Corporate Social Responsibility Mandate Research Articles

Mandatory CSR regulations and social disclosure: the mediating role of the CSR committee

Purpose This study aims to examine the association between mandatory corporate social responsibility (CSR) regulations (CSR mandate) and social disclosures (SOCDS) in India. It also investigates whether CSR committees mediate the relationship between CSR mandate and SOCDS. Furthermore, this paper explores how business group (BG) affiliation moderates CSR committee quality and SOCDS. Design/methodology/approach This study uses a data set of 5,345 observations from the Bombay stock exchange (BSE)-listed firms over 10 years (2011–2020) to examine the research questions. Baron and Kenny’s (1986) three-step model is estimated to examine the mediating role of CSR committees on the relationship between CSR mandate and SOCDS. Findings The study reveals that the CSR mandate positively impacts SOCDS in India due to coercive pressures. CSR committees mediate this relationship, with higher CSR committee quality leading to increased SOCDS. Furthermore, the authors report that SOCDS in India is positively related to CSR committee quality, and this relationship is stronger for BG firms. Finally, the supplementary analysis reveals that promoting CSR committee quality enhances firms’ likelihood of meeting CSR mandatory spending and actual CSR spending in India. Originality/value This research contributes to the academic literature by shedding light on the intricate dynamics of CSR mandates, CSR committees and SOCDS in emerging economies. Notably, the authors identify the previously unexplored mediation role of CSR committees in the link between CSR mandates and SOCDS. The creation of a composite index that measures complementary CSR committee attributes allows us to undertake a novel assessment of CSR committee quality. An examination of the moderating influence of BG affiliation documents the importance of CSR committee quality, particularly in governance, for enhancing SOCDS transparency within BG firms.

Cross-listing and noncompliance with the mandatory CSR expenditure regulation

PurposeIn this paper, the authors examine the relation between cross-listing and the noncompliance with the mandatory corporate social responsibility (CSR) expenditure regulation in India, the first country to legally mandate the CSR expenditure.Design/methodology/approachThe authors apply panel logit and ordinary least square (OLS) regression models to examine the impact of cross-listing on the noncompliance with the mandatory CSR expenditure regulation because panel regression has lesser multicollinearity problems and has the benefit of controlling for individual or time heterogeneity mostly present in cross-section or time series data.FindingsUsing a sample of 1,027 listed Indian firms, the authors show that the cross-listed firms are more likely to comply with the mandatory CSR expenditure than non-cross-listed firms. The authors further show that this relation holds only for those firms which are exposed to higher agency problems, for firms affiliated to business groups and for firms operating in high litigation risk industries. Finally, the authors show that cross-listed firms complying with the mandatory CSR expenditure command more valuation premiums.Practical implicationsThis study’s results suggest that the noncompliance of the Indian firms with the mandatory CSR expenditure regulation comes down once they cross-list their shares in the US or the UK since such firms have to bond to the stronger corporate governance standards of the listed country. Hence, the authors recommend that merely making the investment in CSR activities mandatory may not serve the purpose and the convergence in corporate governance as well as compliance with the CSR expenditure can be achieved through cross-listing in US and UK markets.Originality/valueOne, the authors analyze the effect of cross-listing on the likelihood and magnitude of noncompliance with the CSR mandate. Two, this study is based in India where CSR expenditure has been made mandatory under the Companies Act, 2013. Using CSR mandate as a natural experiment, the authors have access to a richer data set on CSR in terms of the actual expenditure made by the company on CSR activities and the mandatory amount to be spent in a particular year.

Corporate Social Responsibility and Social Development in India: An Interface

Corporate Social Responsibility (CSR) is a much-discussed subject understood contextually and largely debated between dichotomies of profitability and morality. India makes a case for amalgamation of both these dichotomies through compulsory CSR mandate. The cultural diversity of India offers a multitude of challenges in social development and has been approached through localization of both CSR and Sustainable Development Goals (SDG). The objectives of Indian CSR programme are further mapped to Agenda 2030 for achieving sustainable development goals. The influence of this approach is visible in shifting quantum of money, corporate initiatives as well as government schemes toward various development programmes. This paper studies the interface between CSR and social development, which makes a compact case for a public–private partnership to achieve Agenda 2030.

Mandatory corporate social responsibility and foreign institutional investor preferences

This study examines whether the heterogeneity among foreign institutional investors (FIIs) matters when investing in socially responsible investee firms. Exploiting a mandated corporate social responsibility (CSR) regulation in India and using manually collected CSR expenditure data, the results of a quasi-natural experiment confirm that firms that comply with the CSR mandate attract greater investment from FIIs. This positive nexus holds for both existing and new FIIs. However, the heterogeneity of FIIs plays a significant moderating role because FIIs from civil law origin countries and those considered independent and long-term investors invest more in mandated CSR firms.

Did India’s CSR Mandate Enhance or Diminish Firm Value?

Can mandated adoption of corporate social responsibility (CSR) improve firm value? Most CSR adoption is purely voluntary. However, governments regularly encourage CSR adoption with soft regulations that vary from simply endorsing and symbolically supporting CSR to requiring the adoption of specific practices. Governments have resisted fully mandating CSR because there is some concern universally that mandated CSR may reduce firm value. There is, however, no empirical clarity as to whether mandated CSR impedes or improves firm value. We address this uncertainty by analyzing the effects of the mandated adoption of CSR that the government of India legislated in 2014. Drawing on a sample of 1,526 publicly traded firms and deploying a combinative analytical framework comprising an event study, regression discontinuity design, and a difference-in-differences technique, we conclude that India’s CSR mandate did, in fact, increase value for all firms bound by the mandate. This value-enhancing effect was greater for foreign firms relative to domestic firms. Our results refute previous research showing that India’s CSR mandate diminished firm value.

Assessing Perception and Practice of Corporate Social Responsibility (CSR) by Energy Sector Firms in Ghana

Corporate social responsibility (CSR) activities in Ghana are spearheaded by large-scale multi-national companies and have gained momentum in recent years possibly due to the discovery of oil. The goal of this study is to learn more about how energy companies in Ghana view and practise CSR. A mixture of quantitative and qualitative methods was adopted for this study. Structured questionnaires and interview guides were used to collect data from selected energy companies and inhabitants. Descriptive statistics, t-tests and content analysis were the analytical tools adopted. The findings suggest that CSR was seen as a voluntary activity in the Ghanaian energy supply industry, with enterprises being obliged to work within societal norms rather than regulatory standards in the country. In the lens of the level of CSR practiced by the energy supply company, the findings indicate that the companies do practice CSR but based on their own planned policy objectives with most of the interventions geared towards social interventions like education, provision of potable water for communities, scholarship schemes, and road development. Policymakers will make use of the findings of the research to inform their knowledge in designing policies related to CSR. The outcome will also guide corporate firms in the energy sector to make decisions to either consider stakeholders as vital movers of development in the communities they operate, or they are being a hindrance to their CSR mandate. This study is unique as it extends knowledge on CSR in the energy sector of Ghana.

Impact of mandatory corporate social responsibility on corporate financial performance: the Indian experience

PurposeThe purpose of this paper is to investigate the impact of mandatory corporate social responsibility (CSR) expenditure on the firm’s financial performance in the aftermath of insertion of Section 135 in the Companies Act, 2013 for Indian listed companies.Design/methodology/approachThe paper uses independent sample t-test, one-way ANOVA, fixed effect panel regression model and principal component analysis on a data set of 153 non-financial companies listed in BSE-500 companies for a period of 2015–2019.FindingsThe empirical results of the paper suggest that the mandatory CSR expenditure negatively impacts the company’s profitability.Practical implicationsThe study has important implications for regulators and listed companies. Firstly, the mandatory CSR expenditure acts as a burden onto the on-going activities of the firms. CSR activities, therefore, should be integrated with the existing skillsets and expertise of the firms. Secondly, the government can encourage CSR activities by making the expenditure tax deductible. Moreover, the Schedule VII list of activities has a scope to become more inclusive rather than the present exhaustive list.Originality/valueThe paper highlights the gap in the expectation and actualisation of the CSR mandate by studying the recent data of the sample companies of the BSE-500 index. The paper adds to the CSR literature in the emerging market context.

Can Mandating Corporate Social Responsibility Backfire?

Corporations have enormous influence on society. Progressive policymakers and scholars increasingly advocate for corporations to be required to consider those influences on society—a corporate social responsibility (CSR) mandate. The now‐predominant view is that merely allowing directors to consider society (a permissive regime) is ineffective.This article suggests that a CSR mandate could backfire by reducing the reputational rewards to pro‐social corporate acts. If stakeholders (customers, employees, investors) believe that corporations are legally required to do good, they might reward corporate good behavior less (“they had to do it anyway”). In contrast, if firms are merely allowed to act pro‐socially, stakeholders might provide greater rewards (“they chose to do it”). These reputational rewards matter because the business judgment rule precludes formal enforcement of a CSR mandate. Reputational and moral considerations alone must motivate pro‐social corporate acts.Using two preregistered laboratory studies with more than 500 participants, the article finds empirical support for the backfiring hypothesis: rewards for pro‐social action were greater under a permissive regime than under a mandatory one. In a third incentive‐compatible and preregistered experiment with more than 400 participants, the article further finds that the moral force of the mandate does not compensate for these reduced reputational rewards. Once participants know the mandate is unenforceable, they do not act more pro‐socially under the mandate than under the permissive regime.These results suggest a previously unrecognized benefit to the permissive regime. But the studies also suggest an unrecognized benefit to the mandate: reputational penalties for misbehavior can be greater under the mandate than under the permissive regime. Further study is necessary to determine which regime better motivates pro‐social corporate behavior. In weighing the options, this article illustrates the importance of considering reputational benefits and costs and explores how proposed statutory regimes can influence both. Changes in societal expectations and norms will determine our path forward and legal reform is but one avenue for such change.

Sustainability through sensemaking: Human resource professionals’ engagement and enactment of corporate social responsibility

There is no shortage of normative models describing how human resource management (HRM) should integrate with corporate social responsibility (CSR), however actual evidence of this engagement is rare. So what prompts human resource (HR) professionals to engage with a CSR agenda? Using a sensemaking lens this study addresses this question by examining how HR professionals employed in organizations with a publicly espoused CSR mandate make sense of this agenda and glean understanding about the meaning-creation processes surrounding enactment. Data were collected through semi-structured interviews with HR professionals employed in New Zealand and Australian organizations. Findings show that HR professionals draw on CSR-related organizational and social cues to make sense of integration, with their professional identity influencing approaches to operationalization. Evidence is also found to suggest levels and modes of CSR engagement are shaped by situational cues as well as the personal characteristics of HR professionals themselves.

The effect of voluntary and mandatory corporate social responsibility on earnings management: Evidence from India and the 2% rule

Utilizing the natural experiment presented by India's Companies Act of 2013, this paper investigates the relationship between corporate social responsibility (CSR) engagement and earnings management. India's Act includes provisions designed to improve governance and financial audits, as well as a unique mandate requiring firms that satisfy size or profitability criteria to spend a minimum of 2% of reported income on CSR initiatives. We examine the earnings management behavior of firms that voluntarily reported CSR expenditures prior to the Act's implementation as well as those firms that began to report CSR spending as a consequence of the mandate. Results indicate that firms which voluntarily reported CSR expenditures before the Act also engaged in more earnings management than other firms, consistent with CSR being used manipulatively in the pre-Act period. Once the Act was in effect, evidence indicates that on average firms engaged in less earnings management. However, the results suggest the CSR mandate did not have a significant marginal impact on earnings manipulations, implying that the observed decrease in earnings management in the post-Act period was primarily due to other provisions of the Act, such as those related to corporate governance.

Corporate Social Responsibility and Foreign Institutional Investor Heterogeneity

This article examines whether the heterogeneity of foreign institutional investors (FIIs) matters when investing in host firms that are considered to be socially responsible. Exploiting a mandated corporate social responsibility (CSR) regulation and using actual CSR expenditure data, the results of a quasi-natural experiment show that host firms that comply with the CSR mandate attract more FII investment. However, the heterogeneity of FIIs plays a significant role as we find that FIIs from civil law origin countries and, those considered to be independent and long-term investors invest more in mandated CSR firms. Finally, the empirical evidence also indicates that firms that comply with the CSR mandate experience higher long-term market-based valuations in the post-CSR reform period.

Strategic Role of Mandated Corporate Social Responsibility: The India Story

The concept of corporate social responsibility (CSR) is changing from charity and philanthropy to structures and mandates; from voluntary to statutory! Moreover, with the introduction of this mandated CSR in India, there is a sudden surge in CSR research and the differences in the concept of CSR between developed and developing countries have become evident.It is in this perspective that this research aims to study the macro structure of CSR in India; understand its CSR mandate and document the different tenets of this CSR mandate as found in literature. In the micro context, it also analyzes the mediating role of the (variable) corporate social responsibility (VCSR) between strategic management and firm performance.

Qualitative research on the impact of Corporate Social Responsibility mandate in the Companies Act, 2013 (India)

Purpose: Corporate Social Responsibility (CSR) is a buzz word and so is the CSR mandate where certain companies in India have to mandatorily spend 2% of their Net Profit (average 3 years) in specified CSR activities from the year 2014. This paper examines whether the mandate has had any impact in the companies (coming under the purview of the mandate) and the areas where it has had an impact. Design/methodology/approach: The research methodology consisted of two-step process. Step 1: Two Focus Group Discussions were conducted to explore the areas that can be used to measure the impact of CSR mandate. Step 2: A semi-structured in-depth interview was conducted with 10 CSR heads/ CXOs of companies in India. Data was analysed through qualitative analysis methodology of identifying patterns. Findings: The results of the study indicated three major areas where the CSR mandate impacted the maximum. 1. The CSR budget/ expenditure 2. The choice of CSR activity 3. Partnerships for implementing CSR activities with NGO’s/ Government 4. Frequency of impact Assessments. The study showed that the Mandate has not had much impact in the budget for organisations which already had a CSR departments and activities in place but the importance of the department increased. CSR has now become a topic in the boardroom with clear objectives and deliverables which was not the case earlier in most of the companies. Originality/value: This study provides areas for measuring impact of the fairly new CSR mandate in India. It explains how the CSR mandate has made companies think differently on CSR grounds. The findings will help companies and CSR partners (NGO’s and government) to implement the requirements and the intent of the mandate better.

Corporate Social Responsibility (CSR): An Emerging Opportunity or a Forced Liability

A significant number of studies have been conducted on Corporate Social Responsibility (CSR) and its impact on different business organizations. However, no such study has been witnessed so far that could explain the nature of the amount involved in the CSR spending. The main purpose of the study is to analyze the viewpoint of different organizations that how they consider this CSR spending. In a current scenario, organizations have failed to take responsibility for what they are operating, so it is needed to consider the real cost of their functioning which brings a focus toward the environmental and social concerns. On the other hand, CSR also became legitimate spending stipulated in the Indian companies act, 2013. According to the act, every business organization is a responsible player to build an equitable society and for that CSR should be a part of the DNA of every organization. Through this paper, we made an attempt to see the nature of CSR adopted by different organizations, whether it is voluntary or mandatory. We reviewed some survey reports made on CSR before and after the Indian companies act, 2013. These reports provide a perspective on CSR perceptions of different business organizations. For empirical analysis, we have analyzed 100 listed companies’ financial reports to know whether CSR mandate impact their performance or not. Using a difference-in-difference approach, we found that before the legitimation of CSR the performance found to be better than post CSR legislation. This paper is also an attempt to present a conceptual analysis of the CSR spending before and after its legitimation in India which will help us to determine whether it should be treated as an investment opportunity or a forced liability.

Malaysia: DIC Compounds – plastics colorants & compounds

There is no shortage of normative models describing how human resource management (HRM) should integrate with corporate social responsibility (CSR), however actual evidence of this engagement is rare. So what prompts human resource (HR) professionals to engage with a CSR agenda? Using a sensemaking lens this study addresses this question by examining how HR professionals employed in organizations with a publicly espoused CSR mandate make sense of this agenda and glean understanding about the meaning-creation processes surrounding enactment. Data were collected through semi-structured interviews with HR professionals employed in New Zealand and Australian organizations. Findings show that HR professionals draw on CSR-related organizational and social cues to make sense of integration, with their professional identity influencing approaches to operationalization. Evidence is also found to suggest levels and modes of CSR engagement are shaped by situational cues as well as the personal characteristics of HR professionals themselves.

Revolutionising Corporate Social Responsibility in India: Is It Truly Revolutionised?

The approach to corporate social responsibility (CSR) has changed through years from the philanthropy to the self-regulatory and to the present multi-stakeholder approach. In India, the CSR mandate has been looked and projected as a game changer and is expected to revolutionise CSR beyond the lens of defensive CSR, promotional CSR and charitable CSR to the next-level paradigm of strategic CSR. It is in this context an attempt has been made to discuss the CSR approach of public- and private-sector companies in India. The article makes an analysis of the CSR vision and mission statements, expenditure, areas of interventions and initiatives, CSR policy framework and reporting among public and private companies in India. The article is based on the secondary data for a period of four years (2011–2015) and gives a representative view of the companies making difference to the Indian society at large. The article intends to answer whether revolutionising CSR as a mandate is an attempt in the right direction.

An Analytical Study of Corporate Social Responsibility Spending by Companies Based on Government of India's CSR Mandate

Over the years, the concept of corporate social responsibility (CSR) has gained wider implications not only from a philanthropic perspective, but also from a real business standpoint. This paper attempted to identify how large and successful companies in India have contributed towards CSR activities on the basis of norms and regulations prescribed by the Indian authorities as stipulated in the Company's Act, 2013. This paper also attempted to categorize the companies based on the degree of conducting various CSR activities as mandated by the Companies Act. We have provided the findings and recommendations on the basis of descriptive and inferential analysis. This paper also attempted to deliver some guidance to those companies who are yet to start their CSR activities or have contributed very little on the CSR front.

The Effect of Mandated CSR Disclosure on the Pollution Levels of Publicly-Traded Chinese Firms

This paper examines whether mandatory corporate social responsibility (CSR) reporting affects corporate pollution levels in China. Starting with calendar year 2008, Chinese stock exchange listing requirements mandated that certain affected firms produce and issue CSR reports. Though not randomly determined, the affected and control groups are fairly well diversified across industries and, other than pollution, appear to have changed in similar ways across the sample period. The results of a difference-in-differences regression analysis indicate that, with or without controls for firm size, leverage, industry and year, firms required to issue CSR reports reduced their environmental impact, on average, relative to firms not required to issue CSR reports. We find firms’ direct and indirect, or supply chain, environmental impacts decreased; however, 78 percent of the pollution reduction resulted from firm’s direct responses. Manufacturing firms subject to the CSR mandate appear to have reduced relative emissions more than firms in the utilities and natural resources, and services, industries. When firms are sorted based on total assets, the middle group — neither large nor small — decreased relative pollution impacts more than the other two groups. Finally, firms affected by the reporting mandate significantly decreased two of Trucost’s four categories of pollution.

Corporate social responsibility mandates within German multinational enterprises in Sub-Saharan Africa

Multinational enterprises operating in Sub-Saharan Africa (SSA) exist within an environment marked by complexity, inequality and socio-economic challenges, yet also sustained economic growth. This research focuses on how German multinationals define a Corporate Social Responsibility (CSR) mandate that is relevant to the local context and responds to the demands of stakeholders in their host countries within SSA. We find that the broad CSR mandate is defined at headquarters but that it contains a discretionary and a non-discretionary component. This is to ensure that, while global standards are adhered to, the local CSR engagements remain relevant and impactful. CSR in SSA tends to focus on activities that aim for long-term development which indicates a high level of local embeddedness and recognition of the meaningful impact that CSR can have in developing countries. We find that, organisationally, subsidiaries can extend their autonomy in pursuing CSR by building capacities that can be leveraged in the corporations globally. The study contributes to our understanding of multinationals operating in emerging markets and adapting to unique environments, and more specifically to CSR engagement in developing countries.

Corporate social responsibility mandates within German multinational enterprises in Sub-Saharan Africa

Multinational enterprises operating in Sub-Saharan Africa (SSA) exist within an environment marked by complexity, inequality and socio-economic challenges, yet also sustained economic growth. This research focuses on how German multinationals define a Corporate Social Responsibility (CSR) mandate that is relevant to the local context and responds to the demands of stakeholders in their host countries within SSA. We find that the broad CSR mandate is defined at headquarters but that it contains a discretionary and a non-discretionary component. This is to ensure that, while global standards are adhered to, the local CSR engagements remain relevant and impactful. CSR in SSA tends to focus on activities that aim for long-term development which indicates a high level of local embeddedness and recognition of the meaningful impact that CSR can have in developing countries. We find that, organisationally, subsidiaries can extend their autonomy in pursuing CSR by building capacities that can be leveraged in the corporations globally. The study contributes to our understanding of multinationals operating in emerging markets and adapting to unique environments, and more specifically to CSR engagement in developing countries.