Corporate Social Responsibility Initiatives: An Analysis of Voluntary Corporate Disclosure

Article excerpt

The purpose of this paper is to examine the extent of involvement of companies in Corporate Social Responsibility (CSR) initiatives in terms of high, medium and low CSR performers. Secondary data based on a sample of 93 companies operating in India have been analyzed by applying content analysis of annual reports and individual websites of the companies. Extent of social involvement of the companies has been observed on the basis of their respective social scores. The results indicate that some firms are highly involved, some are moderately involved while others are lowly involved in CSR arena. The study further reveals that firms are highly concerned about their shareholders followed by human resources. The firms are found to be highly engaged in providing retirement fund benefit plans and least percentage of companies has been found to be engaged in providing employment to SC/ST/BC and disabled persons. By applying Kruskal-Wallis test and Mann-Whitney U-test the study reveals that there is a significant difference between the average overall CSR scores of different categories of CSR performers. The major limitation of the study is that CSR measurement is based on voluntary disclosures by the companies. Better measures of CSR are, therefore, desperately needed for future studies.

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INTRODUCTION

The role of business in society has undergone several changes. Awareness of the impact of business on society and environment has grown alongwith the increasing socio-regulatory pressures. It is no longer simple enough to employ people, make profits and pay taxes. Companies are now expected to be responsible, accountable and benefit the society as a whole (Brown, 2001). Business cannot escape from society and society cannot exist without business (Davis and Frederick, 1985). Thus, there is a two-way relationship between business and society, Cannon (1994) holds the view that business is expected to create wealth, supply market, generate employment, innovate and produce a sufficient surplus to sustain its activities and improve its competitiveness while contributing to the maintenance of community in which it operates. Society is expected to provide an environment in which business can develop and prosper, allowing investors to earn returns while ensuring that stakeholders can enjoy the benefits of their involvement without any fear of arbitrary and unjust action. Organizations are the citizens of society and therefore, they owe certain responsibilities towards the society. Business can also be viewed as a custodian of society's resources - people, raw materials, services and infrastructure. To convert raw material into profitable goods, business needs the inputs from the society and its output is consumed by the society itself. The relationship between business and society is shown in Table 1.

Corporate Social Responsibility (CSR) is what an organization does to influence the society positively in which it exists. The concept of CSR has been evolving for decades. However, the modern era of social responsibility may be marked by Bowen's (1953) publication of Social Responsibilities of the Businessman, considered by many to be the first definitive book on the subject. He defines CSR as "an obligation to pursue those policies, to make those decisions, or to follow those lines of action that are desirable in terms of the objectives and values of our society". The definition of CSR is not complex.

Scholars have taken varying stances on conceptualizing CSR. While some take CSR as an obligation, others consider it as a strategic tool. According to Steiner (1972), "a social contract between business and society that relates to the corporate impact on the welfare of society". McWilliams and Siegel (2001) defines CSR in terms of actions that appear to further some social good, beyond the interest of the firm and that which is required by law. In the words of Campbell (2006) "CSR sets a minimum behavioral standard that aims at doing no harm to stakeholders and if it has happened then rectifies it as soon as it is identified". …