Outsourcing mandated corporate social responsibility in India: risks and performance

Abstract

Purpose This paper aims to assess the risks and challenges of corporate social responsibility (CSR) management in the Indian-mandated CSR ecosystem from a service purchaser–supplier dualistic perspective and the role management control systems (MCS) and social capital play in managing such risks and challenges. Design/methodology/approach This study undertook a qualitative approach that involved in-depth interviews of 22 CSR directors, managers or chief executive officers from 13 central public sector enterprises (CPSEs) that had purchased CSR services and nine managers of non-government organisations (NGOs) serving as CSR suppliers. Data analysis was founded on the principal–agent and social capital theoretical perspectives. Findings A highly bureaucratic, time-pressured mandated environment poses several goal congruence and adverse selection threats to outsourced CSR project arrangements. A mix of formal and informal control mechanisms is critical for enhancing trust or bonding between service purchasers and service providers and enriching bridging capital or access to resources derived from interpersonal connections between NGOs and communities. Practical implications NGOs and CPSEs may benefit from understanding each other’s goals and culture and using appropriate formal and informal MCS for managing CSR expectations and outcomes. Originality/value Drawing on a unique mandatory CSR regime, this study offers principal–agent and social capital perspectives on CSR programme delivery, highlighting the importance of various formal and informal MCS in lowering agency costs in outsourced CSR relationships.