Corporate Social Responsibility and Role of the Indian State

What is it about?

Over the last few decades, both academic and business entities in the West and East have been attracted to the concept of corporate social responsibility (CSR). The modern-day definition of CSR has transcended beyond the philanthropic notion with the inclusion of CSR into core business operations. In developing societies, corporations, along with the state, are also entrusted with societal development, particularly toward the upliftment of the marginalized sections. Thus, CSR delineates a socially responsible behavior in business operations. CSR encourages the extractive industries to think beyond profits and to give equal importance to the social and environmental issues upon which they are responsible as well. Unlike the established paradigm of CSR in the West that focuses on the moral and social obligations of corporations, this chapter perceives corporate sectors as agents of socioeconomic development. Therefore, contemporary understanding of CSR should focus on the responsibilities of corporations to support the state in socioeconomic development as a stakeholder. Corporations in developing societies, in contrast to the West, are less concerned with their social performances. Weak regulations coupled with a high level of corruption restrict corporations’ engagement in socioeconomic activities. Thus, in developing countries, such as India, the state plays a pivotal role in ensuring the success of CSR. In developing societies, the state not only is entrusted with making regulations related to CSR but also ensures social welfare while challenging the profit maximization of corporations. Following the Companies Act, 2013, India made CSR spending mandatory, posing challenges to the extractive industries. Hence, this chapter is an attempt to understand the systematic transformations of CSR policies in India. Unlike the neoliberal maxim of rolling back the state, this chapter rejuvenates the importance of the state in promoting CSR. For that purpose, neoinstitutionalist methodology has been employed.

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Photo by Ehimetalor Akhere Unuabona on Unsplash

Photo by Ehimetalor Akhere Unuabona on Unsplash

Why is it important?

Over the last few decades, both academic and business entities in the West and East have been attracted to the concept of corporate social responsibility (CSR). The modern-day definition of CSR has transcended beyond the philanthropic notion with the inclusion of CSR into core business operations. In developing societies, corporations, along with the state, are also entrusted with societal development, particularly toward the upliftment of the marginalized sections. Thus, CSR delineates a socially responsible behavior in business operations. CSR encourages the extractive industries to think beyond profits and to give equal importance to the social and environmental issues upon which they are responsible as well. Unlike the established paradigm of CSR in the West that focuses on the moral and social obligations of corporations, this chapter perceives corporate sectors as agents of socioeconomic development. Therefore, contemporary understanding of CSR should focus on the responsibilities of corporations to support the state in socioeconomic development as a stakeholder. Following the Companies Act, 2013, India made CSR spending mandatory, posing challenges to the extractive industries. Hence, this chapter is an attempt to understand the systematic transformations of CSR policies in India. Unlike the neoliberal maxim of rolling back the state, this chapter rejuvenates the importance of the state in promoting CSR.

Perspectives