How mandatory corporate social responsibility can help governments with development goals

Abstract

Many governments seek the private sector to meet their development goals. One possible means to enlist this support is to impose mandatory or "hard" corporate social responsibility (CSR) requirements on large companies. To shed light on how mandatory CSR could be helpful in this regard, we study the case of India, where the government has required large companies to spend a fraction of their income toward development as CSR since 2014. We analyzed the expenses of leading Indian companies and found statistically significant similarities among these companies in their spending pattern across the different categories, which we interpret as isomorphism.By looking for the government's motivation and the companies' motivations-both perceive the priorities in unmet social needs-we present a conceptual model to explain this isomorphism in CSR expenditure across different categories. The model suggests that governments may find mandatory CSR helpful to direct corporations in achieving development goals.

Corporate Social Responsibility Rating, Corporate Governance, and Financial Distress: Evidence from China

“…Concerning Indian listed companies, Sodhi et al . (2021) found that Indian firms require mandatory CSR to strengthen government support. Moreover, Makosa et al .…”

“…8 Jadiyappa et al (2019) show that firm market value only increased for mandatory CSR firms after implementing the Indian Companies Act in 2015. Concerning Indian listed companies, Sodhi et al (2021) found that Indian firms require mandatory CSR to strengthen government support. Moreover, Makosa et al (2020) and Liu and Tian (2021) found that Chinese firms forced to report their CSR experience reduced agency costs.…”

Mediating role of internationalization readiness in the adoption of social sustainability practices: Evidence from Vietnamese handicraft companies

“…Among them, government, laborers, market, and suppliers are the most prominent in exerting pressures, tangible and intangible alike, on companies to adopt SSP (Sodhi et al, 2022;Tran et al, 2021).…”

Ética y Responsabilidad Social en el sector Empresarial

“…Sumado a ello, si bien, las acciones de los directores y gerentes de las empresas que aplican RSE permiten contribuir a la sociedad, proteger el medio ambiente y ayudar las causas sociales, lo realizan con el fin de mejorar su reputación corporativa; ante ello, se señala que existen otros aspectos que se necesitan considerar, como la mejora del lugar de trabajo y la gobernanza de la organización (Sánchez-Torné et al, 2020). Por otro lado, existe la idea de que la RSE debe aplicarse de manera obligatoria, ya que el gobierno y las empresas actuarían debido a la motivación compartida de afrontar las necesidades insatisfechas de la sociedad (Sodhi et al, 2021).…”