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The Political Economy of Corporate Responsibility in India
Sood, Atul Arora, Bimal
Sood, Atul
Arora, Bimal
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tbs18-Sood-Arora-pp.pdf
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Abstract
"Corporate social responsibility (CSR) is on the rise all over the world, and India is no exception. The history of corporate paternalism has played an important part in shaping community expectations and CSR practices in India. Civil society, consumers and other actors have increased the pressure on companies to adhere to social and environmental standards, and this new “civil regulatory” environment has had impacts on business in India. This paper considers corporate environmental and social behaviour in India, both in the past and the present, in an attempt to better understand the actual impact of CSR. The paper is divided into five broad sections with the first section setting forth the issues in context. Section 2 covers the historical aspects of the business and society interface in India from the middle of the nineteenth century up to the present, and it determines the actors and the factors that have influenced the corporate responsibility discourse. Section 3 then presents the state of contemporary CSR in India, by detailing perceptions of the issue, and the initiatives undertaken by selected companies, industries, industry associations, non-governmental organizations (NGOs) and trade unions. It includes a discussion on certain codes of conduct related to labour and environmental issues. Section 4 discusses the drivers of corporate social and environmental responsibility in India, using a case study of the garment sector. Voluntary initiatives are examined in light of the macro changes unfolding in the Indian economy and society since the early 1990s, particularly by examining the characteristics of the labour market and the impact of labour, environmental and other regulations on business and society. This section also documents corporate management and governance practices. The last section contains a brief discussion on issues beyond voluntarism and judicial activism. Philanthropy has been important in India since the middle of the nineteenth century, largely due to a strong heritage of community influence and paternalism among traders-turned-entrepreneurs. At the same time, the larger economic governance framework that was put in place by the state also influenced corporate practices toward labour and society from time to time. The Indian government’s socialistic policy agenda, which aimed at a more equitable distribution of resources, restricted the concentration of wealth to the hands of a few industrialists through strategies of import substitution, foreign exchange control, reservations for and protection of small-scale enterprises, industrial licence, and quota systems for raw material and production. This influenced business practices of the times. However, business was often reluctant to abide by such principles. As a result, interest in corporate philanthropy decreased, leading to an increase in corporate malpractice, and manoeuvring for survival and profits. All this was facilitated by incidents of corruption in state and national government bureaucracies. However, certain self-enlightened businessmen practiced and advocated ethical and responsible business behaviour, and issues of the social responsibility of business and stakeholder engagement were debated in India as early as the 1960s. In fact, there is evidence available of businesses going far beyond compliance and setting best-practice standards in labour relations and community development even before India’s independence in 1947. Some such best practices later became the basis for drafting related legislation after independence."(pg 5)
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2006-11
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With permission of the license/copyright holder