"nitie# ("e to arge #ca e #ite (e!e o*'ent of ne8er *roKect#= In the cor*orate #ector a #o one of the *ri'ar& (ri!er# for the intro("ction of CSR i# co''ercia 'ar+et acce## to r"ra hinter an(= Dhat i# nee(e( i# #o'e co''ona it& an( contin"it& of the'e# for #"#taina% e (e!e o*'ent= Dhi e #t"(&ing re iance %& the con("cte( #"r!e& 8e fo"n( re iance e'* o&ee# #ee'e( to %e F"ite conten(e( 8ith the con(ition# of the co'*an& for 8hich the& 8or+ for/ #o re iance ife in#"rance i# effecti!e & a% e to i'* e'ent CSR %"t #ti it nee(# to 8or+ har(er to attain 8or ( #tan(ar( CSR= D"ring thi# #t"(& 8e 8ere a% e to ana &1e 8hich hierarch& e!e 8a# facing 8hat +in( of *ro% e' an( 8here e?act & the co'*an& #ho" ( foc"# to increa#e it# *rofita%i it&= Dhi e co'*aring the three to* notch co'*anie# +no8n for their re#*on#i!ene## to8ar(# #ta+eho (er# 8e ha!e (i#co!ere( 8here!er #core 8a# higher there the e'* o&ee# are '"ch ha**ier an( the& contri%"te to a !er& high e?tent in the *erfor'ance of their co'*an&= Co'*an& i# a% e to "ti i1e the *otentia of it# e'* o&ee:#= Re iance an( Sat&a' 8ere goo( e?a'* e#= In TCS/ con(ition# 8a# rea & *oor/ #core# 8ere 'ini'"' a'ong a three thi# +in( of #core c ear & in(icate# (i#content'ent 8hich #ho8# inefficient/ ina(eF"ate #&#te' an( *o icie# 8hich (e 'oti!ate the e'* o&ee# an( the& (o not *erfor' "* to the 'a?i'"' *otentia / the& cannot (e!e o* o&a t& to8ar(# organi1ation an( attrition rate i# e?*ecte( to %e higher a'ong a
INDIAN INSTITUTE OF FINANCE 2<1
three %eca"#e 'anage'ent #ee'# to %e inefficient in "n(er#tan(ing the nee(# of the *eo* e 8or+ing #o (efinite & gro8th i# e?*ecte( to ha!e a(!er#e effect of thi# neg igence= For re iance to increa#e it# CSR e!e it can e?*an( in#"rance %"#ine## to ta* agric" t"re #ector/ a# agric" t"re in#"rance i# arge & "n(er (e!e o*e( %"t i# 'o#t i'*ortant econo'ic #ector# in e'erging 'ar+et#= Thi# %"#ine## ha# h"ge *otentia /it i# e?*ecte( to reach O1< %i ion 'ar+ if in#"rer# an( go!ern'ent %eco'e# *roacti!e #o 8e can ho*e integration of *rofita%i it& a ong 8ith concern for far'er# an( *ea#ant# =Do'en in#"rance co" ( again %e area 8hich i# ne8 to co!er an( 8i increa#e the CSR #core e!e = De co" ( ho*e a %etter 8or ( if Cor*orate #ocia re#*on#i%i it& i# "n(er#too( an( i'* e'ente( *ro*er & an( effecti!e &= It #ho" ( not #er!e a *"r*o#e of t"#+ of e e*hant# to (ecei!e the #ta+eho (er an( h"'anit& %"t the i(ea #ho" ( %e a 8or ( of greater har'on& an( re("ction of (i#*arit& in ter'# of *o!ert&/ c" t"ra (ifference# etc/ that can re#" t in *"tting in *ractice a i'agination of %ea"tif" 8or ( into rea e?i#tence=
2<2
CHAPTER I::
S=;;ESTI- S
Co'*ari#on of CSR i'* e'entation in to* notch co'*anie# ha# entire & (ifferent o"tco'e= The co'*an& '"#t gi!e #erio"# tho"ght to *ro% e' of e'* o&ee# an( tr& to enhance their content'ent e!e / %eca"#e a goo( cor*orate ho"#e can create !a "e for the co"ntr& an( can generate ca*acit& %"i (ing for #"#taina% e i!e ihoo(= A co'*an& '"#t re#*ect c" t"ra (ifference# an( fin( the %"#ine## o**ort"nitie# in %"i (ing the #+i # of e'* o&ee#/ the co''"nit& an( the go!ern'ent= CSR i# concerne( 8ith treating the #ta+eho (er# of the fir' ethica & or in a #ocia & re#*on#i% e 'anner= Thi# ana &#i# 'a+e# 'e #"gge#t fo o8ing *oint#B Dith reference to- e'* o&ee#-/ a co'*an& '"#t ha!eB A *ro*er an( efficient h"'an re#o"rce (e*art'ent/ 8hich oo+# after fee(%ac+ of e'* o&ee# an( incor*orate change# accor(ing to their (e'an(= For a reg" ar fee(%ac+ organi1e( channe '"#t %e * anne( %eca"#e thi# 8i he * the' in i(entif&ing *ro% e'atic area# an( th"# (e#igning effecti!e #o "tion# for their era(ication an( i'* e'enting 8or ( #tan(ar( CSR= Thi# can %e (one fro' #"r!e& fro' ti'e to ti'e or thro"gh infor'a gathering/ #o that e'* o&ee# can e?*re## tr"th 8itho"t he#itation=
2<3
E'* o&ee 8e fare can %e (one if co'*anie# #ee+ a 8or ( c a## en!iron'ent thro"gh *roce##e# #"ch a# *erfor'ance 'anage'ent/ ta ent re!ie8/ recr"it'ent thro"gh #+i # a##e##'ent #"cce##ion * anning an( ea(er#hi* (e!e o*'ent etc= There #ho" ( %e h"'ane *o icie# a**reciate( %& the 8or+er# of the co'*an&/ 8hich again co'e# "n(er CRD (e*art'ent an( 'anage'ent e!e = So a# *er h"'an right# nor'#/ ILO nor'#/ *o icie# '"#t %e fra'e( in or(er to *ro'ote #ati#faction in e'* o&ee# gi!ing eF"a e'* o&'ent o**ort"nit&/ a ong 8ith generating 'oti!ation a'ong the' for goo( 8or+= There #ho" ( %e a #e*arate grie!ance# re(re##a (e*art'ent 8here the e'* o&ee# can a**roach the ethic# co"n#e or= There #ho" ( a #o %e *ro*er grie!ance# han( ing *roce("re# 8hich #ho" ( han( e (e!iation fro' the #tan(ar(i1e( r" e= Dith reference to a #ta+eho (er#/ co'*an& '"#t ha!eB 2o!ern'ent '"#t #ee that a co'*anie# '"#t confir' to the %a#ic ega reF"ire'ent *ertaining to CSR #"ch a# en!iron'enta nor'#/ a%or 8e fare reF"ire'ent an( a(!erti#ing a8= D"*ont L# In(ia #afet& #tan(ar( co" ( *ro!i(e another goo( o*tion a# in#tea( of #et of ega en!iron'ent the& *ro!i(e in#ight or can #a& a *re#cri%e( co(e of con("ct=
2<3
Socia a"(it# #"r!e&# '"#t %e con("cte( once in e!er& 1 &ear or 2 &ear %& *ane of in(e*en(ent K"(ge# to %ring a c ear *ict"re= Cor*orate *hi o#o*h& #ho" ( tran#for' fro' ,*rofit 'a+ing ,to ,!a "e creation-= O*eration '"#+an/ Info#&# fo"n(ation/ Sat&a' fo"n(ation# are #etting goo( e?a'* e# an( '"#t %e *ro'ote(= The#e co'*anie# or a 'o#t a cor*orate ho"#e# '"#t concentrate on e?*an(ing their hori1on an( co!ering other area# a# agric" t"re 8hich i# going to effect *oor far'er# an( *ea#ant#/ 8o'en/ han(ica**e(/ "n8ante( an( a #o ani'a 8or ( an( en!iron'ent= There #ho" ( %e a cor*orate re#*on#i%i it& in(e? 8hich i# #"**o#e( to *ro!i(e a %ench'ar+ for co'*anie# 8hich are co''itte( to 'anaging/ 'ea#"ring an( re*orting their i'*act on #ociet&= Thi# in(e? #ho" ( %e "#e( a# a #trategic 'anage'ent too to enhance (e!e o*'ent/ 'ea#"re an( co''"nicate %e#t *ractice# in the fie ( of CSR= It i# nece##ar& for a of "# to *on(er o!er effecti!e i'* e'entation of CSR %eca"#e the e?*ecte( o"tco'e of CSR i# i'*ro!e( financia *erfor'ance/ increa#e( c"#to'er o&a t&/ higher a%i it& to attract an( retain e'* o&ee# /re("ce( reg" ator& o!er#ight /8or+force (i!er#it&
2<6
*ro("ct #afet& an( (ecrea#e( ia%i it&/ e'* o&ee# !o "nteer *rogra' an( greater "#e of rene8a% e re#o"rce#=
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Corporate Social Responsibility of Reliance

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CORPORATE SOCIAL RESPONSIBILITY

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CORPORATE SOCIAL RESPONSIBILITY CSR Policy in Reliance ,ife Ins(rance