Corporate Social Responsibility Orientation : Exploring The Williamson Framework And Government Policy Drivers

Abstract

Corporate Social Responsibility (CSR) is rapidly gathering momentum in the private, public and non-profit sectors over the last few years. First, the old business concept of placing profits and shareholders before principles is being replaced towards more accountability to shareholders and stakeholders. Second, running a business has become more public and a privilege dependent on the will of stakeholders. Third, it has become external where people affected by a firm’s decision have a voice in decision making. These reasons make CSR a strategic business imperative for sustainable growth of many firms. In CSR, paradoxically, there exists a lot of literature with an equal dearth of studies. Several streams of research and theory have been followed. One line of research has focused on the relationship between CSR and specific organizational field like financial performance or business ethics. Exploration of CSR as a comprehensive socio-economic cultural initiative remains limited. Another line of research has developed various conceptual and theoretical models, based on the debate which ranges between two extreme views, namely the classical(the business of business is business) and the socioeconomic(obligation to society for its existence). However, there is no empirical investigation on these differing(or dominant) views. A third line of CSR research is comparative studies, albeit limited and mostly based on web based, secondary data. Lastly, formal policy led collaboration between corporate and government remains largely unexplored. Specifically, in India, where CSR has the potential to usher in major social development, the focus it receives in development literature is distinctly low. This study recognizes these gaps and attempts a comparative study, taking an empirical approach, and furthermore, explores the larger area of CSR and public policy. The following objectives were defined: • Empirically investigate firms operating in India in order to understand their dominant(and differentiating) corporate social responsibility orientations. • To apply the Oliver E.Williamson’s (1985) framework of decision making (as illustrated by David Kreps) on corporate social responsibility. • To determine the nature of government policies and practices that will bring about more effective CSR by firms operating in India. These objectives were investigated through a questionnaire survey administered to the CEO/CSR head (decision maker) of those organizations which undertook CSR initiatives over a period of six months. The response rate was 17.7%. Analytical Hierarchy Process (AHP), Factor Analysis, Yate’s Chi-square test and Kruskal Wallis test were used to test the hypotheses and propositions developed. Investigations on overall CSR orientation (CSRO) of firms operating in India, through the Williamson’s framework, highlighted transaction cost economic as the dominant CSRO of firms operating in India. However these were variations according to country of origin. Significant differences in CSRO were also found according to ownership, size and nature of industry. However firms did not significantly differ on their social initiatives. To the extent that strategic concerns are important, the strategic choice of corporate social initiative was governed by considerations of the local institutional environment, and not their social orientation. Investigations on government policies for effective CSR practices highlighted corporate desire for a facilitative government approach(versus collaborative or regulatory). Firms wanted government facilitation in stakeholder management, publicity and endorsement, framing formal rules for community welfare and social disclosure. These results have implications for the industry as well as national development. Conclusions and implications of these results are discussed, and conceptual and methodological avenues for further research are illustrated.