EFFECTIVENESS OF CORPORATE SOCIAL RESONSIBILITY INITIATIVES IN MEDIUM MANUFACTURING COMPANIES

Abstract

The influence of Corporate Social Responsibility (CSR) in the business operations of the corporate sector has become a global concern. Now, it has become almost an integral part of the operations of large corporations and has received a comprehensive research focus. However, it is a less researched area for Medium Enterprises. More specifically, the research on CSR initiatives of medium enterprises is scant in India, even though their contribution is significant in terms of employment generation and income. These enterprises are under growing pressure to accommodate their stakeholders’ social and environmental concerns into their social programs. Also, enterprises with strong social and environmental programs develop competitive advantages that provide the opportunity that leads to longevity of the business. Therefore, to meet the stakeholders’ expectations of delivering the desired results and long-term survival of enterprises, the CSR initiatives need to be effectively implemented. Also, with the CSR practice gaining momentum globally, its implementation becomes problematic due to barriers. Thus, the current research work develops a framework for enhancing effectiveness while implementing CSR initiatives and identifying the barriers faced by medium manufacturing enterprises. In this direction, the first objective of the thesis is to study the CSR initiatives of medium manufacturing enterprises and explore the factors that lead to the effectiveness of CSR initiatives implementation. The next objective is to identify and prioritise the barriers faced by medium manufacturing enterprises in implementing CSR initiatives. The last objective was to develop an index for measuring the effectiveness of CSR implementation and if it is influenced by the location and origin of the firm. For the first objective of the thesis, the 121 medium manufacturing enterprises in National Capital Region (NCR) was surveyed using a 26-item questionnaire on a seven-point rating scale (with end-points 1 strongly disagree and 7 strongly agree) for CSR initiatives. The census was undertaken with medium manufacturing enterprises and engaged in agro, chemical, electrical machinery, engineering, metal-based, paper and paper products, wood/wooden based furniture, woollen, silk, and thread-based clothes. These enterprises associate CSR with ethical practices, giving donations for charitable causes, supporting government policy, consider as a part of corporate strategy and community development initiatives. The CSR initiatives supported by medium enterprises are education, eradication of hunger, poverty, promoting healthcare, and

xvii promoting environmental sustainability. The most influential driver for undertaking CSR activities are issues supported by the government, potential economic benefit in future, owners or managers value system and care for the local community. In data analysis, the questionnaire was validated using reliability and validity tests. Exploratory and confirmatory factor analysis was performed to validate the factors of effectiveness of CSR implementation. The analysis reveals that stakeholder involvement, the priority of the board, communication of CSR, partnering for CSR, responsible leadership and environmental governance are critical factors for effective CSR implementation. The stakeholder involvement includes enterprises developing capabilities for strategic engagement with a diverse range of stakeholders. Priority of board elaborates on board of directors prioritising CSR as a formal structure. Communication of CSR describes the practices relating to the communication of CSR initiatives to stakeholders. Partnering for CSR explains the practices related to partnership or association to undertake CSR activities. Responsible leadership explains the responsible orientation of managers in conducting business operations. Environmental governance is related to the environmental guidelines the enterprises are adopting as a part of their CSR practices. Further, the study identifies the barriers to CSR implementation amongst medium manufacturing enterprises, develops their classification and establishes relationships among barriers. An exhaustive list of barriers was identified from the literature, and following surveys and expert opinions, 19 critical barriers were extracted. Interpretive Structure Modelling (ISM), a qualitative approach to structuring construct relationships, was employed to understand the hierarchal and contextual relationships among barriers around CSR implementation. The resulting model indicates that are extensive interactions and no autonomous variables present. The results indicate that rigidity in culture and corruption within the system are the two most influential barriers that impede CSR implementation in manufacturing enterprises. The last objective of the thesis was to assess the effectiveness of CSR initiatives of medium enterprises. As a result, a CSR index (CSI) is created. The purpose of the index was to understand the policies, practices & mechanisms that the firm uses to involve in social initiatives for the community as a stakeholder. The index is based on National Voluntary Guidelines, 2009 and broad categories of ISO26000. It was administered through the questionnaire to all medium manufacturing enterprises consists of 7 categories and 50 items. The items in CSI are equally

xviii weighted and are designed to address issues such as CSR as business strategy, CSR planning, environmental activities, social activities, monitoring and involvement in CSR, reporting and policy deployment. The CSI was further tested for the location and origin of the enterprise. The major findings emerging from the analysis of results indicate that the location and origin of the enterprise are significantly linked with CSI. The thesis concludes with suggestions for stakeholders, i.e. planners and policy makers, regulatory bodies and medium manufacturing enterprises, for effective implementation of CSR initiatives which will ultimately create more economic, social and environmental values for the community. Furthermore, the findings suggest that promoting CSR-related training programs may enhance its adoption and help enterprises develop long-term survival capabilities. Last but not least, the findings will be a value addition to the existing literature on CSR theories and will provide direction in business practices and policy formulation by medium manufacturing enterprises and others to re-orient themselves towards CSR practices. The selection of medium manufacturing enterprises within DELHI-NCR is a major limitation of the study, and the findings cannot be generalised for all but maybe implemented to other places and sectors with required corrections. In the end, there are suggestions also for future research.