Factor Affecting CSR Expenditure by Companies in India

Soumyajit Kar | Tanya Sood

1.1 Introduction

Corporate Social Responsibility (CSR) has assumed a new meaning in

today’s world, given that it has extended the boundaries of the firm into
the society. Corporate Social Responsibly is not a new term in India.
Among other countries, India has witnessed some of the oldest traditions
of CSR. History of CSR can be traced back to the 1850s when companies
like Tata, Godrej, Bajaj, Birla etcetera were inclined towards both their
economic growth and society’s well being. Corporate Social Responsibly
is not a new term in India. Among other countries, India has witnessed
some of the oldest traditions of CSR. In the present time, CSR policies,
practices and programs are being comprehensively integrated by an
increasing number of companies throughout their business operations and
processes. A growing number of corporates feel that CSR is not just
another form of indirect expense but is important for protecting the
goodwill and reputation, defending attacks and increasing business
competitiveness. Companies have specialized CSR teams that formulate
policies, strategies and goals for their CSR programs and set aside
budgets to fund them. With passing of the New Companies Act in April
2014, India became the first country in the world to make corporate social
responsibility (CSR) expenditure mandatory for successful companies.
This has given CSR in India a whole new scope and dimension.

1.2 Research Question

The concept of Corporate Social Responsibility (CSR) has acquired

an undeniably high degree of relevance and scope in a large number
of sectors. CSR provides Indian corporations a readily available and
highly impactful opportunity to prove and establish the legitimacy of
their actions by moving beyond charities and vanilla rural
developmental activities. More objectively, it will help counter-
balance to some extent, the impact of the huge negative externalities
that commercial activities tend to create in the developing societies
they operate in, also enable new businesses to witness unforeseen
fortuitous results that will give a boost to economic growth in
India’s emerging market. Many academicians and practitioners are
developing theory and practices of this concept of social
responsibility among entrepreneurs. Within this context, one
frequently asked question is: What are the factors that affect CSR
expenditure by companies? This project aims to link CSR
expenditure by companies in India to factors like financial
performance, size of company, and type of company etcetera.

2 Literature Review

Before starting with Data Collection, we read numerous articles and

reports that highlighted the emerging importance of CSR.

(Need name of pepers to be inserted)

3 Methodology
3.1 Variable Selection and Expected Values

CSR Expenditure by firms

With increasing importance of CSR, major firms today are spending a significant
amount towards CSR. The expenditure is not just limited to charity but also on
developing innovative programs and practice for the benefit of the society

The main data source of this variable was Business Responsibility Reports published
by companies(With effect from 2012 SEBI made it compulsory for the top 200 rated
firms to publish BRR along with their annual report)

VARIABLES

Net Profits

Turnover

Total Assets

Dummy Private

Company Age

3.2 Data Collection

We started our project by conducting a basic literature review of previous studies that
highlighted scope and importance of CSR in India and. Secondary data has been the
chief source of information for the study. Secondary data was collected from the
Annual Reports and Business Responsibility Reports published by the companies,
Bombay Stock Exchange website etcetra.

3.3 Functional Forms

3.4 Model estimation

4 Conclusions

4.1 Significance of the Variables

4.1.1 Model Selection

5 Limitations of the Model