Is the Indian corporate social responsibility law working for the public sector?

ABSTRACT

This study adapts the New Governance Framework to investigate the perspectives of the regulators of India’s state-owned enterprises (SOEs) and the perspectives of the regulated SOEs towards the country’s recent corporate social responsibility (CSR) law. This law mandates that companies spend a fixed amount of their profit on specified CSR activities. The findings indicate that SOEs welcome the regulation, but face implementation issues and political pressures. These issues are forcing SOEs to invest in less impactful CSR activities, which was previously not the case. Regulators believe that companies are making excuses, such as limited resources for implementation, no co-operation with the civil sector and lack of direct contact with communities. The authors argue that a more effective dialogue is required to ensure effective implementation of the new CSR regulation to deliver India’s social development agenda.

IMPACT

Mandated corporate social responsibility (CSR) action for companies doing business in India has brought a paradigm shift in the way CSR is perceived and implemented. This paper adds a new dimension to CSR regulation research by analysing perceptions of the regulators and the regulated state-owned enterprises (SOEs) affected by the recent Indian CSR law. Using interview data, the authors explain the current tensions between the key stakeholders. The paper provides guidance for both regulators and the regulated to make informed and streamlined decisions via enhanced dialogue to resolve current conflicts. This study has implications for law-makers, regulators and corporations in other countries looking at mandatory CSR.

KEYWORDS:

• Corporate social responsibility
• India
• mandatory CSR
• new governance framework
• state-owned enterprises

Acknowledgements

The authors are grateful to the 2017 Central Research Grant Scheme, Deakin University, which provided the necessary funding for research assistance for data collection and transcription of interviews.

Disclosure statement

No potential conflict of interest was reported by the author(s).