The Indian Scenario
The Genesis
The Indian economy has been under two distinct and diverse forces of ‘swadeshi’ i.e. buy Indian Goods’ and the need to integrate with the larger world economy. Both forces have significant economic and political implications in the region. Liberalization of the Indian economy in the late 1980s and early 1990s also saw the reestablishment of transnational corporations on the Indian horizon. The Indian political and economic climate has been far from stable in the last decade, and it has been claimed that transnational corporations, to influence this unstable political and economic climate in their favour, have used the concept of corporate social responsibility as bait. It is worth mentioning that though the concept of corporate social responsibility is gaining popularity with the Indian business too, its practice has been under varied external and internal influences. Therefore the benefit or loss of the increase in numbers and reach of transnational corporations is open to debate in the Indian context.
The Trends
The family run business of the 1920s and 1930s: the Tatas, the Shriram Group, and the Birla Group, were actively involved in running and establishing schools, colleges, hospitals, temples, cultural centers and training centers etc. Most of these infra-structural establishments are all well known today by the names of business that were instrumental in their establishment, for example the Shriram College of Commerce, the Birla Mandir (temple)one of which exists in almost each major city of the country, and the Tata Institute of Fundamental Research etc. These infra-structural initiatives were instrumental in popularizing the identity of these companies. The initiatives were also essential as per Independence and early post-Independence India lacked advanced centers of research and education. The infra-structural initiatives and the economics reach of these businesses have made the Tatas, Birlas, and the Shrirams household names in the Indian context.
Change in Threshold
In the age of globalization Corporations and business enterprises are no longer confined to the traditional boundaries of the nation-state. In the last twenty years the role of multinational corporations in defining the markets and consumers has been tremendous. The rules of corporate governance have changed. And there has been a range of reactions to this change. On the one hand globalization and liberalization have provided a great opportunity for corporations to be globally competitive by expanding the production base and market share. On the other hand, the same situation discounted against multinational corporations in different parts of the world. Labourers, marginalised consumers, environmental activists and social activities have protested against the unprecedented predominance of multinational corporations. The ongoing revolution in communication technology and the effectiveness of knowledge- based economics has created a new model of business and corporate governance. A growing awareness about the need for ecological sustainability has paved the way for a new generation of business leaders concerned about the responses of the community and sustainability of the environment.
Issues on Board
Globalization along with changed norms of production, labour and environment with conditions of best practice has influenced behaviour of businesses across the world. The success of the acceptance of these norms has been outside the letter of law and the adoption has often influenced state to adopt better/improved or at least changed role for itself. The norms of resettlement and rehabilitation as dictated by the Indian state are by law adopted by joint venture companies involved in extractive industries yet many other activities are also undertaken as corporate social responsibility, which are neither detailed nor dictated by law. Growth of civil society organizations has also led to increasing democratization in the marginalized and impoverished communities creating local responses to the grant meta narratives. Yet nation state needs to evolve a new role for itself in this fast changing world. A stable nation providing good governance is thus basic requirement for developing countries in their attempt to safe guard rights and interests of their poor and marginalized. Yet, the business are wary of investing time and resources in proactively dealing with pressure groups, media, and local people for social or community development as they often lack familiarity and the skills to do so (Business World, 1998a). Indian business has been actively involved in corporate philanthropy since the early 1900s. The charitable outlook of Indian businesses is progressively undergoing change under some external and internal influences. The increase in the momentum of corporate social responsibility has created new routes or avenues via which issues of corporate social responsibility are put to practice.
India in context: a dancing dragon?
An interesting development that marked the external environment in the last decade has been the emergence of the BRIC (Brazil, Russia, India and China) countries in general and India, in particular, as influential economic power houses in the global economy (Jain & Subhash 2006). Their remarkable GDP growth has transformed not only the nature and character of economic landscape of these countries but had wide ranging influence on their social and political life as well (Khanna et al. 2006). The projections suggest that amongst the BRIC economies India has the potential to grow the fastest over the next 30-50 years Notably, India’s growth rate is forecast to be above 5% throughout this period. While India grew steadily some sectors of the economy have registered exponential growth. For instance, the CAGR (Combined Annual Growth Rate) of the IT sector has been 30% year on year It has grown from a mere USD 4 billion in revenues in 1998 to a remarkable USD 64 billion in 2008 and it employs over 2 million people in 2009. Its contribution to India’s GDP has gone up approximately five times from 1 percent to 5 percent in the last decade (NASSCOM, 2008).
It is pertinent in this regard to have a brief analysis of India’s economic growth in the recent years which has merited global attention. A key indicator of the remarkable growth of world’s second largest populated state is that it is the fourth largest economy in PPP terms (2000). Since 2004, the growth in the Indian economy is quite close to the projected estimates for the BRIC countries.
Two key forces that shaped the metamorphic changes in the Indian business environment have been the liberalization and privatization of the national economy. Liberalisation and privatisation led to many changes in the external environment of organisations some which include the liberalisation and de-regulation of the various sectors of the economy such as insurance and telecommunication, the phenomenal growth of information communication technology, greater integration into the WTO and membership of global and regional trade organizations, and the liberal trade policies. Furthermore, the forces of globalisation and privatization led to a heightened focus on competition, customers, clients and trade conditions. In brief, these changes forced radical changes in the environment of organisations. The transformation of the role of the sate from that of a controller and regulator to that of a facilitator of the economic activity is the embodiment of these changes. Such changes in the external environment necessitate wide range of changes in workplace values and attitudes
New waves in India
· Rapidly growing economy
· Role of regulations vis-à-vis Pace of Rapid Growth
· Role of Government, Private Sector and Civil Society
· Inclusive Development and
· Responsible Business Initiatives
Current Issues
The triple bottom line (people, planet, profit) approach to CSR emphasizes a company’s commitment to operating in an economically, socially and environmentally sustainable manner. The emerging concept of CSR advocates moving away from a ‘shareholder alone’ focus to a ‘multi-stakeholder’ focus. This would include investors, employees, business partners, customers, regulators, supply chain, local communities, the environment and society at large. The key components of research topics would therefore include the following:
- Corporate Governance: Disclosures, role of Board and CEO, Executive Compensation, Conflict of Interests, Accountability and Transparency, Limits to CSR and Economic Growth, Corporate Reputation, Corporate Citizenship, Code of Conduct.
- Workplace and labour relations: Responsibility in the context of employees, Customers, Supply chain and Community, Ethical Behaviour and Whistle blowing.
- Environment: Sustainability and growth.
- Community: Multi-sector partnership and Collaboration, Socially Responsible Initiatives, Leadership and Community Engagement Models.\
- EPILOGUE
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Globalization along with changed norms of production, labor and environment with conditions of best practice has influenced behavior of businesses across the world. The success of the acceptance of these norms has been outside the letter of law and the adoption has often influenced state to adopt better/improved or at least changed role for itself. The norms of resettlement and rehabilitation as dictated by the Indian state are by law adopted by joint venture companies involved in extractive industries yet many other activities are also undertaken as corporate social responsibility, which are neither detailed nor dictated by law. Growth of civil society organizations has also led to increasing democratization in the marginalized and impoverished communities creating local responses to the grant meta narratives. Yet nation state needs to evolve a new role for itself in this fast changing world. A stable nation providing good governance is thus basic requirement for developing countries in their attempt to safe guard rights and interests of their poor and marginalized. Indian business has been actively involved in corporate philanthropy since the early 1900s. The charitable outlook of Indian businesses is progressively undergoing change under some external and internal influences. The increase in the momentum of corporate social responsibility has created new routes or avenues via which issues of corporate social responsibility are put to practice. This has led to a marked and a welcome participation of corporate house in the local development agenda, showing that they do feel responsibility for the environment and people of the area where they set up business. Now it is no longer a question of what and how they help, because they have already proven, more so in the last decade, that they do want to help, and that they do have the local welfare at heart. This attitudinal shift is not a response to any industrial, commercial or government diktat, of course, certainly increases goodwill. The fact that this makes it a two-way interaction is very welcome too, as that was the primary goal of the exercise anyway. The time for unmotivated philanthropy seems to be coming to an end in the Indian context, and the usage of the term ‘corporate social responsibility’ is gaining currency since the 1990s. Therefore well-established business also may have a well-established strategy of ‘corporate social responsibility’ to a) effectively deal with the instability of the Indian politico-economic climate, b) proactively deal with all the other stakeholders and c) meet the demands of international customer especially as regards to labour and environment. The success of the acceptance of these norms has been outside the letter of law and the adoption has often influenced state to adopt better/improved or at least changed role for itself. The norms of resettlement and rehabilitation as dictated by the Indian state are by law adopted by joint venture companies involved in extractive industries yet many other activities are also undertaken as corporate social responsibility, which are neither detailed nor dictated by law. Growth of civil society organizations has also led to increasing democratization in the marginalized and impoverished communities creating local responses to the grant meta narratives. Yet nation state needs to evolve a new role for itself in this fast changing world. A stable nation providing good governance is thus basic requirement for developing countries in their attempt to safe guard rights and interests of their poor and marginalized.
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