To find the changes in the Indian companies ‘financial report after the mandate of CSR standard
Abstract
This research is aimed to determine the changes in the Indian companies ‘financial report after the mandate of CSR standards. For this research, the data of CSR spending of 29 Indian firms of different sizes is selected along with their financial performance in terms of turnover, net worth and net profit. From the data analysis, it can be recognized that differences exist in the CSR spending during pre-mandate and post-mandate period as Indian firms have started to spend more on CSR practices after the mandate of CSR standards. Apart from this, a significant relationship between CSR spending and financial performance of the firms is also reported for the pre-mandate period. But in the case of post-mandate period, there is no relationship between the CSR spending and financial performance of the firms. Based on this, it can be recommended to the firms and government to facilitate the public awareness regarding the CSR practices and take initiatives to reduce the costs of the products and make the most of the CSR practices.
Nowadays, due to the availability of the different firms along with different benefits provided by governments, the level of competition is on top in the market. It also makes easy for the firms to do business across the boundary without facing any issue and hurdles. But meanwhile, the purchasing behaviour of customers has also changed and now they consider the different things such as health, environment and the society during purchasing the products. Due to this, the marketing and the business strategies of the firm have also been changed. Firms look to use new business strategies that can be quite favourable for the firms in terms of society development and the environment protection in order to influence the customers purchasing behaviour. It is because, this is only the way that can provide competitive advantage for the firms and help to sustain in the competitive market for a long time. Moreover, there are also different approaches related to CSR like historical approach, philanthropic approach and so on that are used by the firms in order to have a success through implementation of CSR (Kemper, & Martin, 2010).
In addition to this, it can also be determined that there are different countries like India, Brazil, etc from where corporate social responsibility is the major aspects that are used by the firms to sustain and to develop the customer base. It is because in developing countries, the major concern of firms is to develop the society and environment that provides additional advantage for corporate to sustain in the competitive market. The governments of the developing countries also provide support for firms to use CSR activities. Due to this, most of the firms firstly initiate the use of CSR and related approaches in the developing country (Kim et al., 2012). Regarding the same concern, India is one of the major examples of the CSR initiatives because India is a fast-growing country and the major preference of Indian government is development of society, community, environment, etc. Due to this, there are various firms that are providing their major concern on the development of Indian society, community and so on. It helps these firms to perform well and to manage the customer base in India.
It is the responsibility of every corporate to fulfil the social responsibility in the society. In the context of India, from the primitive times, it has a culture of giving concern towards philanthropic approach. Social welfare is the Indian culture from the ancient time. It is identified that Kautilya had promoted ethical principles and values in the business (Sharma 2011). At present, due to increasing in fierce competition, it has become necessary for the Indian firms to give their concern towards the use of different approaches of CSR. Moreover, due to improvement in liberalization and literacy level, consumers prefer to purchase the product from the firms that have their major concern towards CSR to uplift the society (Lindgreen, &Swaen, 2010). Due to this reason, it becomes mandatory for the firms to deal with CSR and use different CSR approaches for developing the customer base and the brand value. Moreover, due to increasing demand of CSR and the positive view that customers show towards the CSR activities, it is determined to increase the motivation level of the employees by implementing successful policies, rules and regulation within the firm, for all these reasons CSR plays an important role and is the main requirement in a corporate. In the current business environment, it is essential to create long term survival which can be attained by the firm through showing concern towards holistic business model approach. It supports towards the improvement of the organizational performance (Maon et al., 2009).
According to the Indian law, it is necessary for every qualifying company to invest at least 2% of its average net profit on CSR activities. It is because when firms operate their business in different countries and produce the products and services then they release different harmful gases that create pollution. It also makes uncomfortable and unhealthy for the mankind to survive and to have a better quality of products and services. Because of this concern, the Indian government made various rules and regulations for managing these issues and takes effort to create an eco-friendly environment. Along with this, CSR supports to identify the company’s commitment towards the well-being of the society by utilizing discretionary activities as well as contribution towards the revenue. Moreover, it enables the firm to deal with a global platform while achieving the trust of the consumers in a diversified market (McWilliams, & Siegel, 2011). It supports towards attracting the shareholders. India is a developing country so the major focus of the firms in India is on the development of the education, health, water houses and so on. Along with this, if the companies focus on CSR and makes it as an integral part then it helps towards social development by completing the basic needs of people like food, cloth, shelter, etc.
This research discusses the impact of Corporate Social Responsibility by the Indian firms in Indian market. This research also supports to get the detailed understanding regarding the implementation and mandate of CSR and the changes which has taken place by CSR in the context of Indian Companies. To conduct this study adequately, researcher has selected 29 Indian firms as a sample size including large-scale, medium-scale and small-scale companies (Mishra, &Suar, 2010). Moreover, the financial periods of the firm from 2012 to 2016 are evaluated to identify the role of CSR in the context of Indian Companies and to observe the changes after the mandate of CSR.
1.2 About CSR (Corporate Social Responsibility)
CSR enables the firms to show their contribution towards the environment, society, customers and the other stakeholders too. CSR supports the firm to develop strategies so that human resource of organization can show effort towards the direction for well-being of environment, country, as well as society (Carroll, &Shabana, 2010). Due to this reason, CSR supports the firm to develop positive brand image in the mind of the stakeholders. In like manner, it supports in delivering huge benefits towards the surrounding environment. At the same time, it is essential for firms to concentrate on CSR as per the government rules, regulations and policies. It is because this makes the firm clear about the CSR activities and helps in minimizing the risks that can affect the CSR through the involvement of firms. So, it can be stated that firms must invest a fixed share of their profit towards CSR (Rettab et al., 2009). This supports to have a regulatory control in the context of CSR. In India, leading corporations give a good amount of contribution in respect to CSR, which supports them to create brand image in the mind of different stakeholders. Moreover, it supports in eliminating the chances of legal hindrance and reinforces to create competitive advantage too.
Research aim of this study is “to find the changes in the Indian companies ‘financial report after the mandate of CSR standard.” In order to accomplish this research aim successfully, below are the objectives that are accomplished by the researcher during the research.
Research objectives of this study are as follow:
- To develop a theoretical understanding about CSR’s status in the context of India
- To evaluate the pattern of CSR spending during the pre and post mandate period
- To determine difference in average CSR spending between the pre and post mandate period
- To determine the relationship between CSR spending and organizational performance in terms of net profit, turnover and net worth
- To recommend the ways for overcoming the CSR issues and to accelerate CSR initiatives
Research questions of this study are as follow:
- What is the use of CSR for the firms in India?
- What is the relationship between CSR and firm’s financial performance?
- What is the difference between philanthropic approach and mandate approach?
- What are the ways to accelerate CSR initiatives, especially in the context of India?
H0: There is no substantial difference in average CSR spend between the pre and post mandate period.
H1: There is substantial difference in average CSR spend of 2012-2013 verses 2014-2015 and 2015-2016.
H2: There is substantial difference in average CSR spend of 2013-2014 verses 2014-2015 and 2015-2016. H3: There is substantial difference in average CSR spend of 2012-2013 and 2013-2014 verses 2014-2015 and 2015-2016.
H4: There is a relationship between CSR spending and turnover
H5: There is a relationship between CSR spending and net worth
H6: There is a relationship between CSR spending and net profit
This research will be quite helpful for me to get detailed understanding regarding the importance of CSR in the context of India. It will support the future researchers as well as managers for theoretical as well as practical implications. At the same time, through the research outcomes, it will be easy for the firms to have an understanding about the use of CSR that will also make the corporate easy to perform in an effective manner for managing business and customer base in the developing countries. This study will also be helpful for firms to inherit different approaches such as historical approach, philanthropic approach and so on. At the same time, it will also support in evaluating the impact of CSR in comparison to the corporate philanthropic approach as per the financial reports. Moreover, this research will support to identify the challenges that are faced by Indian firms while implementing CSR. In addition to this it also helps to have an understanding about the ways to accelerate the CSR initiatives in context of India (Okoye, 2009).
The following research aids in assisting all the firms that operates their business in India to rectify the issues and challenges that are faced by corporates during their successful implementation of CSR activities. Because of this, the research study will make the firms easier to understand the usage of CSR and its approaches in India into a more qualified manner (Lindgreen, &Swaen, 2010).
Introduction
This part plays an integral and effective role for the accomplishment of a successful research. It is because introduction of the research makes clear the researcher about the different important topics including background, aim and objectives, questions, rationale, and structure. It supports towards providing a brief introduction of the research to generate the valid outcomes. It also briefs the general aspects of the topic by explaining the meaning and gives an overall view of the whole research in a concise manner.
Literature Review
This part of the research is also one of a major important aspect because in this section of the research, researcher has critically analysed the topic based on various past studies which have taken place by different authors. In this chapter, researcher has included various existing theory, concept, models, frameworks, etc, which are related to the research topic. It has supported towards understanding the role of CSR in Indian market from various perspectives of different researchers who have shown their contribution on the related topic. To increase the reliability of the data, researcher has only included the reliable data sources. This part of the research also helps the researcher to critically evaluate the objectives of the research to generate the valid and reliable research outcomes.
Research Methodology and Data Analysis
This chapter of the research support towards selecting the methods for the purpose of collecting the data and executing the research in an adequate manner. In this research, exploratory research method has taken which supported towards qualitative data analysis on the basis of journals, magazines, articles and financial reports. Available secondary data is extensively used in this study to understand the variations between the financial report while focusing towards ratio, correlation and regression analysis (Alon et al., 2010).
Results, Analysis and Interpretation
In this section, researcher discussed the results of the research on the basis of the findings of the data analysis. At the same time, the outcomes of the research are also interpreted according to the findings of the research (Gautam, & Singh, 2010). In this chapter of the research, the all data of the research is presented in the table and graph format for better understanding of the research outcomes. Because of this, it is also one of the most important parts of the research that has their high contribution in the research accomplishment.
Conclusion, Recommendations and Limitations
This section supports towards concluding the whole research while giving the concern towards the research objectives. At the same time, it has supported towards recommending the ways to overcome the challenges of CSR, while making the accelerating CSR initiatives in the context of India. Moreover, in this section researcher has also discussed the limitations of the research (Brammer et al., 2012).
In this section of the research, the research objectives are critically analyzed . For this purpose, there are various secondary sources like journals, magazines, articles, financial reports, etc. are used which has helped to achieve the goal of research successfully. Additionally, in this chapter, different approaches related to CSR are discussed (Carroll &Shabana, 2010). At the same time, critical analysis of the impact of CSR in comparison to corporate philanthropic approach in financial reports is examined. Moreover, evaluation of the CSR challenges are discussed in the context of Indian firm. At the end of this report, researcher has given recommendations for accelerating CSR initiatives in India.
2.2.1 CSR (Corporate Social Responsibility)
According to the views of Mishra, &Suar (2010), CSR is a form of corporate self-regulation which is integrated into a businHYPERLINK “https://en.wikipedia.org/wiki/Business_model”ess model and supports to design policy functions as a self-regulatory mechanism. Under CSR policy, business is monitored under the spirit of the law that supports to ensure active compliance while giving consideration towards ethical standards as well as national and international norms. CSR strategies help to focus on corporate social initiatives, minimizing the cost, maximum utilization of resources, waste management, value creation and risk management.
Various researchers have offered different definitions of CSR however according to the definition of Chinnadurai (2014) CSR can be defined as a “business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders”. So, from the above definition, it can be understood that while dealing in the market for the business perspective, there is a need of focusing towards three parameters, i.e. people, planet and place. Moreover, it is identified that CSR is a practices and the way which differs in the context of understanding and implementation from company to company and country to country. Moreover, it is a broader concept which addresses various perspectives such as human rights, health and safety, corporate governance, environmental effects, working conditions, contribution towards economic development, etc. The purpose of CSR is to drive change towards sustainable practices.
In the research of Sharma (2011), it is determined that the basic means of corporate social responsibility is development of social, environmental, community, consumers, employees, and other stakeholders who remain directly or indirectly related to organization. With the use of CSR, it is easy for the firm to make a good brand name and brand image among the customers as well as in market which supports to develop good customer base. In support of this, Chinnadurai (2014) stated that CSR also enables the firm to work for the social welfare while giving concern to the parameters which goes beyond the compliance and statutory requirements. From the research of Mishra, &Suar (2010), it is pointed out that although the use of CSR is quite helpful for firms in the business development as well as for customer base development but at the same time, there are different issues and challenges that are faced by the firm during successful implementation of CSR activities. So, it can be interpreted that along with lots of advantages of CSR implication; there are also different issues too which are also faced by Indian firms. Along with this, in the research of Gautam, & Singh (2010), it is determined that firms give concern towards environmental parameter, labour regulations, customer rights, etc. CSR strategies support firms to eliminate negative impact of the industrialisation towards environment, society and surroundings while utilizing effective working procedure. Moreover, CSR practices support to attract different stakeholders of the firm while developing positive aspects for them.
Effective CSR strategies allow the firm to maximize long-term profit margins through developing shareholder trust (De Neve, 2009). As well as, in concern of this, Arevalo, &Aravind (2011) identified that CSR enables to make positive public relations in the market while giving concern towards ethical standards. Moreover, it enables the firm to reduce business and legal risks by fulfilling the social responsibility towards the corporate actions.
In the perspective of historical approach of Indian culture, it is identified that from primitive times, there is a culture of focusing towards philanthropic approach. Due to this, in the ancient times, Indians were focused towards social welfare. Gautam,& Singh (2010) identified that Kautilya had promoted the ethical principles and values of business. In support of this, Arevalo, &Aravind (2011) depicted that in the ancient time, kings, land lords and the rich people of India gives huge concern to help poor people and people who are in need of help.
They spend their particular percentage of income towards the upliftment of the society. From the survey, it is identified that the concept of CSR was started before the 1850s in India and it was started in India during the pre-industrialized period. During this period, merchants donate their fixed part of income towards the social welfare activities like construction of water houses, providing food and education, etc. It is identified that before independence, most of the charity taken place by businessmen and philanthropists. In India, charity was related to religious sentiments.
After the development of industrialization, large corporations of India such as Tata, Birla, Godrej, Bajaj, etc. have started to focus towards CSR for the purpose of social development in different areas including education, food, charitable trusts, health centers, orphanages, old age home, etc. After the independence of India, the Gandhi’s philosophy has taken place as there was a big role of PSUs can be seen towards the fulfilment of the development agenda of the society (Sharma, 2011). Due to the influence of this philosophy, many businessmen and celebrities had shown their contribution towards the societal development. They have started to donate their income to provide funds and contribution in social and economic development of the region. There are also various public and private sector companies which have emerged in India and have shown their contribution to social and economic well-being of the country.
In 1990s, due to liberalization, privatization and globalization global firms were allowed to enter in India for developing the trend of foreign trade which has supported to increase the trend of CSR. In this time span, the global standards of CSR have encouraged and local firms have also shown their involvement in CSR for improving the brand value and goodwill in the market (Saeidi et al., 2015). Global organizations had started to design effective CSR strategies to attract consumers and to enhance customer satisfaction. This attitude of foreign firms had supported to encourage the Indian businessmen too, to increase the concern towards CSR activities. This revolution has supported to influence the trend of CSR activities from the global players to local firms. In the views of Alon et al., (2010), the major drivers of CSR in India were philanthropy, charity and religion that enabled to promote CSR activities.
In the research of Sharma et al., (2011), it is identified that there are different inventions have taken place in India which has supported to promote corporate social responsibility. In the same concern, Saeidi et al., (2015) illustrated that the sharing of global information is also determined in order to make the first country to mandate CSR. There were different CSR strategies made by the Indian government to manage and influence CSR in the country which has supported to increase the concern towards society and has enabled to increase the development of society. From the research of De Neve (2009), it is determined that there are different initiatives which have taken place by the Indian government to influence the trend of funding the NGOs, charities, children education and many other sectors to increase the practices of social welfare. CSR practices assist towards increasing the GDP (gross domestic products) rate through boosting the Indian economy. Because of this, there are various initiatives taken place by the Indian government to promote CSR in India.
According to the views of Wiek, & Lang (2016), after the development of Section 135 in the context of CSR, it is identified that the contribution of the Indian companies has increased towards CSR. This section was implemented in the year 2013, and after its implementation, from the year 2014 to 2016, there is increased trend of CSR has seen which reflects that this section has supported to offer great contribution towards increasing the trend of CSR in India.This section applies on those companies whose net worth is of Rs. 500 Crore or more or the turnover of the company is Rs 1000.00 Crore or more during financial year (Vamsi Krishna Jasti, &Kodali, 2014). In like manner, this section applied on those companies whose net profit is of Rs. 5 Crore or more.Under this section, average net profit is calculatedaccording to the provisions of section 198.There is an exemption of section 135 is that this section shall not apply over the firm which has not completed five years under of a specified IFSC public company. Dumay, &Cai(2015) depicted that the rules of CSR section 135 is come into force on 1st April 2014 and has applied over the companies who are dealing in Indian market to uplift the society while giving concern towards people, planet and profitability.
It enables to constitute the corporate social responsibility committee.Furthermore, Saeidi, et al. (2015) depicted that according to this section, it is essential for the firm to spend atleast 2% of average net profit in CSR activity which is made by the company in the preceding 3 financial years. However, if the firm is not spending the amount on CSR then it is essential that Board of Directors shall specify the reason of not spending on CSR on its Board Report. In like manner, Tuohy, et al. (2013) determined that any amount of money that is contributed towards political party cannot be treated as a CSR. Moreover, the expenditure which takes place in the project or programme for the family benefits of the employees or their family is not treated under CSR. Additionally, the activities which are undertaken by the firm during normal course of businessesare not treated as CSR. This section includes various parameters in the context of CSR. These parameters are eradicating hunger, poverty and malnutrition while promoting the strategies related to preventive health care,safe drinking water and sanitation (Vamsi Krishna Jasti, &Kodali, 2014).These practices give special consideration towards children, women, old agepersonalities and differently abled people. There are various livelihood enhancement projectsalso run under CSR perspective in India. Under this context, companies give concern towards promoting gender equality, women empowerment, constructing orphanage home, day care centres, and facilities for senior citizens, scholarship for children, etc.In like manner, Wiek, & Lang (2016) identified that this section includes the concern towards ensuringthe environmental sustainability, animal welfare, environmental friendly practices, ecological balance, protecting flora and fauna, conservation of natural resources, maintaining the quality of air, water and soil. It also includes protection of national heritage and culture, historical works of art. It also includes restoration of buildings and sites, designing public libraries, promoting and developing traditional arts as well as handicrafts. It also includes rural development projects.
Section 135 remained assistive to increase the concern towards the society and has made it mandatory for the firms to give concern towards the society in which it is dealing (Dumay, &Cai, 2015). It has supported to increase the concern towards health, quality of living, history, art, and many other perspectives of the country. This section has supported to make it compulsion for the firm to spend at least 2% of the net profit towards the society which has supported to make it mandatory for the firm to involve towards social welfare and towards the upliftment of the society.
In regard to this statement, Rettab et al., (2009) determined that for better CSR implementation and to overcome the various issues related to the CSR activities, there are different policies, rules and regulations made by the Indian government. These all policies and the regulations help the firm towards the successful implementation of CSR practices while developing effective business environment. In favour of this statement, in the research of Gugler, & Shi (2009), it is depicted that in 2003, government of India made an act namely corporate responsibility for environment protection and according to this act, standards and parameters are set to control the pollutions and boost the economy.
Besides from this, from the research of Saeidi et al., (2015), it is determined that there are different guidelines related to CSR such as national voluntary guidelines in new company act 2013 that are quite useful to have the assurance about economical, social and environmental related responsibilities in India. Furthermore, in India, it is obligated for the firm to have registration under the company act 2013. According to this act, it is mandatory for every firm which is operating its business in India to invest a fixed percentage of profit towards health, employment, education, charity, etc. to uplift the society. Indian government’s strict rules of CSR remain helpful for the economic development. There are some strict rules and regulation regarding CSR which Indian firms need to implement consciously to eliminate the chances of any legal hindrance. Additionally, Gugler, & Shi, (2009) depicted that due to increase in option avaliability of a single product and liberalization ndian firms are focused to adhere CSR strategies. It enables to develop good customer base while influencing the investors, suppliers and shareholders. In support of this, Brammer et al. (2012) determined that not only the government of India plays a vital role in the successful accomplishment of CSR but also the people of India show awareness towards CSR activities and prefer to purchase the brand which fulfils its CSR responsibilities. So, it forces the Indian firms to follow and implement CSR activities (Maon et al., 2009).
In the same concern, Brammer et al., (2012) also illustrated that at present Indian consumers are aware about the issues which are taking place due to industrialization such as pollution, CO2 emission, climatic change, global warming, etc. Due to this reason, demand of green products has increased. Moreover, consumers are also giving concern towards recycling and reusability too. In like manner, Indian consumers prefer to buy products from the firms which show huge involvement towards CSR activities. Due to this reason, firms are giving concern towards utilizing innovative CSR strategies to attract the consumers such as green packaging, sharing the profit to charity, using of effective machineries to minimize pollution, utilization of renewable energy sources, etc.
2.5 Identifying the Challenges of CSR
In the research of McWilliams, & Siegel (2011), it is illustrated that although, CSR plays vital role in the success of the firm in India but at the same time, there are different issues that are faced by the firms towards the successful implementation of CSR. These all issues create the hurdle for the firms in successful management of CSR activities in India. In the same concern of this, Carroll, &Shabana (2010) depicted that consideration of corporate social responsibility is a peripheral issue that directly affects the business of the firm. In support of this, Lindgreen, &Swaen (2010) elaborated that from the survey on Indian consumers it is identified that Indian customers are price sensitive. Indian consumers give less concern towards CSR as compared to price parameter. Implementation of CSR increases the company cost which negatively impacts the company sales as firm not become able to create competitive advantage with increased price. Due to this reason, firm faces challenge while adhering to CSR activities in the context of India.
In the views of Lindgreen, &Swaen (2010), governments have relied on legislation and regulation to deliver social and environmental objectives in the business sector. Shrinking government resources, coupled with a distrust of regulations, has led to the exploration of voluntary and non-regulatory initiatives instead. Secondly, there is a lack of consensus amongst local agencies regarding CSR projects. This lack of consensus often results in duplication of activities by corporate houses in areas of their intervention. This results in a competitive spirit between local implementing agencies rather than building collaborative approaches on issues. This factor limits company’s abilities to undertake impact assessment of their initiatives time to time. Thirdly, there is a lack of interest of local community in participating and contributing to CSR activities of companies. In the same concern of this, Carroll, &Shabana (2010), defined that corporate social responsibility is a serious issue for the firm in the context of customer satisfaction as well as to attract the investors and financiers. It is considered that customer satisfaction is only about price and service, but it is not true as CSR supports towards the creation of competitive advantage and long-term sustainability in the industry. Failed to the implication of CSR, creates issue to enter in the global market too. The change is named as social responsibility which is an opportunity for the business however the practical implementation of CSR is faced with a lot of issues and challenges. In support of this, Carroll, &Shabana (2010) defined that tax issues on CSR are also one of the major issues that are faced by the firm while implementing CSR in India. It is because according to the Section 37 of Income Tax Act (1961), it is crucial for the firm to pay tax to the Indian government at the time of doing any expanses from the firm side in corporate social responsibility. It increases the extra expanses and burden over the firm.
2.6 Recommendations for Accelerating CSR Activities
According to the views of Gugler, & Shi (2009),it is identified that in the context of India, people have less awareness about CSR. Indian consumers are highly price sensitive, due to this reason; they give huge concern towards price parameter, instead of focusing towards ethical practices. CSR increases the company cost which increases the product cost too and it creates issue for the firm to survive in the situation of cut-throat competition. In this context, it is recommended that government of India needs to increase the awareness of Indian consumers regarding the CSR activities and its impact towards society, environment and people so that the demand of those brand which are focusing towards CSR will increase. This strategy will enable to increase the force towards the firms to utilize effective CSR strategy(Kemper, & Martin, 2010). In like manner, government should also offer rebates, subsidies and other benefits to the firm which are fulfilling their corporate responsibility. It will support the firm to offer the company product in a low cost in the market while fulfilling its CSR responsibility.
In like manner, firm needs to utilize economies of scale as this strategy will assistive for the firm to produce the quality product in a reasonable price. Moreover, government need to increase the awareness among the firms that CSR activities also support to decrease the company cost by utilizing effective strategy of recycling, reusability, effective supply chain management, effective utilization of power, eliminating wastage, utilizing renewable energy sources, etc. (Maon, Lindgreen, &Swaen, 2009). Moreover, there is a need of developing the campaign to make the firms aware that societal wellbeing is pre-requisite for theprosperity of business. Firms should not only give focus towards profitbut also needs to give concern towards people and planet too. To make the CSR implemented in an effective manner, government needs to make strict rules and regulations so that it will become necessary to apply CSR strategy within the organization to survive in Indian market(Mishra, &Suar, 2010).
In like manner, firm needs to understand that future business will remain hugely dependent on the ability and willingness of responding towards the changing aspirations of the society towards the environmental perspective. While implementing the CSR strategies within the organization, it is recommended for the firm to focus towards the strategies which are used by the competitor firm as it will remain assistive to design effective strategy(Sharma, 2011). In like manner, firm also needs to give concern towards the market in which it is dealing as different region customers get influenced by different CSR strategy. In the context of India as it is a developing country so consumers get influenced through increase concern towards children education, health and reducing poverty. Moreover, donation for social activities will remain a better approach to attract the Indian consumers. In like manner, promoting the organization in the marketon the basis of CSR will remain assistive for making the consumers aware about the actions taken by the firm to uplift the society.
Chapter 3: Research Methodology
In this chapter of the research, researcher has discussed about the methods which are used to conduct the study in the right direction. This section has supported to select the data collection method which remains assistive to execute the research in systematicmanner while selecting effective methods. It remained assistive towards the collection of information and data.Moreover, this section has discussed about the research philosophy, research approach, and research strategy and research purpose. Furthermore, this study has discussed data collection method, sample size, financial analysis and research design. Additionally, this study has given focus towards ethical consideration which has enabled to conduct the study adequately.Moreover, this section has also discussed the research limitations to define the opportunities for the future researchers.
Mackey&Gass (2015) determined that research philosophy enables the researcher to create different assumptions in the context of gathering or analysing the information. It enables to facilitate in developing new thoughts in the research. It enables to deal with the source, nature and the development of knowledge. Majorly interpretivism, positivism and realism philosophy is used by the researcher to conduct the study in an effective manner. In this research paper, researcher has utilized positivism philosophy instead ofinterpretivism and realism philosophy as this philosophy remained assistive to analyse the impact of CSR towards the Indian organization while focusing towards figures and facts. Positivism philosophy supports the researcher to use the natural phenomena to give the information in an optimistic manner. So, in the context of this research, this approach has supported to gain the knowledge of the study by utilizing scientific methods. This method supports to associate with the paradigm while utilizing figures and facts and has enabled to conduct the study in a quantitative manner. Due to this reason, positivism research philosophy has shown more suitability with the research issue and requirements and has supported to offer in-depth knowledge regarding the research issue and this analysis cannot be possible in the context of interpretivism philosophy and realism philosophy (Taylor, Bogdan, &DeVault, 2015). It has also supported to correlate the financial analysis with literature to generate valid research outcomes and to accomplish the study successfully.
There are basically two types approach which are used by the researcher, these are – inductive approach and deductive approach. To conduct this study, in an effective manner, deductive approach is used by the researcher as it remained assistive for the researcher in the context of utilising existing theories or testing hypothesis rather than developing new theories. In like manner, deductive approach remains assistive towards the utilization of positivism philosophies. Additionally, this research approach remained more flexible and the suitable to study this research issue and have supported to generate valid research outcomes (Flick, 2015). Deductive approach has enabled to increase the significance of the study by offering deeper understanding of research by investigating the research topic on the basis of facts and figures instead of describing theoretical aspects (Vaioleti, 2016). Due to this reason, deductive approach remain more supportive to conduct this study in the right direction to analyse the data related to financial periods of the firm during the time span of 2012 to 2016 to identify the role of CSR in the context of Indian Companies and to observe the changes before and after the mandate of CSR.
Smith (2015) depicted that research strategy reflects then overall plan for conducting the research study. It enables to guide the research in the context of effective planning, execution, and monitoring the study. To conduct this study adequately, researcher has utilized literature review strategy which has enabled to explore the theoretical concepts. This strategy enabled to get detailed understanding regarding CSR and its impact towards the firm in the context of India. It has also assisted to critically analyse the research topic to understand the point of view of past researchers on the basis of journals, textbooks, articles, websites, and annual report, etc. (Gast, & Ledford, 2014). At the same time, for the purpose of financial analysis, researcher has utilized various data, facts and figures for Reliance Industries, Aditya Birla Group, Mahindra & Mahindra, AirtelBharti and Tata Group in the context of the financial period of 2012-2013, 2013-2014, 2014-2015 and 2015-2016. For the collection of secondary data, various sources such as journals, websites, annual report, etc. are used. In this context, the findings of the literature review have enabled the researcher to correlate the findings with financial performance. So, it has supported to improve the validity of the research outcomes (Tarone, Gass, & Cohen, 2013). Secondary data analysis remained highly assistive to increase the reliability and relevancy of the research. It has supported to collect the data from the past findings and has supported to generate adequate results.
Research purpose are divided into three types, they are – exploratory, explanatory & descriptive. These research purposes can be utilised as per the research need. Exploratory research purpose is used in those researches where there is a need of generating new hypothesis. It is used for those problems which are not clearly defined(Humphries, 2017). Howeverin the contrary, in the context of explanatory research, phenomenon and testing of the hypothesis take place. It enables to explain the objective of the research as well as research problem on the basis of hypothesis. In like manner, descriptive research purpose supports to define the dilemma of the research on the basis of various input methods. In this research, for getting effective outcome, researcher has included exploratory research purpose as it has enabled to focus towards secondary sources while getting responses of the participants. It has enabled to get the authentic conclusion of the study.
There are basically two types of data collection method which are used by the firm. In this context, primary as well as secondary data collection method is used.In the context of primary data collection method, first hand data is collected by the respondents to understand their point of view regarding the research topic on the basis of their ideas, views and perception(Bauer, 2014). However secondary data collection method allows collecting the research data from the past findings which remain assistive to understand the view points of the past researchers regarding the research topic.
For the purpose of conducting this study, researcher has utilized secondary data collection method. So, the researcher has referenced various news, annual reports, articles, webpage, etc. which has supported to collect the relevant data of the sample firms(Tuohy, et al., 2013). So, in this context, under secondary data collection method, financial analysis method is used. In this study, researcher has conducted the study on the basis of literature review and financial analysis technique.In the context of literature review, researcher has referenced various articles, internet sites, blogs, business magazines, annual reports, etc. which has supported to critically analyse the research topic. Both these methods haveremained supportive to collect the relevant information regardingthe Indian companies after the mandate of CSR standard on the basis of financial report (Choy, 2014). Financial analysis has supported towards offering in-depth knowledge regarding the research topic. The reason behind selecting secondary data collection method is that it has enabled to evaluate the figures and facts on the basis of financial report. In like manner, the findings of the financial analysis have correlated with the literature review which has supported to increase the reliability of the research outcome(Reynolds, et al., 2014).
It is difficult task to involve all the firms related to the research in the study(Lushey, & Munro, 2015). Due to this reason, to conduct this study in an effective manner, researcher has taken 29 Indian firms operating in different industries including telecom, banking, FMCG, oil and gas, IT and pharmaceutical. In this context, firm has conducted the research on the financial periods of 2012-2013, 2013-2014, 2014-2015 and 2015-2016. These financial periods has supported to analyse the pre-periods and post-periods in implementation of CSR. The figures and facts regarding the financial periods of these five firms have remained assistive to evaluate correlation analysis and regression analysis in an effective manner.
To conduct the research in an effective manner, there are basically three typesof research designs, they are – qualitative research design, quantitative research design and mixed research design. Quantitative research design supports to analyse the research output on the basis of tables, graphs, carts, etc. which allows to understand the research outcome in a glance(Dumay, &Cai, 2015). On the other hand, qualitative researchdesign cannot be quantified and based on subjective judgment perspective. In like manner, mixed research design is the combination of quantitative as well as qualitative method.Wiek,& Lang (2016) depicted that the research design for a particular research is selected on the basis of research need.
In this study, researcher has taken quantitative research design as this method has supported to offer in-depth knowledge regarding the research topic on the basis of past figures and facts. It has supported the researcher to conduct the financial analysis of the sample firms in an adequate manner while focusing towards financial periods. Quantitative research design has supported to analyse the research study on the basis of figures and facts and has enabled to statistical represent the data(Roberts, 2013). This method remained assistive to analysethe study on the basis of correlation analysis and regression analysis in an effective manner and has enabled to get adequate information about the CSR activitiesin the context of India, for the purpose of finding the changes in the Indian companies after the mandate of CSR standard. Researcher has utilized various past figures and facts as well aswhile collecting the data, researcher has given huge consideration towards validity and relevancy which has supported to analyse the study in an effective manner and to conclude the research effectively.
To conduct this study in the right direction, financial analysis method is used by the researcher. For this purpose, ratio, correlation and regression analysis has taken which has enabled to conduct the study on the basis of descriptive and numerical type. Ratio analysis is used at the initial step to evaluate changes in the financial report after implementation of CSR (Vamsi Krishna Jasti, &Kodali, 2014). Furthermore, profitability testing correlation and regression analysis is used which has enabled to analyse the understanding regarding positive relationship between CSR and financial performance of the firm. Additionally, it has enabled to represent the secondary data on the basis of figures and facts which has enabled to understand the research outcome in a glance. In like manner, researcher has correlated the secondary findings with literature review which has enabled to identify the consensus of the output with theories, concepts and framework (Lushey, & Munro, 2015).
In this research, huge consideration has given towards ethical parameters as it enables to increase the relevancy of the study. For this purpose, researcher has given huge consideration towards copyright, patent and plagiarism during the collection of secondary data. In like manner, researcher has focused towards referencing and in-texting the data which are collected from past researchers to give equal respect to the authors whose findings are utilized in the study. It has supported to give credit to the authors for the data which has sourced from their study(Bauer, 2014).It has supported to eliminate the chances of any kind of hindrance. Additionally, researcher has also given consideration towards following the rules and parameters of the university. It has enabled to eliminate the chances of issuesduring the submission of the dissertation. Furthermore, it has supported to eliminate any kind of ethical violation in the context of copyright, patent and plagiarism and has supported to remove the chances of legal issues (Tarone, Gass, & Cohen, 2013).
In this study, researcher has utilized secondary data collection method however primary data collection method remains highly assistive as it enables to collect first hand data directly from the side of the respondents which increases the relevancy of the research. Due to this reason, there is an opportunity for the future researchers to utilize primary data collection method. In like manner, this study has included limited sample size which has limited the research outcome. So, future researchers have opportunity to include large sample size which will remain assistive to enhance the reliability of the research outcome (Vaioleti, 2016). In like manner, this study is based on quantitative data analysis which has supported to increase the statistical representation but has eliminated the chances of understanding the data on qualitative basis. So, future researchers can utilize mixed data analysis approach.
Chapter 4: Data Analysis
This chapter of dissertation provides the analysis of the gathered data to present the meaningful information. In this chapter, the data and information collected in the previous chapters by using secondary data collection method is analyzed. This chapter provides main findings related to the role of CSR in the context of Indian Companies and to observe the changes after the mandate of CSR. In this chapter, the researcher used quantitative data regarding CSR spending by the firms during pre-mandate and post-mandate periods to make a comparative study. his chapter also explains the relationship between different variables through correlation analysis, which is significant to understand the impact of CSR spending on financial performance of the firms. All the data findings are also discussed with the outcomes of literature review to prove the hypotheses.
4.2 Data Findings and Analysis
Linear regression for 2012-2013, 2013-2014, 2014-2015 and 2015-2016
For Year 2012-13:
| One-Sample Test | ||||||
| Test Value = 0 | ||||||
| t | df | Sig. (2-tailed) | Mean Difference | 95% Confidence Interval of the Difference | ||
| Lower | Upper | |||||
| @20122013 | 3.034 | 28 | .005 | 42.40997 | 13.7797 | 71.0402 |
For Year 2013-14:
| One-Sample Test | ||||||
| Test Value = 0 | ||||||
| t | df | Sig. (2-tailed) | Mean Difference | 95% Confidence Interval of the Difference | ||
| Lower | Upper | |||||
| @20132014 | 2.950 | 28 | .006 | 55.91941 | 17.0900 | 94.7488 |
For Year 2014-15:
| One-Sample Test | ||||||
| Test Value = 0 | ||||||
| t | df | Sig. (2-tailed) | Mean Difference | 95% Confidence Interval of the Difference | ||
| Lower | Upper | |||||
| @20142015 | 2.935 | 28 | .007 | 66.94672 | 20.2153 | 113.6782 |
For Year 2015-16:
| One-Sample Test | ||||||
| Test Value = 0 | ||||||
| t | df | Sig. (2-tailed) | Mean Difference | 95% Confidence Interval of the Difference | ||
| Lower | Upper | |||||
| @20152016 | 1.510 | 28 | .142 | 218.36055 | -77.8610 | 514.5821 |
For all periods:
| One-Sample Test | ||||||
| Test Value = 0 | ||||||
| t | df | Sig. (2-tailed) | Mean Difference | 95% Confidence Interval of the Difference | ||
| Lower | Upper | |||||
| @20122013 | 3.034 | 28 | .005 | 42.40997 | 13.7797 | 71.0402 |
| @20132014 | 2.950 | 28 | .006 | 55.91941 | 17.0900 | 94.7488 |
| @20142015 | 2.935 | 28 | .007 | 66.94672 | 20.2153 | 113.6782 |
| @20152016 | 1.510 | 28 | .142 | 218.36055 | -77.8610 | 514.5821 |
In regression analysis, p value less than 0.05 is used as the cut off for significance. If p value is less than 0.05 means there is a significant difference. If the p value is larger than 0.05, then it cannot be concluded that a significant difference exist. From the above table, it can be evaluated that in 2012-13, 2013-14 and 2014-15, that data sample is significant to make any decision as the p-value is less than 0.05. But at the same time, in 2015-16, the value of p is more than 0.05 indicating no significance of data.
H1: CSR spend 2012-2013 v/s 2014-2015 and 2015-2016
2012-13 Vs 2014-15
| Paired Samples Test | |||||||||
| Paired Differences | t | df | Sig. (2-tailed) | ||||||
| Mean | Std. Deviation | Std. Error Mean | 95% Confidence Interval of the Difference | ||||||
| Lower | Upper | ||||||||
| Pair 1 | @20122013 – @20142015 | -2.45368E1 | 51.23104 | 9.51337 | -44.02400 | -5.04951 | -2.579 | 28 | .015 |
P value <0.05 means differences exist in both data set.
If the value of p is smaller, the result is significant. From the above regression table, it can be evaluated that p-value is less than 0.05 means null hypothesis were to be rejected at the 5% significance level, this would be reported as “p < 0.05″. It can be suggested that null hypothesis is unlikely to be true or it is false. Null hypothesis is that there is no difference in data of CSR spending between 2012-13 and 2013-14. But based on regression, null hypothesis is rejected as there are differences between the data of CSR spending between these two periods.
2012-13 Vs 2015-16
| Paired Samples Test | |||||||||
| Paired Differences | t | df | Sig. (2-tailed) | ||||||
| Mean | Std. Deviation | Std. Error Mean | 95% Confidence Interval of the Difference | ||||||
| Lower | Upper | ||||||||
| Pair 1 | @20122013 – @20152016 | -1.75951E2 | 729.02052 | 135.37571 | -453.25516 | 101.35399 | -1.300 | 28 | .204 |
From the above table, it can be evaluated that P value is >0.05 means no significant difference in both data set. It means the null hypothesis i.e. no difference exists in both data samples will be accepted. It can be interpreted that the amount of CSR spending during 2012-13 is quite similar with the spending during 2015-16.
H2: CSR spend on 2013-2014 v/s 2014-2015 and 2015-2016
2013-2014 V/s 2014-2015
| Paired Samples Test | |||||||||
| Paired Differences | t | df | Sig. (2-tailed) | ||||||
| Mean | Std. Deviation | Std. Error Mean | 95% Confidence Interval of the Difference | ||||||
| Lower | Upper | ||||||||
| Pair 1 | @20132014 – @20142015 | -1.10273E1 | 35.01080 | 6.50134 | -24.34471 | 2.29009 | -1.696 | 28 | .101 |
On the basis of the above regression table, it can be interpreted that P value is >0.05 means no significant difference exists in both data sets. From this, it can be evaluated that null hypothesis is accepted.
2013-2014 v/s 2015-2016
| Paired Samples Test | |||||||||
| Paired Differences | t | df | Sig. (2-tailed) | ||||||
| Mean | Std. Deviation | Std. Error Mean | 95% Confidence Interval of the Difference | ||||||
| Lower | Upper | ||||||||
| Pair 1 | @20132014 – @20152016 | -1.62441E2 | 714.81253 | 132.73735 | -434.34128 | 109.45901 | -1.224 | 28 | .231 |
On the basis of the above table, it can be stated that P value is >0.05 means no significant difference in both data sets. It means the null hypothesis is accepted.
H3: CSR spend on 2012-2013, 2013-2014 v/s 2014-2015 and 2015-2016
2012-2013 V/s 2014-2015 and 2015-2016
| Model Summary | ||||||||||
| Model | R | R Square | Adjusted R Square | Std. Error of the Estimate | ||||||
| 1 | .989a | .978 | .976 | 11.58442 | ||||||
| a. Predictors: (Constant), @20152016, @20142015 | ||||||||||
| ANOVAb | ||||||||||
| Model | Sum of Squares | df | Mean Square | F | Sig. | |||||
| 1 | Regression | 155136.265 | 2 | 77568.133 | 578.009 | .000a | ||||
| Residual | 3489.169 | 26 | 134.199 | |||||||
| Total | 158625.434 | 28 | ||||||||
| a. Predictors: (Constant), @20152016, @20142015 | ||||||||||
| b. Dependent Variable: @20122013 | ||||||||||
| Coefficientsa | ||||||
| Model | Unstandardized Coefficients | Standardized Coefficients | t | Sig. | ||
| B | Std. Error | Beta | ||||
| 1 | (Constant) | -.088 | 2.513 | -.035 | .972 | |
| @20142015 | .700 | .029 | 1.143 | 24.425 | .000 | |
| @20152016 | -.020 | .005 | -.207 | -4.425 | .000 | |
| a. Dependent Variable: @20122013 | ||||||
In this case, P value is <0.05 means differences exist in both data sets. It means the difference in CSR spending in periods 2012-13 was different from 2014-15 and 2015-16. It can be stated that null hypothesis is rejected and alternative hypothesis is accepted.
2013-2014 V/s 2014-2015 and 2015-2016
| Model Summary | ||||
| Model | R | R Square | Adjusted R Square | Std. Error of the Estimate |
| 1 | .980a | .960 | .957 | 21.27016 |
| a. Predictors: (Constant), @20152016, @20142015 | ||||
| ANOVAb | ||||||
| Model | Sum of Squares | df | Mean Square | F | Sig. | |
| 1 | Regression | 280009.745 | 2 | 140004.873 | 309.458 | .000a |
| Residual | 11762.913 | 26 | 452.420 | |||
| Total | 291772.658 | 28 | ||||
| a. Predictors: (Constant), @20152016, @20142015 | ||||||
| b. Dependent Variable: @20132014 | ||||||
| Coefficientsa | ||||||
| Model | Unstandardized Coefficients | Standardized Coefficients | t | Sig. | ||
| B | Std. Error | Beta | ||||
| 1 | (Constant) | -1.512 | 4.615 | -.328 | .746 | |
| @20142015 | .960 | .053 | 1.155 | 18.240 | .000 | |
| @20152016 | -.031 | .008 | -.239 | -3.768 | .001 | |
| a. Dependent Variable: @20132014 | ||||||
In this case, it can be determined that P value is <0.05 means differences exist in both data sets as the CSR spending in 2013-2014 was different from spending in both periods 2014-15 and 2015-16. In this, the null hypothesis is rejected and alternative hypothesis is accepted as the difference in CSR spending in these periods exists.
H4: Relationship between CSR spending & NET Profit
| Correlations | |||||||||
| CSR (2012-13) | Net_profit (2012-13)_ | CSR_(2013-14) | Net_profit_(2013-14) | CSR_(2014-15) | Net_profit(2014-15)_ | CSR (2015-16) | Net_profit (2015-16) | ||
| CSR (2012-13) | Pearson Correlation | 1 | .690** | 1.000** | .675** | .981** | .701** | .688** | .705** |
| Sig. (2-tailed) | .000 | .000 | .000 | .000 | .000 | .000 | .000 | ||
| N | 29 | 29 | 29 | 29 | 29 | 29 | 29 | 29 | |
| Net_profit (2012-13) | Pearson Correlation | .690** | 1 | .690** | .851** | .566** | .968** | .108 | .938** |
| Sig. (2-tailed) | .000 | .000 | .000 | .001 | .000 | .576 | .000 | ||
| N | 29 | 29 | 29 | 29 | 29 | 29 | 29 | 29 | |
| CSR (2013-14) | Pearson Correlation | 1.000** | .690** | 1 | .675** | .981** | .701** | .688** | .705** |
| Sig. (2-tailed) | .000 | .000 | .000 | .000 | .000 | .000 | .000 | ||
| N | 29 | 29 | 29 | 29 | 29 | 29 | 29 | 29 | |
| Net_profit (2013-14) | Pearson Correlation | .675** | .851** | .675** | 1 | .590** | .940** | .108 | .956** |
| Sig. (2-tailed) | .000 | .000 | .000 | .001 | .000 | .576 | .000 | ||
| N | 29 | 29 | 29 | 29 | 29 | 29 | 29 | 29 | |
| CSR (2014-15) | Pearson Correlation | .981** | .566** | .981** | .590** | 1 | .593** | .783** | .598** |
| Sig. (2-tailed) | .000 | .001 | .000 | .001 | .001 | .000 | .001 | ||
| N | 29 | 29 | 29 | 29 | 29 | 29 | 29 | 29 | |
| Net_profit (2014-15) | Pearson Correlation | .701** | .968** | .701** | .940** | .593** | 1 | .097 | .970** |
| Sig. (2-tailed) | .000 | .000 | .000 | .000 | .001 | .615 | .000 | ||
| N | 29 | 29 | 29 | 29 | 29 | 29 | 29 | 29 | |
| CSR (2015-16) | Pearson Correlation | .688** | .108 | .688** | .108 | .783** | .097 | 1 | .093 |
| Sig. (2-tailed) | .000 | .576 | .000 | .576 | .000 | .615 | .631 | ||
| N | 29 | 29 | 29 | 29 | 29 | 29 | 29 | 29 | |
| Net_profit (2015-16) | Pearson Correlation | .705** | .938** | .705** | .956** | .598** | .970** | .093 | 1 |
| Sig. (2-tailed) | .000 | .000 | .000 | .000 | .001 | .000 | .631 | ||
| N | 29 | 29 | 29 | 29 | 29 | 29 | 29 | 29 | |
| **. Correlation is significant at the 0.01 level (2-tailed). | |||||||||
| Net Profit (2012-13) | Net Profit (2013-14) | Net Profit (2014-15) | Net Profit (2015-16) | |
| CSR (2012-13) | 0.69 | |||
| CSR (2013-14) | 0.675 | |||
| CSR (2014-15) | 0.593 | |||
| CSR (2015-16) | 0.093 |
On the basis of the above table, it can be determined that first three periods including 2012-13, 2013-14 and 2014-15) are showing relationship between CSR and net profit but in FY 2015-16, there is low relationship between CSR and Net profit. It means overall, there is a positive effect of CSR spending on net profit of the firms in different industries in first three periods. In 2015-16, there might be other factors that may affect the new profits of the firms.
H5: Relationship between CSR spending & Turnover
| Correlations | |||||||||
| CSR (2012-13) | Turnover(2012-13)_ | CSR (2013-14)_ | Turnover(2013-14) | CSR(2014-15) | Turnover(2014-15) | CSR(2015-16) | Turnover (2015-16) | ||
| CSR(2012-13) | Pearson Correlation | 1 | .702** | 1.000** | .640** | .981** | .480** | .688** | .711** |
| Sig. (2-tailed) | .000 | .000 | .000 | .000 | .008 | .000 | .000 | ||
| N | 29 | 28 | 29 | 29 | 29 | 29 | 29 | 29 | |
| Turnover(2012-13) | Pearson Correlation | .702** | 1 | .702** | 1.000** | .597** | .751** | .076 | .989** |
| Sig. (2-tailed) | .000 | .000 | .000 | .001 | .000 | .699 | .000 | ||
| N | 28 | 28 | 28 | 28 | 28 | 28 | 28 | 28 | |
| CSR(2013-14) | Pearson Correlation | 1.000** | .702** | 1 | .640** | .981** | .480** | .688** | .711** |
| Sig. (2-tailed) | .000 | .000 | .000 | .000 | .008 | .000 | .000 | ||
| N | 29 | 28 | 29 | 29 | 29 | 29 | 29 | 29 | |
| Turnover(2013-14) | Pearson Correlation | .640** | 1.000** | .640** | 1 | .531** | .745** | .071 | .975** |
| Sig. (2-tailed) | .000 | .000 | .000 | .003 | .000 | .715 | .000 | ||
| N | 29 | 28 | 29 | 29 | 29 | 29 | 29 | 29 | |
| CSR(2014-15) | Pearson Correlation | .981** | .597** | .981** | .531** | 1 | .389* | .783** | .598** |
| Sig. (2-tailed) | .000 | .001 | .000 | .003 | .037 | .000 | .001 | ||
| N | 29 | 28 | 29 | 29 | 29 | 29 | 29 | 29 | |
| Turnover(2014-15) | Pearson Correlation | .480** | .751** | .480** | .745** | .389* | 1 | .026 | .756** |
| Sig. (2-tailed) | .008 | .000 | .008 | .000 | .037 | .893 | .000 | ||
| N | 29 | 28 | 29 | 29 | 29 | 29 | 29 | 29 | |
| CSR(2015-16) | Pearson Correlation | .688** | .076 | .688** | .071 | .783** | .026 | 1 | .080 |
| Sig. (2-tailed) | .000 | .699 | .000 | .715 | .000 | .893 | .679 | ||
| N | 29 | 28 | 29 | 29 | 29 | 29 | 29 | 29 | |
| Turnover(2015-16) | Pearson Correlation | .711** | .989** | .711** | .975** | .598** | .756** | .080 | 1 |
| Sig. (2-tailed) | .000 | .000 | .000 | .000 | .001 | .000 | .679 | ||
| N | 29 | 28 | 29 | 29 | 29 | 29 | 29 | 29 | |
| **. Correlation is significant at the 0.01 level (2-tailed). | |||||||||
| *. Correlation is significant at the 0.05 level (2-tailed). | |||||||||
| Turnover (2012-13) | Turnover (2013-14) | Turnover (2014-15) | Turnover (2015-16) | |
| CSR (2012-13) | 0.702 | |||
| CSR (2013-14) | 0.640 | |||
| CSR (2014-15) | 0. 383 | |||
| CSR (2015-16) | 0.080 |
In case of turnover, the results are some different from relationship between the CSR spending and net profit. First two duration periods are showing relationship between CSR and turnover as if the firms spend on CSR activities, their turnover also increases. But in FY 2014-15 and 2015-16, there is low relationship between CSR and turnover. From this, it can be stated that during periods 2012-13 and 2013-14, there was a positive relationship between the CSR spending and turnover, while there is no significant relationship between the CSR spending and turnover during periods 2014-15 and 2015-16.
H6: Relationship between CSR spending &net worth
| Correlations | |||||||||||||||
| CSR(2012-13) | Net_worth(2012-13) | CSR(2013-14)_ | Net_worth(2013-14) | CSR(2014-15) | Net_worth(2014-15) | CSR_(2015-16) | Net_worth(2015-16)_ | ||||||||
| CSR(2012-13) | Pearson Correlation | 1 | .702** | 1.000** | .723** | .981** | .695** | .688** | .702** | ||||||
| Sig. (2-tailed) | .000 | .000 | .000 | .000 | .000 | .000 | .000 | ||||||||
| N | 29 | 29 | 29 | 29 | 29 | 29 | 29 | 29 | |||||||
| Net_worth(2012-13) | Pearson Correlation | .702** | 1 | .702** | .999** | .588** | .990** | .084 | 1.000** | ||||||
| Sig. (2-tailed) | .000 | .000 | .000 | .001 | .000 | .665 | .000 | ||||||||
| N | 29 | 29 | 29 | 29 | 29 | 29 | 29 | 29 | |||||||
| CSR(2013-14) | Pearson Correlation | 1.000** | .702** | 1 | .723** | .981** | .695** | .688** | .702** | ||||||
| Sig. (2-tailed) | .000 | .000 | .000 | .000 | .000 | .000 | .000 | ||||||||
| N | 29 | 29 | 29 | 29 | 29 | 29 | 29 | 29 | |||||||
| Net_worth(2013-14) | Pearson Correlation | .723** | .999** | .723** | 1 | .611** | .987** | .105 | .999** | ||||||
| Sig. (2-tailed) | .000 | .000 | .000 | .000 | .000 | .586 | .000 | ||||||||
| N | 29 | 29 | 29 | 29 | 29 | 29 | 29 | 29 | |||||||
| CSR (2014-15) | Pearson Correlation | .981** | .588** | .981** | .611** | 1 | .578** | .783** | .588** | ||||||
| Sig. (2-tailed) | .000 | .001 | .000 | .000 | .001 | .000 | .001 | ||||||||
| N | 29 | 29 | 29 | 29 | 29 | 29 | 29 | 29 | |||||||
| Net_worth(2014-15) | Pearson Correlation | .695** | .990** | .695** | .987** | .578** | 1 | .094 | .990** | ||||||
| Sig. (2-tailed) | .000 | .000 | .000 | .000 | .001 | .627 | .000 | ||||||||
| N | 29 | 29 | 29 | 29 | 29 | 29 | 29 | 29 | |||||||
| CSR (2015-16) | Pearson Correlation | .688** | .084 | .688** | .105 | .783** | .094 | 1 | .084 | ||||||
| Sig. (2-tailed) | .000 | .665 | .000 | .586 | .000 | .627 | .665 | ||||||||
| N | 29 | 29 | 29 | 29 | 29 | 29 | 29 | 29 | |||||||
| Net_worth(2015-16) | Pearson Correlation | .702** | 1.000** | .702** | .999** | .588** | .990** | .084 | 1 | ||||||
| Sig. (2-tailed) | .000 | .000 | .000 | .000 | .001 | .000 | .665 | ||||||||
| N | 29 | 29 | 29 | 29 | 29 | 29 | 29 | 29 | |||||||
| **. Correlation is significant at the 0.01 level (2-tailed). | |||||||||||||||
| Net worth (2012-13) | Net worth (2013-14) | Net worth (2014-15) | Net worth (2015-16) | ||||||||||||
| CSR (2012-13) | 0.702 | ||||||||||||||
| CSR (2013-14) | 0.723 | ||||||||||||||
| CSR (2014-15) | 0. 578 | ||||||||||||||
| CSR (2015-16) | 0.084 | ||||||||||||||
From the above table, it is evident that there is strong positive relationship between CSR spending and net worth of the firms from different industries. But in 2014-15, there is a moderate positive relationship between CSR spending and net worth of the firms, whereas in 2015-16, there is no significant relationship between the variables.
H7: Average spending on CSR (Sector wise) in pre-period is less than post-period.
| Sectors | 2012-13 | 2013-14 | 2014-15 | 2015-16 |
| Pharmaceutical | 80.68 | 112.78 | 117.51 | 183.094 |
| Telecom | 86.11 | 117.045 | 119.85 | 181.49 |
| FMCG | 7.34 | 7.99 | 9.36 | 11.20 |
| Banking | 4.81 | 8.20 | 8.97 | 11.07 |
| IT | 10.61 | 2.86 | 14.71 | 16.50 |
| Oil & Natural Gas | 73.65 | 98.86 | 141.87 | 899.44 |
From the above table, it can be evaluated that in pharmaceutical sector, the CSR spending during the periods 2012-13 and 2013-14 was less than that during the periods 2014-15 and 2015-16. It means the CSR spending in pre-period was less than the post-period. The same result can be seen in all sectors as all remaining sectors, telecom, FMCG, banking, IT and oil and natural gas sectors because all these sectors show higher CSR spending in 2014-15 and 2015-16 as compared to CSR spending in 2012-13 and 2013-14. It means this hypothesis is accepted.
| Hypothesis | Relationship | Accepted/ Rejected |
| H0 | There is no substantial difference in average CSR spend between the pre and post mandate period. | Rejected |
| H1 | There is substantial difference in average CSR spend of 2012-2013 verses 2014-2015 and 2015-2016. | Accepted |
| H2 | There is substantial difference in average CSR spend of 2013-2014 verses 2014-2015 and 2015-2016. | Rejected |
| H3 | There is substantial difference in average CSR spend of 2012-2013 and 2013-2014 verses 2014-2015 and 2015-2016.
|
Accepted |
| H4 | There is relationship between CSR spending & turnover of pre-mandate period and post mandate period | Significant relationship in pre-mandate periods, not significant in post-mandate periods. |
| H5 | There is relationship between CSR spending & net worth of pre-mandate period and post mandate period | Significant relationship in pre-mandate periods, not significant in post-mandate periods. |
| H6 | There is relationship between CSR spending & net profit of pre-mandate period and post mandate period | Significant relationship in pre-mandate periods, not significant in post-mandate periods. |
| H7 | Average spending on CSR (Sector wise) in pre-period is less than post-period. | Accepted |
From the analysis of results and the interpretation of their findings, it is concluded that the there is a difference in CSR spending between pre-mandate and post mandate period. At the same time, it is also determined that there is also significant relationship between CSR spending and financial performance of the firms in pre-mandate period but, there is no significant relationship between CSR spending and financial performance of the firms in post-mandate period.
Chapter 5: Conclusion and Recommendation
From the above discussion, it can be concluded that during the pre-mandate period, the Indian firms spent less as compare to post-mandate period. On the basis of regression analysis, it can be concluded that the Indian firms have spent more after execution of the CSR standards.
Apart from this, it can be summarized that there is a significant difference in average CSR spend of 2012-2013 verses 2014-2015 and 2015-2016. It can be noticed that the firms in India have spent on CSR activities and programs more in 2014-15 and 2015-16 as compare to the pre-mandate period i.e. 2012-13.
However, the results for second hypothesis were different as it is found that there is no substantial difference in average CSR spending of 2013-2014 verses 2014-2015 and 2015-2016. It means the firms spend on CSR activities and programs in 2013-14 similar as the next periods. At the same time, it is also summarized that there is substantial difference in average CSR spending of 2012-2013 and 2013-2014 verses 2014-2015 and 2015-2016. It is because there are differences in CSR spending in 2012-13 with 2014-2015 and 2015-2016 and CSR spending in 2013-14 with 2014-2015 and 2015-2016. On the basis of these findings, it can be summarized that there is a significant difference in the CSR spending between pre-mandate and post-mandate periods.
These findings have supported to summarize that the implication of section 135 remained highly assistive to increase the trend of CSR as facts and figures of various companies have enabled to analyse that the trend of CSR expenditure has increased in the year 2014-2015 and 2015-2016 as compared to 2012-2013. It has enabled to increase the trend of CSR in India and has enabled to involve the firms to give consideration towards the upliftment of the society.Section 135 has supported to bring change in the society and has enabled to increase the living standard. In like manner, it has supported to give concern towards the environment perspective as it has become a major concern in the current scenario. Due to increase in modernization and industrialization, pollution is regularly increasing in the atmosphere.
After applying CSR standards, a change can be noticed within the Indian firms as they have started to spend more in CSR practices for the community welfare and develop brand image in the market. From the literature review, it can be summarized that there are different guidelines which are associated to CSR like the new company act 2013 national voluntary guidelines that are helpful in assuring about the economical, environmental, social related responsibilities in India. In addition to it, the firm is obliged to get its registration done under the company act 2013 in India. According to this act, it is necessary for each firm which are operating its operations and carrying out its functions in India to invest a fixed percentage of profits towards education, employment, health, etc, for the betterment of the society. The strict rules regarding CSR which are introduced by the Indian government have further helped for the economic development. Additionally, there are many other various rules and regulations which Indian firms are required to initiate in order to eliminate the possibility of any legal hindrance. Indian firms are shifting focus on CSR strategies because of the rise in option availability of a particular product and liberalization. It also helps to develop better consumer base while influencing the investors, shareholders and the suppliers. The government of India along with people of India plays an important role in the successful accomplishment of CSR. Indian people show awareness regarding the CSR activities and they prefer to buy those brands which attain its CSR responsibilities. This is the reason which forces the Indian firms to implement the CSR activities.
It shows that there is an increase in CSR spending of the firms after implementation of the mandate. It is because the government of India has made it mandatory to follow the CSR practices for the firms that have a positive impact on the CSR spending.
Apart from this, from the correlation analysis, it can also be summarized that there is a significant relationship between CSR spending and financial performance in pre-mandate period. It is because in pre-mandate period, when the firms spend more on CSR, financial performance indicators including net worth, turnover and net profit also increase. There is a direct positive relationship between these variables. But in post-mandate periods, there is no significant relationship between CSR spending and net worth and turnover and net profit. However, there was an increase in CSR spending during post-mandate periods (2014-15 and 2015-16) but the firms could not notice a significant increase in financial performance including turnover, net worth and net profit. There might be different reasons or challenges that might have caused this impact on financial aspects even after doing CSR efforts. For instance, high spending on CSR may cause high costs for these companies that affected their net profits. Therefore, it can be stated that there is need for the firms to make some changes in their existing practices.
From the above discussion, it can be recommended that the Indian firms need to spend more on CSR to develop strong brand image in international market. The concerns of the firms should not be on increasing profits and revenues as they should voluntarily participate in CSR activities that have a positive impact on their brand image. There may be different challenges including lack of CSR awareness among Indian people and price sensitiveness and increasing costs due to higher CSR spending that might have affected the financial performance of the Indian firms even after increasing CSR spending. For improving the effect of CSR practices to increase financial performance of Indian firms, there is need to adopt the following recommendations:
Increase public awareness:
It is essential for the firms to consider the public awareness regarding CSR as there is need to increase the CSR awareness among Indian people as they could purchase the products of the companies which spend more on CSR practices. Apart from this, it is also essential for the government of Indian to run the campaigns based on CSR programs and activities to develop public awareness for the CSR practices. For this purpose, government should develop various programs, advertisement, etc.
Changes in government polices:
It can be effective for the government of India to provide the benefits like rebates, subsidies and other benefits to the firms, which fulfil their CSR framework. It can be helpful for the firms to reduce the operational costs and keep the product prices low as there is high impact of CSR spending on the costs of the firms. Government needs to facilitate the use of environmentally friendly practices like recycling, reusability, effective supply chain management, effective utilization of power, eliminating wastage, utilizing renewable energy sources, etc. in Indian firms. All these practices can be effective for the firms to reduce the cost of the production and also reduce the impact of CSR spending on profitability. Government should also give focus towards making strict rules and regulations towards CSR so that it will become essential for the firm to fulfil their social responsibility.
Focus on the major social areas:
In order to develop social awareness about the CSR efforts of the firms, it is crucial to focus on the major social areas for improvement in the Indian society. There may be different areas like child education, health improvement and poverty reduction that may be focused by the organizations to make bigger impact of their CSR efforts in Indian society.
Moreover, there is a need of making the firms aware that increasing the concern towards CSR will remain assistive to increase the positive image in the market which will remain supportive for increasing the sales and developing the brand loyalty.There is a need of making the firms aware that in India due to increase in the trend of liberalization and literacy level, consumers give huge focus towards CSR parameters so to increase competitive advantage and long-term sustainability in the industry, they need to increase focus towards CSR.
5.3 Limitations and Future Research Implication
This research can be helpful for the Indian companies to get more benefits through CSR framework. It is because it helps them to identify the impact of CSR efforts on the financial performance. With the help of this, these firms can design effective strategies to improve the financial performance through CSR efforts. However, there are some limitations because this study was based only India that limits its generalized aspects for research outcomes. It may be more effective for the future researchers and scholars to include other countries to make the research outcomes more generalized. Moreover, this study is based on secondary data analysis, so in the future context, involving the primary data will remain assistive to increase the validity and reliability of the research outcomes.Apart from this, this study is also limited to some financial parameters and non-financial aspects as the future researches can be focused on other financial and non-financial aspects to present more wide view on this research issue. In addition, the sample size was restricted to 29 companies in this research that may reduce the validity and reliability of the research outcomes. In future studies, the researchers can incorporate more firms to provide more valid and reliable research outcomes.
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