A STUDY ON IMPACT OF CORPORATE SOCIAL …icmrr.org/global/pdffiles/IJFRR/f201705008.pdf · This school of theory maintains that maximizing the interests of the shareholders of the

IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON THE

SUSTAINABLE RETURNS OF THE SHAREHOLDERS IN INDIA

S GOPALAKRISHNAN 1

DR. K V KANNAN 2

1 Research Scholar, Prist University, Thanjavur

2 Assistant Professor, Government Arts College, Dharmapuri – 636705

"Corporate Social Responsibility is the continuing commitment by business to behave ethically and

contribute to economic development while improving the quality of life of the workforce and their

families as well as of the local community and society at large".

L.Holmes & R.Watts

1.1 INTRODUCTION

In the last twenty years, a large number of changes have taken place in relationships

maintained by a company with the state and society. No longer does a company continue to act as an

independent entity regardless of the public interest and welfare of the society and its effect on the

environment. The growth of the relationship between a company and the society has been a slow

transformation from just a humanitarian coexistence to a point where the interest of stakeholders and

society is increasingly becoming prime importance. Organizations are beginning to realize the fact

that in order to stay ahead in the business and gain strategic benefits, it is important to practice

responsible business etiquettes. The kind of competition companies‟ face today and the wave of

globalization have drastically changed the business environment in the past few years. Globalization

has compelled organizations to expand their boundaries from their country of origin to other rapidly

developing markets in other parts of the world. In order to be successful in their attempt towards

globalization companies have realized that they need to implement clearly defined business practices

with a well-defined focus on public interests and the environment. Also, in some of the markets across

the world, since the Government still holds the key due to the rules and regulations set by it, the

Government would be naturally inclined to prefer companies which take care of the interest of all the

stakeholders. Lastly, organizations across the world have begun to realize the importance of intangible

assets, i.e. it‟s brand name or employee morale. Only organizations that have gained the goodwill of

the people and are ideal corporate citizens will be successful in developing these assets into strategic

benefits

Social Responsibility

The social responsibility of business encompasses the economic, legal, ethical, and

discretionary expectations that society has on organizations at a given point in time (Archie, 1979)1.

1.2 Theory of social responsibility for protection on the interests of the corporate stakeholders

other than shareholders:

This school of theory maintains that maximizing the interests of the shareholders of the

company is the most important objective that a business organization should achieve. However, it

should not be considered as the sole objective. As a business organization, a company is vitally

interrelated with the overall social environment. In business activities, a company should not only

consider on the influence that the activities may have on shareholders, but also on the influence that

they will have on the interests of the parties other than the shareholders, including employees,

suppliers, customers, creditors and on the benefits of the Government. When a company makes any

decision, it has to take into account the benefits of these people. Otherwise, it should take liabilities

against any harm or damages thus incurred to these people.

1 Archie B. Carroll, (1979). A Three-Dimensional Conceptual Model of Corporate Performance. The

Academy of Management Review, 4 (4), 497-505.

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INTERCONTINENTAL JOURNAL OF FINANCE RESEARCH REVIEWISSN:2321-0354 - ONLINE ISSN:2347-1654 - PRINT - IMPACT FACTOR:4.236VOLUME 5, ISSUE 5, MAY 2017UGC APPROVED JOURNAL - NEWLY ADDED JOURNAL S.NO:7095

REVIEW OF LITERATURE

Review of literature deals with the previous study conducted by other researchers in the same

area or related area and reveals their findings. Industrial Revolution contributed to radical change.

Large organizations developed and acquired great power, and their founders and owners became some

of the richest and most powerful men in the world. In the late nineteenth century many of these

individuals believed in and practiced a philosophy that came to be called „Social Darwinism‟.

Davis, (1960)2 in the early 1960s, the advocates of corporate social responsibility argued that

implementation of CSR helps the entity to improve the reputation and employee recruitment and

retention.

Milton Friedman, (1970)3 stated that the one and only one social responsibility of business

to use its resources and engage in activities designed to increase its profits so long as it stays within

the rules of the game, which is to say, engages in open and free competition without deception or

fraud.

Bowman, (1977)4 made an in-depth analysis on the social orientation or the perceptions of

Corporate Social Responsibility of the managers of various enterprises and found that the managers

are predominantly focused and inclined towards the economic dimensions of the Corporate Social

Responsibility. The Chief executives of the companies should adopt a tradeoff between economic

factors and Corporate Social Responsibility.

Beesley and Evans, (1978)5 is of the opinion that for the companies to be CSR driven, the

government should promote CSR through various regulations and taxation rules to ensure that the

corporations are profitable enough to take up and pursue CSR as an effective tool of business.

Anderson and Frankle, (1980)6 observed that there has been increased interests on the part

of various organistions to report on their social performances along with the economic performances.

These social performances are having direct impact on the capital markets. The returns of the

organisations reporting the social performances are compared with the returns of the organisations

that are not reporting the social performances while making investment decisions.

Cornell and Shapiro, (1987)7 commented upon the role of non-investor stakeholders who

are highly counted upon now-a-days and it has a larger impact in the corporate financial policies.

The movements of the stock prices depends on the level of the informations and communications

provided to the non -investor stake holders along with investors.

Windsor, (1991)8 argues that there are four categories of Corporate Social Responsibilities

which can be depicted as a pyramid, in which economic responsibilities is the foundation upon which

all other responsibilities are predicted and without which they cannot be achieved, and discretionary

responsibilities are the apex.

2 Davis, K. (1960). Can business afford to ignore social responsibilities? California Management Review

2, 70–76. 3 Milton Friedman, (1970). Corporate ethics and corporate governance, 173-178,

4 Bowman, J.S. (1977). Business and the Environment: Corporate Attitudes, Actions in Energy-Rich

States. MSU Business Topics 25 (1), 37–49. 5 M E Beesley and Tom Hevans- Croom Helm, (1978). Corporate Social Responsibility – A

Reassessment, ISBN No 0856646407, 9780856646409 6 Anderson, J.C., & Frankle, A.W. (1980). Voluntary social reporting: An ISO-Beta Portfolio analysis.

The Accounting Review 55, 467–479. 7 Cornell, B., & Shapiro, A.C. (1987). Corporate Stakeholders and Corporate Finance. Financial

Management, 16 (1), 5-14. 8 Windsor, D. (2001). The Future of Corporate Responsibility'. International Journal of Organizational

Analysis, 9(3), 225-56.



Griffin and Mahon, (1997)9 commented that multiple and focused measures on social

performances will have larger impact on the consistency in terms of financial measures and this builds

a strong relationship between corporate social performances and financial performance of an

organisation. A firm should have increased awareness on the need of the social performances at all

times under varying financial performance situations.

Jeff Frooman, (1997)10

has given opinion to increase the wealth of the shareholders for

which he the organisations to act in a highly socially responsible and lawful manner. In his article he

stated that an organisation with a socially irresponsible behavior will have a negative effect on the

wealth of the shareholders.

Carroll, (1999)11

have stated that several theoretical frameworks have emerged in the last few

decades on the relations between social, environmental and financial performance of the business

entities. While commenting upon the Corporate Social Responsibility of the business, Carroll

thrusted upon the corporate social and environmental performances for achieving financial

productivity.

Epstein and Roy, (2001)12

brought in a framework, aiming to assist managers in making the

corporate sustainability strategies operational on the basis of economic rationale. They made an

analysis of 20 external corporate reports in terms of how companies used systems to link

environmental and social activities to long term financial performances.

Rojsek, (2001)13

conducted a study which focuses on the attitudes of the corporate managers

towards their concern for the environmental performances of the business. As per the study, the

existence of a potential conflict between the environmentally responsible behaviour of the

organization and the other economic goals funnels constructive pressure on the organisations for

better environmental performances.

Xueming Luo and Bhattacharya, (2006)14

addresses the influence of CSR on customer

responses. The study predicted that the customer satisfaction mediates the relationship between the

CSR and firms market value. The product quality and innovativeness moderates the financial returns

to CSR. As per their study, high CSR innovativeness will result into higher customer satisfaction

which inturn will be resulting into financial quality.

Truscott, et al., (2009)15

in their article on the reputation of Industires in Australia, revealed

that CSR has increasingly become significant for the business. The study also described the CSR as a

tool of reputation which has its own influence in the economical, legal and ethical aspects of the

business. An organisation‟s economic sustainability has the base of Corporate Social Responsibility.

9 Griffin, J.J., & Mahon, J.F. (1997). The Corporate Social Performance and Corporate Financial

Performance Debate: Twenty Five Years of Incomparable Research. Business and Society 365 (1),

5–31. 10

Frooman, J. (1997). Socially irresponsible and illegal behavior and shareholder wealth. Business and

Society 36 (3), 221–249. 11

Carroll, AB (1999). Corporate social responsibility: Evolution of a definitional construct. Business and

Society, 38 (3), 268-95. 12

Epstein, M.J., & Roy, M.J. (2003). Making the business case for sustainability. linking social and

environmental actions to financial performance. Journal of Corporate Citizenship, 9 (1), 79–96. 13

Rojsek, I. (2001). From red to green: Towards the environmental management in the country in

transition. Journal of Business Ethics 22, 37–50 14

Xueming Luo, & Bhattacharya, C.B. (2006). Corporate Social Responsibility, Customer Satisfaction,

and Market Value. Journal of Marketing: October 2006, 70 (4), 1-18. 15

Truscott, Rachael.A., Bartlett, Jenniferm, L.& Stephane A. Tywoniak (2009). The reputation of

Corporate Social Responsibility industry in Australia. Australasian Marketing Journal. 17( 2),

84-91.



Bansal, et al., (2012)16

on their article entitled “Emerging trends of Corporate Social

Responsibility in India” at KAIM Journal of Management and Research analyzed 30 companies of 11

sectors listed in the Bombay Stock Exchange with the help of their annual reports. Some of these

sectors were Transport Equipment sector, Finance and Metal Mining sector, IT & Power, Capital

goods, Telecom, Housing, FMCG, Oil & Gas and pharma. The article considered the nature and areas

of society in which the companies are investing. By considering all those areas it was concluded that

today companies are not working only to earn profit but also have realized the importance of being

social friendly.

RESEARCH GAP

Various researchers all across the globe have been involving in research studies pertaining to

Corporate Social Responsibility. Some of them have found out that CSR increases profitability of

organisations, Certain others argue that it is the root cause for an organisation to achieve it‟s economic

objective. Even for enhancing the employee‟s motivation CSR practices have been emphasized.

Researchers also have found out that various corporations are taking responsibility now-a-days for the

economic, social, and environmental well being of the society. Though various studies have been

conducted in this regard, none of the studies are being done to identify the impact of Corporate Social

Responsibility on the sustainable returns of the shareholders in India by conducting a research among

the shareholders and executives in India. Similarly the earlier researchers also have not analysed the

financial performance of different scales of organisations (large and medium) for a decade in knowing

the impact of CSR practices on sustainable returns of the shareholders.

RESEARCH METHODOLOGY

Research Methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically. An effective research strategy

is the framework of the research process. This deals with the most suitable methods of investigations,

nature of investment, sampling plan and types of data.

3.1 IMPORTANCE OF THE STUDY

CSR is an important business strategy because, wherever possible, consumers want to buy

products from companies they trust; suppliers want to form business partnerships with companies they

can rely on; employees want to work for companies they respect; and NGOs, increasingly, want to

work together with companies seeking feasible solutions and innovations in areas of common

concern. CSR must not merely be considered as a charity concept but to be viewed by the business

world as a market opportunity available to qualitatively increase the revenue and the resultant bottom

line with which shareholders are ensured a return in line with their expectations. This will be made

possible predominantly by way of exploring the targets in the bottom of the economic pyramid, where

almost 80 percent of the opportunities are already hidden.

3.2 NEED FOR THE STUDY

A societal approach to business is the contemporary business philosophy, which demands

business organizations to be responsive to the social problems. As a result of globalization of

business, global companies and MNCs operate in a big way in their host countries. In order to

establish a good corporate image, they include social responsibility as a corporate objective.

Indigenous companies are forced to follow suit for maintaining their corporate identity. In the terms

16

Bansal, Harbajan., Parida, Vinu & Pankaj Kumar, (2012). Emerging trends of Corporate Social

Responsibility in India. KAIM Journalof Management. 4 (1), 1-2.



and conditions of collaborations agreements, very often, social welfare terms are included which

necessitates the collaborating company to take up social responsibility of business. On the basis of

legal provisions, companies have to concentrate on social problems. An organizations commitment to

social responsibility creates a good corporate image, and there by a better business environment.

Social responsibility of business enables the organization to improve its product positioning and

thereby improve its market share.

3.3 STATEMENT OF THE RESEARCH PROBLEM

Considering the importance of CSR, there is a need to evaluate how CSR impact on the

profitability. The following questions were designed to probe into the Corporate Social Responsibility

and its profitability.

What impact does Corporate Social Responsibility have on the profitability?

What challenges does Corporate Social Responsibility impose?

Are there other benefits stands to gain aside profitability from the execution of Corporate

Social Responsibility?

Does Corporate Social Responsibility guarantee the customers‟ confidence level and security

of fund?

3.4 JUSTIFICATION FOR THE STUDY

The study is expected to make contribution to knowledge in the following areas:

Provide information about CSR in relation to corporate institution

A fundamental material for scholarly discourse in management science relating to Corporate

Social Responsibility.

Assist in providing information on the impact of CSR on the profitability of business

Provide information on the challenges of CSR and its recommendations.

Provide information for future research works on CSR.

3.5 OBJECTIVES OF THE STUDY

To examine Corporate Social Responsibility in relation to corporate sector

To evaluate the impact of Corporate Social Responsibility on the profitability of the sector.

To determine the challenges of Corporate Social Responsibility

To investigate whether Corporate Social Responsibility guarantee Investors‟ confidence and

security of fund.

3.6 RESEARCH DESIGN

The researcher used Descriptive research design for this research. The validity of any research

depends upon the systematic method of collecting the data and analyzing the same in a logical and

sequential order. The study is about evaluating the financial performance of the 40 companies which

have 3 and 4 star CSR ratings. The list of 40 companies is given below.



TABLE NO. 3.1

LIST OF COMPANIES PRACTISING CSR

(as per Karmayog’s Rating)

No. Name of the Company CSR

Ratings

Price Range (Rs.) Face

Value

(Rs.)

All Time

Low

All Time

High

1 Mahindra & Mahindra 4 121.4 967.95 5

2 TATA Motors 4 25.29 333.4 2

3 HDFC Bank 4 159.77 703.65 2

4 Titan Industries 4 35.14 311.75 1

5 Infosys Technology 4 1101 3475.85 5

6 WIPRO 4 12.58 491.4 2

7 TATA Consultancy Service 4 222.68 1452.1 1

8 Ashok Leyland 3 6.5 40.15 1

9 Hero Honda Motors 3 638 1843 2

10 Maruti Suzuki 3 460 1698 5

11 Axis Bank 3 280.89 1588.7 10

12 Punjab National bank 3 292.3 1384.35 10

13 ICICI Bank 3 262.95 1269.7 10

14 Union Bank of India 3 100.1 417.2 10

15 Dr Reddy's Laboratories 3 376.7 1946.7 5

16 Apollo Hospials 3 178.43 880.5 5

17 Wokhardt Limited 3 68.45 1929.5 5

18 Tata Power Limited 3 57.03 149.52 1

19 Bharti Airtel 4 242.3 468.8 5

20 Aditya Birla Nuvo 3 335.05 1747.6 10

21 Arvind Ltd 3 11.13 109.65 10

22 Ballarpur Industires 4 13.43 42.6 2

23 V Guard Industries 4 39.9 541.4 10

24 Godrej Industries 3 48.65 330.1 1

25 Jubilant Life 4 85.85 385.65 1

26 Nerolac Paints 4 179.25 1152.7 10

27 Larsen & Tubro 4 561.79 2171.25 2

28 Siemens Limited 3 187.65 944 2

29 Thermax Limited 3 151.8 912.59 2

30 Voltas Ltd 3 32.6 258.3 1

31 Bluestar Ltd 3 125.95 502.45 2

32 SKF 3 123.75 724.55 10

33 Tata Chemicals 3 100.15 439.9 10

34 MRF Tyres 3 1535.3 13796.9 10

35 Britannia Industries 3 216.68 594.79 2

36 ITC Group 5 74.53 309.14 1

37 GAIL India 3 183.5 527.9 10

38 BPCL 3 108.95 440.2 10

39 HPCL 3 174.1 546.15 10

40 TATA Steel 4 148.65 922.25 10

Source : www.karmayog.org, 2012.

The above companies have been taken for this research and their financial performance was

examined. Further, opinion of the shareholders and organization executives has been collected with

regard to the impact of Corporate Social Responsibility of the selected companies through a well-

structured questionnaire.



Data Sources

For the present study both primary and secondary data were extensively used. The secondary

data were collected from the annual reports of the selected 40 companies. The secondary data were

also collected from Journals, Periodicals, Websites and manuals of the selected companies. The

primary data have been collected through well-structured questionnaire from the shareholders and

organization executives who have been experiencing the Corporate Social Responsibility of the

selected companies.

Pilot Study

Pilot study is conducted to detect weakness in design and instrument and provide proxy data

for selection of a probability sample. It should therefore, draw subject from the target population and

simulate the procedure and protocols that have been designed for data collection. The researcher had

an informal talk with stakeholders. A pilot study was conducted on 5 shareholders and 5 organization

executives who have been experiencing the impact of Corporate Social Responsibility activities.

Sample Size

The primary data was collected among the shareholders and organization executives of listed

companies possessing either 3 star or 4 star Corporate Social Responsibility ratings.

The details of the sample distribution are given in Table No. 1.2.

TABLE NO. 3.2

DISTRIBUTION OF SAMPLE SIZE

No. Type of Sample Number of Sample

1 Shareholders 50

2 Organization Executives 40

Reliability

The reliability of the questionnaire and individual items in it was tested with the help of

Cronbach‟s alpha. Examination of Cronbach‟s alpha provides information about the reliability of any

given set of measures. The value of alpha must be larger than 0.70 to imply reliability. In this research

study, the Cronbach‟s alpha value for the shareholders and organization executives is calculated and

presented in the following table.

TABLE NO. 3.3

CRONBACH’S ALPHA

No. Type of Sample Cronbach’s Alpha

1 Shareholders 0.988

2 Organization Executives 0.938

From the above table, it is clear that the data has validity for further analysis. Hence the study

is reliable for further research.

Sampling Technique

For collecting primary data, field survey technique was employed in India. A well structured

questionnaire comprising of close-ended questions ware used to collect the primary data. The samples

were collected from all across India based on simple random sampling technique. Firsthand

information pertaining to the respondents‟ demographic details, opinion towards impact of Corporate



Social Responsibility, satisfaction level, suggestions to improve the quality of CSR activities and

problems were collected from 50 shareholders and 40 executives of the respective organisations.

Frame work of analysis

The financial performance of selected 40 companies were analysed through various

accounting and statistical technique. Accounting techniques like annual growth rate and ratio analysis

have been applied for analyzing the secondary data. Further the following statistical tools have also

been applied for analyzing the secondary data.

1. Mean

2. Standard Deviation

3. Co-efficient of Variation

4. Annual Growth Rate

5. „t‟ Test

To examine the shareholders‟ opinion and organization executives‟ opinion towards impact of

Corporate Social Responsibility offered by the selected 40 companies (Primary Data), the following

statistical tools have been used.

1. Average

2. Range (Min, Max)

3. Standard Deviation

4. Two-Way classification Table

5. Chi-Square test

6. Anova Analysis

7. Correlation Analysis

8. Multiple Regression Analysis

9. Factor Analysis

10. Structural Equation Modelling

11. Henry Garratt Ranking Technique

12. Friedman‟s Test

3.7 PERIOD OF THE STUDY

The study period is confined to ten years starting from the financial year 2004-05 to 2013-14

and necessary data have been collected from the select 40 companies.

3.8 LIMITATIONS OF THE STUDY

Due to lack of proper knowledge of CSR activities among the shareholders and organization

executives, 40 orgnizational executives and 50 shareholders were only selected and hence the

study findings cannot be generalized.

Non-availability of the information regarding any earlier studies conducted in CSR linking

the same with the financial benefits of any organization.

The CSR ratings were not available for 2013 and above and hence the companies were

selected based on 2012 CSR ratings records.



FACTOR INFLUENCING THE SHAREHOLDERS AND EXECUTIVES ON CORPORATE

SOCIAL RESPONSIBILITY

4.1 INTRODUCTION

In this chapter an in depth study has been made to identify the factors that influence the

shareholders towards satisfaction on Corporate Social Responsibility in India. For this purpose a field

survey method was employed to collect first hand information from 50 sample respondents. The

respondents have been chosen randomly from selected 40 companies in India. The data thus collected

were arranged into simple tabular form. The level of satisfaction towards Corporate Social

Responsibility by the selected sample respondents is considered as dependent variable. The

Independent variables selected for the study are age, gender, educational status, occupational status,

monthly income, investment sector, type of investors and preferred span of investment. The data were

analyzed by using various statistical tools as mentioned above.

This chapter has been divided into two sections based on research study,

for ease of analysis and understanding. The two sections of this chapter are as follows :

1. The first section examines the opinion of the shareholders towards satisfaction on Corporate

Social Responsibility of the selected 40 companies in India.

2. The second section examines the opinion of the executives towards implementation of

Corporate Social Responsibility of the selected 40 companies in India.

4.2 SECTION 1 : OPINION OF THE SHAREHOLDERS TOWARDS

SATISFACTION ON CORPORATE SOCIAL

RESPONSIBILITY

In this section, the researcher has examined the opinion of the shareholders towards Corporate

Social Responsibility of the selected companies in India. This section has been divided into four sub-

sections and it includes the followings:

1. Profile of the shareholders – Percentage Analysis

2. Examining the importance of the CSR – Henry Garrett Ranking Technique

3. Suggestions of shareholders to improve the quality of CSR – Friedman Test

4. Satisfaction level of the shareholders towards Corporate Social Responsibility – Chi Square

Test

4.2.1 PERCENTAGE ANALYSIS

.

TABLE NO. 4.1

SATISFACTION LEVEL OF SHAREHOLDERS TOWARDS CORPORATE SOCIAL

RESPONSIBILITY WHERE THEY MADE THEIR INVESMENTS

S.No Factors HS S N DS HDS

1 Assists to enhance quality of life

in the local community.

12

(24%)

16

(32%)

15

(30%)

4

(8%)

3

(6%)

2

Prevents unethical behaviours in

order to achieve organizational

goals.

13

(26%)

13

(26%)

15

(30%)

5

(10%)

4

(8%)

3 Make efforts to be good

citizenship.

10

(20%)

12

(24%)

19

(38%)

5

(10%)

4

(8%)

4

Operates business in a manner

consistent with expectations of

government and law.

11

(22%)

15

(30%)

18

(36%)

4

(8%)

2

(4%)




5 Obeys various Central, state, and

local regulations.

20

(40%)

8

(16%)

14

(28%)

4

(8%)

4

(8%)

6 Supports culture and art activities

of local community.

12

(24%)

12

(24%)

17

(34%)

5

(10%)

4

(8%)

7 Fulfills its legal obligation. 12

(24%)

15

(30%)

16

(32%)

3

(6%)

4

(8%)

8

Operates in a manner consistent

with expectations of societal and

ethical norms.

13

(26%)

15

(31%)

15

(30%)

3

(6%)

4

(8%)

9 Seeks a profitable business. 14

(28%)

14

(28%)

17

(34%)

3

(6%)

2

(4%)

10 Recognizes and respects new

ethical / moral norms.

19

(38%)

12

(24%)

10

(20%)

4

(8%)

5

(10%)

11 Invests in energy conservation. 25

(50%)

12

(24%)

10

(20. 0%)

2

(4%)

1

(2%)

12 Supports private and public

educational institutions.

14

(28%)

14

(28%)

18

(36%)

2

(4%)

2

(4%)

13 Meets minimal legal requirements

related to goods and service.

16

(32%)

15

(30%)

15

(30%)

2

(4%)

2

(4%)

14

Managers and employees

participate in charitable activities

of their local communities.

12

(24%)

16

(32%)

17

(34%)

3

(6%)

2

(4%)

15 Makes efforts to improve product

quality.

13

(26%)

13

(26%)

17

(34%)

5

(10%)

2

(4%)

16 Good transparency 15

(30%)

18

(36%)

16

(32%)

0

(0%)

1

(2%)

17 Practices recycling pollutants and

wastes.

12

(24%)

17

(34%)

15

(30%)

3

(6%)

3

(6%)

18 Focuses on maximizing earnings 10

(20%)

14

(28%)

23

(46%)

2

(4%)

1

(2%)

19 The policy of CSR meets my

expectation.

13

(26%)

19

(38%)

13

(26%)

3

(6%)

2

(4%)

20 Committed to profitability. 19

(38%)

11

(22%)

14

(28%)

3

(6%)

3

(6%)

21 The company is open to

consumers.

13

(26%)

13

(26%)

18

(36%)

3

(6%)

3

(6%)

22 Manufactures eco-friendly

products.

12

(24%)

15

(30%)

16

(32%)

4

(8%)

3

(6%)

23 The company enjoying

competitive position.

12

(24%)

17

(34%)

14

(28%)

4

(8%)

3

(6%)

24 The company enjoying clean

reputation.

12

(24%)

16

(32%)

17

(34%)

3

(6%)

2

(4%)

25 Product and service of the

company.

19

(38%)

13

(26%)

13

(26%)

3

(6%)

2

(4%)

26 Makes efforts to improve

customer service.

20

(40%)

15

(30%)

8

(16%)

4

(8%)

3

(6%)

27 CSR activities of the company. 13 15 14 4 4




(26%) (30%) (28%) (8%) (8%)

28 Sets out effluent treatment plant. 12

(24%)

16

(32%)

15

(30%)

4

(8%)

3

(6%)

29 Settles customers' complaints

quickly.

14

(28%)

16

(32%)

15

(30%)

3

(6%)

2

(4%)

30 Practices product improvement by

customers' requirement

14

(28%)

14

(28%)

15

(30%)

4

(80%)

3

(6%)

Highly Satisfied, S- Satisfied; N-Neutral; DS-Dissatisfied; HDS-Highly Dissatisfied

It is examined from the above table that the respondents are highly satisfied towards the

statements of their companies where they made their investments which includes „obeys various

central, state and local regulations, recognizes and respects new ethical / moral norms, invest in

energy conservation, committed to profitability, product and service of the company, makes efforts to

improve customer service as 40, 38, 50 and 32 percent respectively. The respondents are satisfied

towards the statements that includes assisting to enhance quality of life in the local community,

operating in a manner consistent with expectations of societal and ethical norms, good transparency,

practices recycling pollutants and wastes, the policy of CSR meeting their expectation, the company

enjoying strong competitive position, CSR activities of the company, sets out effluent treatment plant

and settles customers‟ complaints quickly as 32, 31, 36, 34, 38, 34, 30 and 32 percent respectively. On

the other hand, respondents are neutral towards the statements preventing unethical behaviours in

order to achieve organizational goals, making efforts for good citizenship, operates business in a

manner consistent with expectations of government and law, supports culture and art activities of

local community, fulfills its legal obligation, seeking a profitable business, supporting private and

public educational institutions, managers and employees participating in charitable activities of their

local communities, making efforts to improve product quality, focuses on maximizing earning, the

company being open to consumers, manufacturing eco-friendly products, the company enjoying clean

reputation, practices product improvement by customers‟ requirement as 30, 38, 36, 34, 32, 34, 36,

34, 34, 46, 36, 32, 34 and 30 percent respectively. It is found from the analysis that majority (50%) of

the respondents are highly satisfied towards their organisation with resgard to investment in energy

conservation activities.

4.2.2 IMPORTANCE OF CSR ACTIVITIES - HENRY GARRETT RANKING

TECHNIQUE

Henry Garrett ranking technique was applied to find the importance of CSR activities of the

respondents that are shown in the following table.

TABLE NO. 4.2

OPINION OF THE SHAREHOLDERS TOWARDS IMPORTANCE OF CSR ACTIVITIES

THAT THE CORPORATE COMPANIES SHOULD ACCUSTOM

S.No. Factors Total

Score

Mean

Score Rank

1 Ecological production process 3318 66.36 II

2 Reduce packaging and use ecological

packaging material 3682 73.64 I

3 Provide consumers with safe products 2033 40.66 V

4 Contribute to local communities 1232 24.64 VI

5 Health awareness 2429 48.58 III

6 Ethical promotion campaigns 2306 46.12 IV

It is examined from the above table that majority of the respondents opined that „reduce

packaging and use ecological packaging material‟ is the major factor for importance of corporate

social responsibility which they ranked as first with the Garrett score of 3682 points. It is followed by



the second and third ranks assigned to „ecological production process‟ and „health awareness‟ with the

Garrett scores of 3318 and 2429 points respectively. The fourth and fifth ranks were occupied by the

factors that includes „ethical promotion campaigns‟ and „providing consumers with safe products‟

with Garrett scores of 2306 and 2033 points respectively. The last rank is assigned to „Contributing to

local communities‟ with the Garrett score of 1232 points. It is found from the analysis that majority of

the respondents opined the factors „reduce packaging‟ and „use ecological packaging material‟ were

the most important factor for CSR activities of their organisation.

4.2.3 SUGGESTIONS OF SHAREHOLDERS TO IMPROVE THE QUALITY OF CSR –

FRIEDMAN’S TEST

Null Hypothesis: Opinion regarding suggestions to improve the quality of Corporate Social

Responsibility is found to be similar among all the shareholders.

TABLE NO. 4.3

SUGGESTIONS OF SHAREHOLDERS TO IMPROVE THE QUALITY OF CSR

S.

No. Quality of CSR

Mean

Rank DF

Table

Value

2

Value

‘p’

value

1 Communicate company performance in

CSR and sustainability to stakeholders 2.72

4 13.276 31.152 0.000*

2 Improve environmental impact of

products/services 2.06

3 Develop new products / services which help

to reduce social or environmental problems 3.24

4 Improve energetic influence 3.32

5 Improve rigid control on suppliers

concerning standard regarding human rights 3.66

Note : * - Significant at 1% level

It could be noted from the analysis that among the selected five suggestions, maximum (3.66)

of the respondents have suggested that the factor „Improve rigid control on suppliers concerning

standard regarding human rights‟ is an important factor to improve the quality of CSR. The

Friedman‟s mean rank value ranges between 2.06 and 3.66. The calculated chi-square value is 31.152

and it is significant at 1 percent level. So, the null hypothesis is rejected and hence the respondents are

significantly varied towards the statements regarding suggestions to improve the quality of CSR.

4.2.4 SATISFACTION LEVEL OF SHAREHOLDERS TOWARDS CORPORATE SOCIAL

RESPONSIBILITY - CHI-SQUARE ANALYSIS

TABLE NO. 4.4

AGE AND SATISFACTION LEVEL OF SHAREHOLDERS TOWARDS CORPORATE

SOCIAL RESPONSIBILITY

S.

No. Age

No. of

Respondents % Mean

Range S.D

Min Max

1. Below 30 years 6 12 3.64 3 4 0.06

2. 31-40 years 12 24 3.59 3 4 0.26

3. 41-50 years 22 44 3.85 3 4 0.27

4. Above 50 years 10 20 3.44 3 4 0.13

Total 50 100



It could be noted from the above table that the level of satisfaction towards corporate social

responsibility among below 30 years aged respondents ranges between 3 and 4 with a mean score of

3.64. The level of satisfaction towards corporate social responsibility among 31-40 years aged

respondents ranges between 3 and 4 with a mean score of 3.59. The level of satisfaction towards

Corporate Social Responsibility among 41-50 years aged respondents ranges between 3 and 4 with a

mean score of 3.85. The level of satisfaction towards Corporate Social Responsibility among above

50 years aged respondents ranges between 3 and 4 with a mean score of 3.44. It is found from the

analysis that maximum level of satisfaction towards Corporate Social Responsibility has been

perceived by 41 to 50 years aged respondents.

STRENGTH OF THE FACTOR ANALYSIS VARIABLES – MULTIPLE REGRESSION

ANALYSIS

To assess the overall effect of the instrument on shareholders‟ satisfaction towards Corporate

Social Responsibility of the companies in India and to determine the relative importance of the

individual dimension of the generated scale, Multiple Regression analysis is performed. For

regression analysis, the study adopts the use of a single-item direct measures of overall shareholders‟

satisfaction in the study area which is excellent at five-point Likert scale. The regression model

considers the 9 dimensions as the independent variables and the overall satisfaction factors as the

dependent variable. The adjusted R2 of 0.978 (p=0.000) indicates that 97.8 per cent of variance in

overall shareholders‟ satisfaction is predicted. Further, the results also indicate that all the nine

variables ie., Philanthropic responsibility, ethical responsibility, legal responsibility, economic

responsibility, environmental contribution, consumer protection, corporate image, customer

satisfaction and customer loyalty to be the significant predictors (p<0.001) of overall shareholders‟

satisfaction. Further, Variation Inflation Factor (VIF) values score from 1.074 to 3.265 indicates that

multi-collinearity among the independent variables is not a problem.

TABLE NO. 4.5

EFFECT AND RELATIVE IMPORTANCE OF THE INDIVIDUAL DIMENSIONS OF

SHAREHOLDERS’ SATISFACTION

– MULTIPLE REGRESSION ANALYSIS

No. Factors Standardized

Coefficient () ‘t’ Value ‘p’ Value VIF

Constant 12.526

1 Philanthropic responsibility 0.596 10.912 0.000** 1.574

2 Ethical responsibility 0.147 5.044 0.000** 1.423

3 Legal responsibility 0.210 6.232 0.000** 1.925

4 Economic responsibility 0.034 2.281 0.023* 2.105

5 Environmental contribution 0.113 3.751 0.000** 1.650

6 Consumer protection 0.100 2.206 0.028* 3.265

7 Corporate image 0.076 2.161 0.031* 1.952

8 Customer satisfaction 0.214 4.652 0.000** 1.074

9 Customer loyalty 0.147 5.044 0.000** 2.781

The resulted equation is

Shareholders‟ Satisfaction

= 12.526 +

(0.596 Philanthropic Responsibility) +



(0.147 Ethical Responsibility) +

(0.210 Legal Responsibility) +

(0.034 Economic Responsibility) +

(0.113 Environmental Contribution) +

(0.100 Consumer Protection) +

(0.076 Corporate Image) +

(0.214 Customer Satisfaction) +

(0.147 Customer Loyalty)

It is found that, one unit increase of shareholders‟ satisfaction is predicted from 0.596 unit

increases of satisfaction towards Philanthropic responsibility, 0.147 unit increases of satisfaction

towards Ethical responsibility, 0.210 unit increases of satisfaction towards Legal responsibility, 0.034

unit increases of satisfaction towards Economic responsibility, 0.113 unit increases of satisfaction

towards Environmental Contribution, 0.100 unit increases of satisfaction towards Consumer

Protection, 0.076 unit increases of satisfaction towards Corporate Image, 0.214 unit increases of

satisfaction towards Customer satisfaction activities, and 0.147 unit increases of satisfaction towards

Customer loyalty.

4.3 SECTION II : OPINION OF THE EXECUTIVES TOWARDS

IMPLEMENTATION OF CORPORATE SOCIAL

RESPONSIBILITY

In this section, the researcher has examined the opinion of the executives towards Corporate

Social Responsibility of the selected companies in India. This section has been divided into four sub-

sections and it is discussed as follows:

1. Profile of the Executives – Percentage Analysis

2. Examining the opinion of the executives towards benefits of the CSR – Henry Garrett

Ranking Technique

3. Identifying the benefits and problems while implementing the CSR activities – Friedman Test

4. Level of Implementation of Corporate Social Responsibility - Anova Analysis

4.3.1 PERCENTAGE ANALYSIS

TABLE NO. 4.6

LEVEL OF IMPLEMENTATION OF CORPORATE SOCIAL RESPONSIBILITY

S.

No. Activities Excellent Good

Neither

good nor

bad

Poor Very

Poor

1 Solid waste management 20

(50%)

13

(32.5%)

5

(12.5%)

2

(5%)

0

(0%)

2 Scholarships to students 20

(50%)

13

(32.5%)

3

(7.5%)

4

(10%)

0

(0%)

3 Infrastructure to schools / colleges 18

(45%)

14

(35%)

4

(10%)

4

(10%)

0

(0%)

4 Furniture, play equipment etc to

schools / colleges

16

(40%)

14

(35%)

8

(20%)

2

(5%)

0

(0%)

5 Training to students 16

(40%)

11

(27.5%)

9

(22.5%)

4

(10%)

0

(0%)

6 Pollution Control 20

(50%)

9

(22.5%)

7

(17.5%)

4

(10%)

0

(0%)

7 Providing hostel buildings to

students

18

(45%)

10

(25%)

8

(20%)

4

(10%)

0

(0%)

8 Rain water harvesting 18

(45%)

14

(35%)

6

(15%)

2

(5%)

0

(0%)



S.

No. Activities Excellent Good

Neither

good nor

bad

Poor Very

Poor

9 Establishing blood banks 24

(60%)

8

(20%)

5

(12.5%)

3

(7.5%)

0

(0%)

10 Support to primary / secondary

education

23

(57.5%)

11

(27.5%)

5

(12.5%)

1

(2.5%)

0

(0%)

11 Support & Associate to special

care hospitals

19

(47.5%)

9

(22.5%)

9

(22.5%)

3

(7.5%)

0

(0%)

12 Energy saving 18

(45%)

7

(17.5%)

9

(22.5%)

6

(15%)

0

(0%)

13 Special school buildings to

physically challenged persons

17

(42.5%)

13

(32.5%)

5

(12.5%)

5

(12.5%)

0

(0%)

14 Development of Green belt 20

(50%)

12

(30%)

5

(12.5%)

3

(7.5%)

0

(0%)

15 Placement linked trainings 19

(47.5%)

11

(27.5%)

8

(20%)

2

(5%)

0

(0%)

16 Mobile clinics 15

(37.5%)

8

(20%)

17

(42.5%)

0

(0%)

0

(0%)

17 Health checkup camps 18

(45%)

10

(25%)

8

(20%)

4

(10%)

0

(0%)

18 Treated water supply 12

(30%)

12

(30%)

14

(35%)

2

(5%)

0

(0%)

19 Laying Drainages 12

(30%)

12

(30%)

15

(37.5%)

1

(2.5%)

0

(0%)

20 Community welfare centres 20

(50%)

9

(22.5%)

6

(15%)

5

(12.5%)

0

(0%)

21 Constructing hospital buildings 26

(65%)

6

(15%)

6

(15%)

2

(5%)

0

(0%)

22 Constructing Bridges 19

(47.5%)

8

(20%)

9

(22.5%)

4

(10%)

0

(0%)

23 Provide Water Tanks 27

(67.5%)

6

(15%)

4

(10%)

3

(7.5%)

0

(0%)

24 Multipurpose halls 15

(37.5%)

14

(35%)

10

(25%)

1

(2.5%)

0

(0%)

25 Interaction with peoples 20

(50%)

9

(22.5%)

7

(17.5%)

4

(10%)

0

(0%)

26 Offer Road facilities 17

(42.5%)

18

(45%)

5

(12.5%)

0

(0%)

0

(0%)

It is inferred from the table no. 4.69 that the executives have opined as excellent towards the

implementation of „solid waste management, scholarships to students, infrastructure to schools /

colleges furniture, play equipment etc., to schools / colleges, training to students, pollution control,

providing hostel buildings to students, rain water harvesting, establishment of blood banks, support to

primary / secondary education, support & associate to special care hospitals, energy saving, special

school buildings to physically challenged persons, development of green belt, placement linked

trainings, health checkup camps, community welfare centers, constructing hospital buildings,

constructing bridges, providing water tanks, multipurpose halls, interaction with peoples, as 50, 50,

45, 40, 50, 45, 45, 60, 57.5, 47.5, 45, 42.5, 50, 47.5, 45, 50, 65, 47.5, 67.5, 37.5 and 50 percent

respectively. As according to 45 percent of the respondents their company came out with good road

facilities. On the other hand, 42.5 percent of the respondents were of the opinion that they feel neither

good nor bad with regard to mobile clinics, with regard to treated water supply 35 percent of the

respondents and with regard to laying of drainages 37.5 percent of the respondents feel the same.



It was also found from the analysis that majority (67.5%) of the respondents have opined that

the company provide water tank facilities in an excellent manner.

4.3.2 HENRY GARRETT RANKING TECHNIQUE

TABLE NO. 4.7

RANKING OF EXECUTIVES TOWARDS COMMUNAL BENEFITS OF THEIR

COMPANIES CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES

S.

No. Action towards Community

Total

Score

Mean

Score Rank

1. Environmental Care 2570 64.25 I

2. Education 2529 63.23 II

3. Health care 2473 61.83 III

4. Peripheral Development 2100 52.50 VI

5. Housing 1930 48.25 VIII

6. Village Adoption 2243 56.08 V

7. Community Involvement 2248 56.20 IV

8. Employment & Employability 1987 49.68 VII

9. Rural Sports 1599 39.98 IX

10. Welfare 1561 39.03 X

11. Others 756 18.90 XI

It is observed from the above table that most of the executives have opined that their major

communal benefit of their companies Corporate Social Responsibility was towards „environmental

care‟ which has been ranked as first with the Garrett score of 2570 points. It is followed by the second

and third ranks assigned to „education‟ and „health care‟ with the Garrett scores of 2529 and 2473

points respectively. It is followed by the fourth, fifth, sixth and seventh ranks assigned to „community

involvement‟, „village adoption‟, „peripheral development‟ and „employment & employability‟ with

the Garrett scores of 2248, 2243, 2100 and 1987 points respectively. On the other hand, the eighth,

ninth and tenth ranks were assigned to „housing‟, „rural sports‟ and „welfare‟ with the Garrett scores

of 1930, 1599 and 1561 points respectively. The last rank was assigned to „others‟ with the Garrett

scores of 756 points. It is found from the analysis that majority of the executives opined that

„environment care‟ was the major benefit of their communal benefit through their Corporate Social

Responsibility activity.

4.3.3 FRIEDMAN’S TEST

Null Hypothesis : Benefits of the organizations did not vary while implementing Corporate

Social Responsibility activities of various organizations.

Alternate Hypothesis : Benefits of the organizations vary while implementing Corporate Social

Responsibility efforts of various organizations.

TABLE NO. 4.8

BENEFITS OF CORPORATE SOCIAL RESPONSIBILITY FOR ORGANISATIONS

S.

No. Benefits

Mean

Rank DF

Table

Value

2

Value

‘p’

value

1 Enhancing corporate reputation 2.78

6 16.811 28.696 0.000*

2 Improving relations with suppliers,

companies, donors, community 3.89

3 To strengthen the sense of employees 4.63

4 Increase of the efficiency 3.80

5 Acquisition of commercial benefits 3.79



6 Identification of reputational risks 3.96

7 Better access to credit 5.16

Note: * - Significant at 1% level

It could be stated from the analysis that among the selected seven benefits, maximum (5.16)

respondents have opined that „better access to credit‟ is the major benefit for the companies while

implementing CSR. The Friedman‟s mean rank value is ranged between 2.78 and 5.16. The calculated

Friedman‟s chi square value is 16.811 and it is significant at 1 percent level. So, the null hypothesis is

rejected and hence the benefits are significantly varied while implementing the CSR activities in

India.

4.3.4 LEVEL OF IMPLEMENTATION OF CORPORATE SOCIAL RESPONSIBILITY -

ANOVA ANALYSIS

Null Hypothesis: There is no significant difference between the opinion of the executives

towards the level of implementation of Corporate Social Responsibility

among the various positions held by the executives.

Alternate

Hypothesis : There is a significant difference between the opinion of the executives

towards the level of implementation of Corporate Social Responsibility

among the various positions held by the executives.

TABLE NO. 4.9

POSITION OF THE EXECUTIVES AND LEVEL OF IMPLEMENTATION OF

CORPORATE SOCIAL RESPONSIBILITY

S.

No.

Position of the

Executives Mean Score SD ‘F’ Value ‘p’ Value

1. Top Level 3.96 0.21 7.563 0.009*

2. Middle level 4.18 0.20

Note: * - Significant at 1% level

It is noted from the above table that among the two categories of positions held by the

executives, the middle level management category executives have the maximum (4.18) score

regarding the level of implementation of Corporate Social Responsibility.

It is found from the F test analysis that the null hypothesis is rejected. Hence, it is found that

there is a significant difference between the position of the executives and their level of

implementation of Corporate Social Responsibility at 1 percent level.

STRENGTH OF THE FACTOR ANALYSIS VARIABLES – MULTIPLE REGRESSION

ANALYSIS

To assess the overall effect of the instrument on executives‟ opinion towards implementation

of Corporate Social Responsibility of the companies in India and to determine the relative importance

of the individual dimension of the generated scale, Multiple Regression analysis is performed. For

regression analysis, the study adopts the use of a single-item direct measures of overall executives‟

opinion in the study area is excellent at five-point Likert scale. The regression model considers the 5

dimensions as the independent variables and the overall satisfaction factors as the dependent variable.

The adjusted R2 of 0.995 (p=0.000) indicates that 99.5 per cent of variance in overall executives‟

opinion is predicted. Further, the results also indicate that all the five variables ie., Community

Development, Educational Development, Environmental Care, Health Care and Peripheral

Development to be the significant predictors (p<0.001) of overall executives‟ opinion. Further,



Variation Inflation Factor (VIF) values score from 1.625 to 3.954 indicates that multi-collinearity

among the independent variables is not a problem.

TABLE NO. 4.10

EFFECT AND RELATIVE IMPORTANCE OF THE INDIVIDUAL DIMENSIONS OF

EXECUTIVES’ OPINION

– MULTIPLE REGRESSION ANALYSIS

No. Factors Standardized

Coefficient () t Value ‘p’ Value VIF

Constant 4.375

1 Community Development 0.081 7.364 0.000** 1.625

2 Educational Development 0.022 2.200 0.020* 2.541

3 Environmental Care 0.111 12.333 0.000** 3.954

4 Health Care 0.089 6.846 0.000** 2.658

5 Peripheral Development 0.091 7.000 0.000** 1.944

The resulted equation is

Executives‟ opinion towards implementation of CSR

= 4.375 +

(0.081 Community Development) +

(0.022 Educational Development) +

(0.111 Environmental Care) +

(0.089 Health Care) +

(0.091 Peripheral Development)

It is found that, one unit increase of executives‟ opinion towards implementation of CSR is

predicted from 0.081 unit increases of community development, 0.022 unit increases of educational

development, 0.111 unit increases of environmental care, 0.089 unit increases of health care and

0.091 unit increases of peripheral development.

FINANCIAL PERFORMANCE OF THE SELECTED COMPANIES PRACTISING

CORPORATE SOCIAL RESPONSIBILITY

5.1 INTRODUCTION

In this chapter, financial performance of the selected corporate companies for the 10 years

study period, from 2004-05 to 2013-14 has been analysed. The companies have been selected based

on the CSR rating of 2014. In this, 40 companies have been selected. Among the selected 40

companies, it has been categorized under two heads viz., large companies and medium companies for

the ease of analysis. Large companies are 29 in numbers and medium companies are 11 in numbers.

For examining the financial performance of the large and medium companies, Return on

Shareholders‟ funds, Operating Profit ratio, Net Profit ratio and Earning Per Share (EPS) have been

calculated. Further, mean, standard deviation, co-efficient of variation, annual growth rate and „t‟ test,

has been employed for examining the growth of the selected large and medium companies. For the

ease of understanding this analysis, the researcher has categorized this chapter into two sections as

stated below.

Section 1 : Analysis for Large Companies.

Section 2 : Analysis for Medium Companies.

The results of the above analysis are being discussed thoroughly under Summary of findings 6.3.



SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION

6.1 FINDINGS FOR SHAREHOLDERS

Percentage Analysis

It is found that most of the shareholders belong to the age group of 41-50 years of age. A vast

majority of them were males. It is also found that most of them have did their post

graduation. Further, it is found that most of these shareholders were working as employees.

A vast majority of these shareholders were earning a monthly income of above Rs.50,000/-.

Majority of them have made their investment in banking sector. Most of these shareholders

were aggressive in their investment policy followed by consistent proportion of them being

moderate in their investment policy and only quite a few of them were conservative in their

investment policy. They mostly prefer long-term investment. Further, they expect consistent

profits from organizations as shareholders returns. For most of these shareholders their

current return on investments „always‟ matches their expectation. It has also been found that

that most of them prefer „Tata‟ group of companies for consistent returns. Mostly these

shareholders prefer an organization for its „financial performance‟. A vast majority of them

were „aware‟ of Corporate Social Responsibility. Further, they justify their investments based

on its „sustained growth‟ of the organisation. They were also of the opinion that the

Corporate Social Responsibility has greater impact in the business performance of an

organisation. It is found out that majority (50%) of the respondents were highly satisfied

towards the investments made by their organisation in energy conservation as a part of their

CSR.

Henry Garrett Ranking Technique

It is found that majority of the shareholders were of the opinion that the factors „reduce

packaging‟ and „use ecological packaging material‟ as the most important CSR activities of

their organisation.

Friedman’s Test

It is found from the analysis that maximum number of shareholders have suggested that the

factor „Improve rigid control on suppliers concerning standard regarding human rights‟ is an

important factor to improve the quality of CSR. It is also noted that the shareholders are

significantly varied towards the statements regarding suggestions to improve the quality of

CSR.

Findings based on Correlation Analysis

It is found that whenever the age and monthly income of the shareholders increases their level

of satisfaction towards Corporate Social Responsibility also positively increases.

Findings based on Multiple Regression Analysis

It is found from the multiple regression analysis that the two variables age and monthly

income of the shareholders are having positive association. The resulted equation shows that

level of satisfaction towards corporate social responsibility of shareholders is predicted by the

0.106 unit increase of age and 0.095 unit increase of monthly income.



6.2 FINDINGS FOR EXECUTIVES

Percentage Analysis

It is found that a vast majority of the executives belong to the „Middle Level Management‟.

They were mostly „males‟ and belong to the age group of „40 to 50 years‟ of age. As far as

their profession is concerned a vast majority of them were „finance professionals‟ possessing

the job position as „Head Finance‟. Most of these executives have „6-10 years‟ of experience

in the current organization where they are working. Further, a vast majority of these

executives „don‟t accept that the organizations value being dependent upon profit alone.

Most of the executives were of the opinion that „Management Social views & style‟ plays a

major role in determining an organisation‟s value. A vast majority of them opine CSR is

„always‟ a management driven process. They consider CSR as „both charity and an

opportunity‟ followed by consistent proportion of them considering it as an „opportunity‟.

Most of them were of the opinion that CSR will yield „greater corporate image‟ in business

which is closely being following by „increased revenues‟ for an organization. Further,

majority of the executives opine that CSR practices always help an organization in attaining

it‟s financial goals. At the same time they also accept that value of the firm acts as a base for

achieving sustainability in wealth maximization of shareholders. A vast majority of these

executives accept that CSR always helps to enhance corporate image of an organisation.

They also accept that the impact of CSR would always be generating huge revenue for their

business. In their organisations employees were „encouraged to participate‟ in the local

community activities as a part of CSR effort. Their organisation also provides financial

support for such activities. In majority (67.5%) cases the companies provide water tank

facilities in an excellent manner as a part of implementation of CSR.

Henry Garrett Ranking Technique

It is found that majority of the executives were of the opinion that environmental care is

major communal benefit emphasized by the selected companies.

It is found that majority of the executives were of the opinion that „Clear information about

products or services‟ would be ensuring greater transparency in the market.

It is found that majority of the executives were of the opinion that promotion of corporate

image is the main reason for implementing the CSR activities by the selected companies.

It is found that majority of the executives were of the opinion that their companies have

focused on „System of governance, transparency and relationship with investors and

shareholders‟.

Friedman’s Test

It is found that the maximum number of executives were of the opinion that „better access to

credit‟ is the major benefit for the companies while implementing CSR. It is also found that

the executives benefits have significantly varied while implementing the CSR activities in

India.

It is found that the maximum number of executives have opined that their company faced the

problem of „lack of company assistants‟ followed by „little impact on social and

environmental business‟. It is also found that the respondents problems have significantly

varied while implementing the CSR by the selected companies in India.

Anova Analysis

It is found that from among the two categories of position of the executives, the middle level

management category executives have towards the implementation of Corporate Social

Responsibility. The result of F test analysis states that there is a significant difference between



the position of the executives and their opinion towards the level of implementation of

Corporate Social Responsibility.

Correlation Analysis

It is also found from the correlation analysis that whenever the years of experience of the

executives increases, their opinion towards the level of implementation of Corporate Social

Responsibility also positively increases.

Multiple Regression

It is found from the multiple regression analysis that the variable year of experience of the

executives is having significant positive association. The resulted equation shows that the

level of implementation of Corporate Social Responsibility is predicted by the 0.041 unit

increase of age and 0.130 unit increase of years of experience.

6.3 Findings for the Financial Performance of the selected companies practicing Corporate

Social Responsibility

Large Companies (29 nos)

The highest and lowest mean values of shareholders‟ funds recorded has been by Hero

Motocorp and Adhitya Birla respectively. The companies ITC and Gail India shows less

volatility in its shareholders‟ fund ratio. Further, the companies MRF and ITC are having

positive significant growth during the study period.

The highest and lowest mean values of operating profit ratio has been recorded by HDFC and

Hindustan Petroleum Corporation respectively. The companies ITC and Apollo Hospitals

Enterprises shows less fickle in its operating profit ratio. Further, the companies Bharati

Airtel, Ashok Leyland and Tata Motors have registered negative significant growth during the

study period.

The highest and lowest mean values of net profit ratio has been recorded by Infosys and

Hindustan Petroleum Corporation respectively. The companies Tata Consultancy Services

and Infosys Technologies shows less fluctuations in its net profit ratio. Further, the companies

Bharati Airtel, Axis Bank, Apollo Hospitals Enterprises, Union Bank, Gail India, Tata Steel,

Punjab National Bank, Tata Power Ltd, Ashok Leyland, Siemens and Tata Motors have

registered negative significant growth during the study period.

The highest and lowest mean values of earning per share has been recorded by MRF Tyres

and Infosys Technologies respectively. The companies Mahindra and Mahindra and Larsen

and Toubro shows less fickle in its earning per share. Further, the companies Union Bank,

HDFC, Punjab National Bank, Gail India, Tata Motors and Tata Steel are registered negative

significant growth during the study period.

Medium Companies (11 nos)

The highest and lowest mean values of shareholders‟ funds has been recorded by Voltas Ltd

and Ballarpur Industries Ltd., respectively. The companies Britannia Industries and

Wockhardt Ltd shows less volatility in its shareholders‟ fund ratio. Further, the companies

Blue star Ltd, Ballarpur Industries, Voltas Ltd and Jubilant Life are having negative


The highest and lowest mean values of operating profit ratio has been recorded by Wockhardt

Ltd and Voltas Ltd respectively. The companies V-Guard Industries and Kansai Nerolac

Paints shows less fickle in its operating profit ratio. Further, the companies Ballarpur

Industries and Wockhardt Ltd have registered negative significant growth during the study

period.



The highest and lowest mean values of net profit ratio has been recorded by Kansai Nerolac

Paints and Blue star respectively. The companies Thermax Ltd and SKF India shows less

fluctuations in its Net Profit Ratio. Further, the companies Ballarpur Industries and Jubilant

Life Sciences registered negative significant growth during the study period.

The highest and lowest mean values of earning per share has been recorded by Britannia

Industries and Ballarpur Industries respectively. The companies SKF India and Kansai

Nerolac Paints shows less fickle in its Earning Per Share. Further, the companies Britannia

Industries Ltd., Ballarpur Industries Ltd., and Jubilant Life Sciences have registered negative


6.4 SUGGESTIONS

Though all the shareholders enjoyed the services offered by the respected companies, male

have perceived maximum level of satisfaction than female beneficiaries. Hence, it is

recommended to the company that they should take necessary steps to increase the

satisfaction of the female shareholders through offering some additional benefits for female

shareholders which supports for lifting their family status that leads to increase the

satisfaction of the female shareholders in India.

The Human Resource department of the company should be entrusted with the responsibility

of measuring and evaluating CSR activities. It can be done in two forms (a) direct results,

such as, economic and financial savings (b) indirect results like increase in employee

satisfaction and paving way for less absenteeism and less employee turnover.

If shareholders are not convinced with the current CSR practices of the respective

organisations, they need to take immediate steps to educate the shareholders about the

importance of CSR and in the implementation of codes of conduct. Moreover, the

organisations need to ensure two-way communication between them and shareholders so that

they feel comfortable to openly discuss the problems they encounter.

Recognizing that shareholders often struggle to comply with a number of codes of conduct

from different companies, it is suggested to the companies to provide advice and work in

partnership with other businesses that source the same products. This could foster an

agreement on one standardized code of conduct and reduce the confusion amongst the

suppliers.

The companies might consider implementing CSR as an on-going process, which needs to be

monitored and reviewed regularly and also noticed by their shareholders. Unless CSR is given

appropriate care and the concept is embedded within the company strategy, socially

responsible slogans will be worthless.

Companies use CSR as a strategy to create a competitive advantage and gain improved

financial performance. From the study findings, it is noted that the companies MRF and ITC

being large size companies recorded positive significant growth during the study period in its

shareholders fund. These companies can initiate more CSR activities to capture greater

market share in India. The other selected large size companies should concentrate more on

CSR activities for increasing the demand of their product in the market. It could increase their

financial performance in future.

The need of Corporate Social Responsibility must be included as part of the Vision Statement

of the business house, so that a constant and consistent drive throughout the business verticals

and segments to implement effectively the CSR goals.

Section 135 of the Companies Act of 2013, refers to the CSR aspects to be upheld by the

corporate which states that every companies having net worth of Rs 500 crores or more

during any financial year shall constitute compulsorily a CSR committee consisting of three

or more directors out of which atleast one director shall be an independent director. Such

committees formed should formulate and recormmend to the Board the CSR policies, clearly

indicating various activities to be undertaken by the company as specified in schedule VII.



The committee further shall be recommending the amount of expenditure to be incurred on

the activities referred by them. As per sub section (1), every company shall ensure that the

company spends, in every financial year at least 2% of the average net profits of the company

made during the three immediately preceding financial years. If the amount towards CSR

activities were not spent by the companies, reasons for the same should be stated. The above

section of the Companies Act, makes the CSR activities compulsory for the companies. But

over and above the rules, the organisations should take up the CSR measures and activities as

a voluntary step towards its own sustainable growth.

As the customers are key and the prominent stakeholders so far as any business unit is

concerned, the marketing team which is very closely working with the customers and acting

as a bridge between the organisations and the customers, must be vested with the

responsibility to kick off socially responsible marketing techniques to contribute towards

qualitative top line.

6.5 CONCLUSION

Corporate Social Responsibility (CSR) has been started practicing everywhere today. This

research study has mainly focused on impact of CSR on sustainable returns of the shareholders in

India. CSR is a broad subject which leads to a variety of opinions and can be considered in a number

of different ways. CSR has gained it‟s prominence in recent years. It has also changed it‟s nature as

different issues have become more prominent. The research have considered these changes and

looked in particular at environmental issues and the way in which the effects and associated costs can

be externalized away from the company itself. CSR is now generally considered to be an integral part

of strategy for any organization and built into the strategic planning process. There are many

perceived benefits to an organization from this. Governance also is an integral part of this process.

With the effective implementation of CSR practices every business organisation would be able to

create a win-win relationship by satisfying the needs of the shareholders, executives and employees

working in their organisation, customers, Government and various other stakeholders associated with

them.

6.6 DIRECTIONS FOR FURTHER RESEARCH

The current research study has been conducted among the shareholders and executives of

select organizations pertaining to the impact of CSR on the sustainable returns of the shareholders in

India. The researcher also has made an attempt to study the financial performance of select corporate

companies based on CSR ratings of 2014 issued by Karmayog. Both large sized (29 nos.) and

medium sized companies (11 nos.) have been selected for the study. Hence, primary data has been

collected among the shareholders and executives and secondary data for 10 years pertaining to

selected corporate companies has been collected based on the CSR ratings within the stipulated

research period. Due to time constraint other stake holders like the suppliers, customers, Government

etc., has not been covered by the researcher. Here arises an opportunity for other researchers to

conduct a study among them in the future.



Documents

A STUDY ON IMPACT OF CORPORATE SOCIAL …icmrr.org/global/pdffiles/IJFRR/f201705008.pdf · This school of theory maintains that maximizing the interests of the shareholders of the