0115 966 7955 Today's Opening Times 10:30 - 17:00 (BST)

Corporate Social Responsibility in Developing Countries

Disclaimer: This dissertation has been submitted by a student. This is not an example of the work written by our professional dissertation writers. You can view samples of our professional work here.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.

Corporate Social Responsibility in developing countries such as India - using Tata Nano as a case study

1. Introduction

A company's main business objective is maximisation of shareholder's wealth by means of achieving higher profit. Business managers are entrusted with shareholders money so that they could run the company efficiently and profitably. According to Sloan (1964) “the strategic aim of a business is to earn a return on capital and if any particular case the return in the long run is not satisfactory, then the deficiency should be corrected or the activity abandoned for a more favourable one.” This suggests that companies are run for profit motives and this should be the top most priority of any management.

However Globalisation has brought about a change in notion concerning the business objective of any company, arguments are being put forward that the business activities must take into account human and social welfare. According to Peter Drucker (1954), “the enterprise is an organ of society and its actions have a decisive impact on the social scene. It is thus important for management to realize that it must consider the impact of every business policy and business actions upon society. It has to consider whether the action is likely to promote the public good, to advance the basic belief of society, to contribute to its stability, strength and harmony”.

A business enterprise is a major user of nature, society and environment; therefore it must be responsible towards their protection and development. Depletion of natural resources and causes like global warming has brought a lot attention to the sustainable use of these resources and companies are going to play a major role in ensuring this. So this marks a shift in the company objective that no longer can they only be guided by the sole aim of making profit but they should be take actions to ensure the welfare of the society in which they operate. This brings out the concept of “Corporate Social Responsibility”: Corporations acting as citizens of a society in a responsible manner ensuring the well beings of others in the society. The International Standards Organisation (ISO) describes CSR as “a balanced approach for organisations to address economic, social and environmental issues in a way that aims to benefit people, community and society” (ISO, 2002).

1.1 Rationale behind the Research

Corporate social responsibility has gained widespread attention in most developed countries; policies & practices are being developed by corporations to abide by standards of environment pollution, use of human capital etc. However in less developed countries this is not a much heard or debated topic. According to Steiner & Steiner (2000), “In less developed countries there is often no indigenous sense of corporate responsibility.” There are a lot of loopholes in the system and business activities are not often concentrated on human/ social welfare. Austin (1990) argues that the extremity and pervasiveness of poverty in less developed countries places a special responsibility on business, as a vehicle for creating economic progress that will help alleviate this deprivation.

With developing economies a lot of importance is given to industrial upliftment and that might come at a cost of social welfare or benefit. This research aims to identify the CSR policies and practices being in use in developing countries such as India with a special reference to TATA Nano.

India is a developing country which has recorded a growth rate of more than 9% for 3 years upto 2008 and has seen a decade of 7% growth. (www.economicshelp.org: accessed on 10th January 2010). In spite of the global economic slowdown is slated to grow at around 7.5% for this year (2010). The rapid growth in economy has increased the standards of living and has created huge disposable income among Indians. The car manufacturers are taking advantage of this huge growth and are coming up with various models to tap into this growing market. TATA one of the most reputed business firms of India have come up with a car called TATA Nano - which is slated to be the cheapest car in the world. The price is kept at $2500 which is equivalent to 100,000 INR. The objective behind this to make four wheelers available to every common man in India; this is touted to be a very big success. I have my own reservations concerning it; what if masses can afford this car, will it not increase the fuel consumption, thereby creating more pollution? Will it not put a huge burden on roads which are already suffering from traffic congestion? This research aims to find out whether TATA is acting in a responsible manner by launching this car.

1.2 Objectives

The research can be subdivided into four parts:

1. To identify the state of CSR in developing countries such as India

2. To evaluate public awareness concerning issues such as CSR in India

3. To evaluate the impact of TATA Nano on environment, traffic congestion, demand for fuel etc

4. To suggest a number of ways in which companies in developing countries can develop frameworks to act in a more responsible manner

2. Literature Review

There are numerous ways to classify the literature on CSR in developing countries i.e. in terms of content (thematic coverage), type (epistemological approach), and level (focus of analysis). The analysis would be done by each way separately:

2.1 Content Theme

We would use the same classification as Lockett et al. (2006) did, the CSR literature can be categorized into four CSR themes: social, environmental, ethics, and stakeholders. One point that immediately comes to light by applying this categorization to the literature on CSR is that, in contrast to Lockett et al.'s (2006) findings that most CSR articles in top management journals focus on ethical and environmental themes, most scholarly work on CSR in developing countries focuses on the social theme. Also social issues are in general given more political, economic, and media coverage in developing countries than environmental, ethical, or stakeholder issues (Schmidheiny, 2006).

2.2 Knowledge Type

Lockett et al. (2006) had also classified the CSR literature by knowledge type. He found even split between theoretical and empirical research. Lockett et al. (2006) found that 89% of theoretical CSR papers are non-normative, in the CSR in developing countries literature, the balance is far more evenly split. This is mainly because relatively large number of papers on the role of “business in development” tends to adopt a normative, critical perspective (Blowfield and Frynas, 2005). Also if we see empirical research, there are also differences. According to Lockett et al. (2006), the CSR literature is dominated by quantitative methods (80%), while CSR papers on developing countries are more likely to be qualitative. Most research on CSR in developing countries to date has either generalized about all developing countries (e.g. Frynas, 2006), or focused at a national level. In terms of generic literature, Corporate Citizenship in developing countries (Pedersen and Huniche, 2006) is a useful compendium, as are special issues on CSR in developing countries that have appeared in the Journal of Corporate Citizenship (issue 24, 2006), International Affairs (81(3), 2005) and Development (47(3), 2004). Despite the focus on countries in the literature, only about a fifth of all developing countries have had any CSR journal articles published on them. Of these, the most commonly analyzed and written about countries are China, India, Malaysia, Pakistan, South Africa, and Thailand. Analysis at a regional level (notably Africa, Asia, and Latin America) is becoming more common, but papers at the sector, corporate, or individual level remain relatively scarce.

2.3 Global

Most of the literature concentrates on CSR in a global context and there is very little empirical research on the nature and extent of CSR in developing countries. One notable exception is Baskin's (2006) research on the reported corporate responsibility behavior of 127 leading companies from 21 emerging markets across Asia, Africa, Latin America, and Central and Eastern Europe, which he compares with over 1,700 leading companies in high-income OECD countries. Looking at three generic indicators of CSR, Baskin (2006) finds that emerging market companies have a respectable representation in the Dow Jones “Sustainability Index” and show rising levels of take-up of the Global Reporting Initiative and ISO 14001. Baskin (2006) also showed that emerging markets lag the OECD significantly on reporting on business ethics and equal opportunities, are roughly at par on environmental reporting, and show comparable reporting variance on women on company boards, training and occupational health and safety . Despite the limitations of using reporting as an indicator of CSR performance and the danger of representing regions by just a few countries (e.g. only two of the 53 countries in Africa were included in the sample), the Baskin (2006) study does provide some insight into the level of CSR activity in developing countries, concluding that:

‘there is not a vast difference in the approach to reported corporate responsibility between leading companies in high income OECD countries and their emerging-market peers. Nonetheless, corporate responsibility in emerging markets, while more extensive than commonly believed, is less embedded in corporate strategies, less pervasive and less politically rooted than in most high-income OECD countries' (p. 46).

2.4 Regional


Major coverage of the Asia in the field of CSR often focus on China (e.g. Zhuang and Wheale, 2004), India (e.g. Balasubramanian et al., 2005), Indonesia (e.g. Blowfield, 2004), Malaysia (e.g. Zulkifli and Amran, 2006), Pakistan (e.g. Lund-Thomsen, 2004), and Thailand (e.g. Kaufman et al., 2004). Other countries that have had less attention include Bangladesh (Nielsen, 2005), the Pacific Forum Islands (Prasad, 2004), Sri Lanka (Luken and Stares, 2005), and Vietnam (Prieto-Carron, 2006b). Birch and Moon (2004) noted that “CSR performance varies greatly between countries in Asia, with a wide range of CSR issues being tackled (e.g. education, environment, employee welfare) and modes of action (e.g. foundations, volunteering, and partnerships)”. In one of the survey on CSR reporting in Asia, Chapple and Moon (2005) find that nearly three quarters of large companies in India present themselves as having CSR policies and practices versus only a quarter in Indonesia and between these two extremes are Thailand (42%), Malaysia (32%), and the Philippines (30%). They also infer from the research that the evolution of CSR in Asia tends to occur in three waves, first being community involvement followed by successive second and third waves of socially responsible production processes and employee relations. In a comparative survey of CSR in 15 countries across Europe, North America, and Asia, Welford (2005) speculates that the low response rates from countries like Hong Kong, Malaysia, Mexico, and Thailand may in itself be an indicator of CSR being less prevalent in developing countries. This seems to be borne out by the research findings, in which these countries fairly consistently underperform when compared with developed countries across 20 aspects of CSR measured by the survey.


The literature on CSR in Africa is predominantly based on South Africa (Visser, 2005a), while other pockets of research exist for Côte D'Ivoire (e.g. Schrage and Ewing, 2005), Kenya (e.g. Dolan and Opondo, 2005), Nigeria (e.g. Amaeshi et al., 2006), Tanzania (e.g. Egels, 2005), and Mali and Zambia (e.g. Hamann et al., 2005). Very few papers are focused on industry sectors, with traditionally high impact sectors like agriculture (e.g. Blowfield, 2003), mining (e.g. Kapelus, 2002), and petrochemicals (e.g. Acutt et al., 2004) featuring most prominently. Two of the best sources of literature on Africa are Corporate Citizenship in Africa (Visser et al., 2006) and the Journal of Corporate Citizenship special issue on CSR in Africa (issue 18, summer 2005). The latter concludes that ‘academic institutions and researchers focusing specifically on corporate citizenship in Africa remain few and under-developed' (Visser et al., 2005: 19). This is confirmed by a review of the CSR literature on Africa between 1995 and 2005 (Visser, 2006a), which found that that only 12 of Africa's 53 countries have had any research published in core CSR journals, with 57% of all articles focused on South Africa and 16% on Nigeria. The latter partly reflects the high media profile generated around corporate citizenship issues and the petrochemical sector, especially focused on Shell and their impacts on the Ogoni people (Ite, 2004). Economic and philanthropic aspects of CSR, rather than the legal and ethical responsibilities, will continue to dominate CSR conceptualization and practice in Africa (Visser, 2007).

Corporate social responsibility in South America is not as much covered subject as other underdeveloped countries (Haslam, 2007), the focus has been mainly concentrated on Argentina (e.g. Newell and Muro, 2006), Brazil (e.g. Vivarta and Canela, 2006) and Mexico (e.g. Weyzig, 2006), although Nicaragua (Prieto-Carron, 2006a) and Venezuela (Peindado-Vara, 2006) also feature. De Oliveira in 2006 has noted that the Corporate social responsibility agenda in South America has been heavily influenced by socio-economic and political conditions, which have invariably led to problems like, unemployment, in- equality, and crime. Schmidheiny has in 2006 stated that Corporate social responsibility has ushered a positive effect in South America. The trend towards increasing CSR in the region has been generally upward. For example, Correa et al. has reported in his article in 2004 that by 2004 there were thousand South American companies which were member of organization called EMPRESA (the hemisphere-wide CSR network), another three hundred companies were members of the “World Business Council” for Sustainable Development, also another fourteen hundred had obtained ISO 14001 certification, and one hundred eighteen had signed UN Global Compact.

2.5 Motivations

Until now we have classified the CSR literature on a regional level. To further see the difference between the CSR in developing countries and developed countries we would now isolate motivations for CSR in developing countries, with the help of this we would be able to see why the CSR in developing countries is so unique. Some of the motivations for CSR that I have isolated with the help of literature review are:

2.5.1 Cultural Tradition

The term CSR has been widely used in western countries and hence there is a widespread believe that CSR is a Western thing but on the contrary there is evidence that CSR in developing countries has been around for centuries and its man pillar has been deep-rooted indigenous cultural traditions of philanthropy and business ethics. An excellent example was given by, Visser and Macintosh in 1998 they have quoted that “the ethical condemnation of usurious business practices in developing countries that practice Hinduism, Buddhism, Islam, and Christianity dates back thousands of years”. Another example was given by Frynas (2006) ‘business practices based on moral principles were advocated by the Indian statesman and philosopher Kautilya in the 4th century BC'. If we take South American context, Sanborn (2002), quoted in Logsdon et al. (2006) that ‘varied traditions of community self-help and solidarity stretch back to the region's pre-Hispanic cultures, and include the mutual aid societies, trade unions and professional associations that emerged in the 19th and early 20th centuries'. Logsdon et al.'s (2006) stated that “One myth is that CSR in Mexico is new, another is that US firms brought CSR to Mexico, and a third is that CSR as practised by Mexican firms simply reflects the CSR patterns and activities of US firms”. Even if we take CSR for more modern times I have found that it was heavily influenced by local culture, Vives's (2006) had conducted survey of over 1,300 enterprises in South America, his findings were that the region's religious beliefs are one of the major motivations for CSR. Also Nelson (2004) founded that Buddhist traditions in Asia are aligned with CSR. Also for Asia, Chapple and Moon (2005) had reached a same conclusion, that “CSR does vary considerably among Asian countries but that this variation is not explained by [levels of] development but by factors in the respective national business systems”, this was consistent with Birch and Moon's (2004) finding in his paper for the Journal of Corporate Citizenship special issue on CSR in Asia. If we take African the findings are same, Amaeshi et al. (2006) found that CSR in Nigeria is heavily influenced by local socio-cultural influences like communalism, ethnic religious beliefs, and charitable traditions.

2.5.2 Political Upheaval

CSR in developing countries are heavily influenced by the social and political reforms, which drives business behavior towards integrating social and ethical issues. De Oliveira (2006) has argued that “the political and associated social and economic changes in Latin America since the 1980s, including democratization, liberalization, and privatization, have shifted the role of business towards taking greater responsibility for social and environmental issues”. A recent example can be the case of South Africa, the political changes towards democracy and end of decades of apartheid have been a significant driver for CSR, through the practice of improved corporate governance (Roussouw et al., 2002), collective business action for social upliftment (Fourie and Eloff, 2005) has led to black economic empowerment (Fig, 2005), and business ethics (Malan, 2005). Visser (2005a) lists more than a dozen examples of socio-economic, environmental, and labor-related legislative reform in South Africa between 1994 and 2004 that have a direct bearing on CSR. Another excellent example can be given of many central and eastern European countries which have been recently inducted into European Union, these countries have now shifted towards CSR .(Baskin, 2006).

2.5.3 Social and Economic Conditions

It is often said that the CSR in developing countries is directly shaped by the social conditions and economic environment present in the country in which firms operate and the development priorities this creates. Amaeshi et al. (2006), had argued that “CSR in Nigeria is specifically aimed at addressing the socio-economic development challenges of the country, including poverty alleviation, health-care provision, infrastructure development, and education. This, they argue, stands in stark contrast to many Western CSR priorities such as consumer protection, fair trade, green marketing, climate change concerns, or socially responsible investments.” Schmidheiny (2006) had questioned the appropriateness of foreign CSR approaches, citing examples from South America, where the most important issues like poverty, illiteracy, crime and tax avoidance are not included in the CSR conceptions in developed countries, but if we consider locally developed CSR approaches, then they are most likely to respond to the many local social and environmental problems, such as deforestation, unemployment, income inequality, and crime (De Oliveira, 2006).

2.5.4 Poor Governance

CSR can be seen as a form of private or self governance or a response to poor governance (Levy and Kaplan, Chapter 19). A particular important aspect of the CSR for developing countries is the fact it is often seen as a way to plug the gaps left by weak, corrupt, or under-resourced governments that fail to adequately provide various social services. Furthermore, “as many developing country government initiatives to improve living conditions falter, proponents of [CSR and bottom of the pyramid] strategies argue that companies can assume this role”. Such proponents of CSR, Blowfield and Frynas (2005) observe, “an alternative to government” which is “frequently advocated as a means of filling gaps in governance that have arisen with the acceleration of liberal economic globalization”. A survey was conducted by “World Business Council for Sustainable Development” (WBCSD 2000) in their report they illustrated that, when asked how CSR should be defined, peoples in Ghana stressed ‘building local capacity' and ‘filling in when government falls short'. Moon (2002a) in his paper has argued that, this phenomenon is part of a broader political shift towards ‘new governance' or “alternate governance” approaches, here the local governments are trying to share responsibilities and to develop more effective modes of operation, the reason may be result of overload or of a view that they do not have a monopoly of solutions for society. This is often in the form of social partnerships with non-profit and for-profit organizations. Moon et al. (2005) has cited this phenomenon as an example of companies acting in a ‘civic republicanism' mode. In addition to being encouraged to step in where once only governments acted, through the mechanism of either privatization or welfare reform, Matten and Crane (2005) also suggest that companies enter the arena of citizenship where government has not as yet administered citizenship rights, for example, improving working conditions in sweatshops, ensuring for employees a living wage, and financing the schooling of child laborers in the absence of legislation requiring this. However, this approach is not without its share of criticism ,Hamann et al. (2005) had argued that CSR is not adequate response to these governance gaps and that more proactive steps involving local government towards accountability and inclusiveness is necessary. Blowfield and Frynas (2005) had questioned the very logic: “Is CSR a stepping-stone on the path to better national regulation in developing countries? Or is it part of a longer term project for overcoming the weaknesses of territorially prescribed judicial and welfare mechanisms that is, addressing the limitations of the nation-state in regulating a global economy?” There are also serious questions about the dependencies this governance gap approach to CSR creates, especially where communities become reliant for their social services on companies whose primary accountability is to their shareholders. Hence, multinationals may cut expenditure, or disinvest from a region if the economics dictates that they will be more profitable elsewhere. There is also the issue of perceived complicity between governments and companies, as Shell all too painfully experienced in Nigeria (Ite, 2004).

2.5.5 Crisis Response

Crises associated with developing countries have in the past affected CSR responses. These crises can come in the form of economic, social, environmental, health-related, or industrial accident. An excellent example was quoted by Newell (2005) that “the economic crisis in Argentina in 2001-2 marked a significant turning point in CSR, prompting debates about the role of business in poverty alleviation”. Another example can be of climate change (Hoffman, 2005) and HIV/AIDS (Dunfee, 2006) these crises have bought CSR in developing countries into lime-light. Catastrophic events with immediate impact are often more likely to elicit CSR responses, especially of the philanthropic kind. The company's quick response to the Asian tsunami is an excellent case (Fernando, 2007). However, companies can also have negative affect like industrial accidents. Examples include Union Carbide's response to the 1984 Bhopal disaster in India (Shrivastava, 1995) and Shell's response to the hanging of human rights activist Ken Saro-Wiwa in Nigeria in 1995 (Wheeler et al., 2002).

2.5.6 Market Access

Not all the intention of the companies in developing the CSR is for good, some companies may also see these unfulfilled human needs as an untapped market. This can be corroborated from the fact that there lies burgeoning literature on ‘bottom of the pyramid' strategies, which refer to business models that focus on turning the four billion poor people in the world into consumers (Prahalad and Hammond, 2002; London and Hart, 2004; Rangan et al., 2007). CSR may be working towards enabling companies in developing countries which are trying to access markets in the developed world. An example in this support can be given from, Baskin (2006), he had identified that “competitive advantage in international markets as one of the key drivers for CSR in Central and Eastern Europe and Asia”, also Araya's (2006) survey of CSR reporting among the top two hundred and fifty companies in South America found that “businesses with an international sales orientation were almost five times more likely to report than companies that sell products regionally or locally”. This is has become increasingly relevant as more and more companies from developing countries are moving towards globalization and in their effort they need to comply with international stock market listing requirements, including various forms CSR code compliance (Visser, 2005a). The above argument was also stated by Chapple and Moon's (2005) study of 7 countries in Asia, which found a strong relationship between international exposure, either in terms of international sales or foreign ownership, and CSR reporting. CSR is also sometimes used as a partnership approach to creating or developing new markets. Another example in support towards this, is the case of , AED and Mark collaboration with Exxon Mobil that has created a viable market for insecticide-treated mosquito nets in Africa, while improving pregnant women's access to these nets, through the delivery of targeted subsidies (Diara et al., 2004). Similalry, ABB used a partnership approach to CSR to deliver a rural electrification project in Tanzania (Egels, 2005).

2.5.7International Standardization

There is a widespread belief that the Western countries has imposed CSR approaches on the global South, but on the contrary there is ample evidence present to suggest that CSR codes and standards are a key driver for CSR in developing countries. For example Baskin's (2006) survey of CSR practices in emerging markets has indicated towards growing acceptance rate of ISO 14001 and the “Global Reporting Initiative's Sustainability Reporting Guidelines”. These codes are now used as a CSR response in sectors that are prevalent in developing countries, such as horticulture (Dolan and Opondo, 2005), cocoa (Schrage and Ewing, 2005), and textiles (Kaufman et al., 2004), as well as some social issues in developing countries, like child labor (Kolk and Van Tulder, 2002) or women in the workplace (Prieto-Carron, 2004). In general it is seen that CSR is driven by standardization imposed by MNC's in striving to achieve global consistency among its subsidiaries and operations in developing countries. For example, Chapple and Moon (2005) found that “multinational companies are more likely to adopt CSR than those operating solely in their home country, but that the profile of their CSR tend to reflect the profile of the country of operation rather than the country of origin”.

2.5.8 Investment Incentives

Multinational companies' investments in developing countries are generally linked to the social conditions prevalent in those countries (Gabriel, 1972). Now a day these investments are being screened for CSR performance. In response to this socially responsible investment (SRI) is becoming a major factor CSR in developing countries. Baskin (2006) had noted “that approximately 8% of emerging market companies on the Dow Jones World Index is included in the Dow Jones Sustainability Index, compared with around 13% of high-income companies”. In other developing countries, like South Africa, the SRI trend is well researched (AICC, 2002). The SRI movement in the 1980s had led to the anti-apartheid disinvestment phenomenon, also since 1992, South Africa has introduced twenty SRI funds which track companies' social, ethical, and environmental performance (Visser, 2005a). According to research by the “African Institute of Corporate Citizenship “(AICC) (2002), the size of the South African SRI market in 2001 was already 1.55% of the total investment market. In an another major development, in May 2004, the Johannesburg Securities Exchange had launched its own tradable SRI Index, the first of its kind in an emerging market (Sonnenberg et al., 2004). A similar index was also introduced in Brazil. Closely linked to the literature on SRI in developing countries is the debate about the business case for CSR. Very few instrumental studies have been done, a survey done in Thailand by Connelly and Limpaphayom (2004) had showed that environmental reporting had not negatively impacted on short-term profitability and has in fact generated a positive relationship with firm valuation. More generally, a report by Sustainability (2002) uses case studies to illustrate various business benefits associated with addressing sustainability in developing countries. Furthermore, Goyal (2006) contends that CSR may serve as a signaling device for developing countries seeking to assess foreign direct investment proposals by unknown foreign firms.

2.5.9 Stakeholders

In general the governmental has not got strong control or prohibitive laws over the social, ethical, and environmental performance of companies in developing countries, hence in its absence activism by stake- holder groups has become major source of CSR. Lund-Thomsen (2004) had described describes this as “an outcome of micro-level struggles between companies and communities over the distribution of social and environmental hazards which are created when global political and economic forces interact with local contexts around the world”. In research it was found that there are mainly four kinds of groups namely development agencies (Jenkins, 2005), trade unions (Kaufman et al., 2004), international NGOs (Christian Aid, 2005), and business associations (WBCSD, 2000) has emerged as the most impotant activists for CSR. These four groups had also provided a support for local NGOs. Another goup has also emerged in recent times namely media, it has also emerged as a key supporter for promoting CSR in developing countries (Vivarta and Canela, 2006). Activism by these groups in developing countries has taken various forms, which was classified by Newell (2001) “as civil regulation, litigation against companies, and international legal instruments”. Of these, civil regulation is perhaps the most common and effective. Bendell (2000) describes this as the theory that ‘businesses are being regulated by civil society, through the dual effect of negative impacts from conflict and benefits from collaboration [which] provides new means for people to hold companies accountable, thereby democratising the economy directly'. There are numerous examples of civil regulation in action in the developing world of which South Africa is a rather striking case in point (Visser, 2005a). This has manifested itself mainly through community groups challenging companies over whether they are upholding the constitutional rights of citizens. Various land mark cases between 1994 and 2004 suggest that, although civil society still tends to lack capacity and resources in South Africa, this has been an effective strategy. Stakeholder activism has also taken a constructive approach towards encouraging CSR, through groups like the National Business Initiative and partnerships between business and NGOs. Stakeholder activism can also be a source of criticism of CSR, arguing that it is an inadequate response to the social and environmental challenges of developing countries. The Christian Aid (2005) report Behind the Mask: The Real Face of Corporate Social Responsibility epitomizes this critical approach, and may be a driver for an enlarged conception and practice of CSR in developing countries.

2.5.10 Supply Chain Management

Another significant aspect for CSR development in small and medium-sized companies in developing countries is the requirements that are being imposed by multi- nationals on their supply chains. This recent trend has began with different ethical trading initiatives (Blowfield, 2003, 2004), which led to the growth of fair trade auditing and labeling schemes for agricultural products sourced in developing countries (Dolan and Opondo, 2005; Schrage and Ewing, 2005). Poor labour and human rights conditions in high profile multinational supply chains in the sporting and clothing sectors were also a significant catalyst for greater attention to CSR (Hussain-Khaliq, 2004; Kaufman et al., 2004; Nielsen, 2005). One positive affect of this is the development of certifiable standards like SA 8000, which is now being widely used as a screening mechanism for multinationals in selecting their suppliers in developing countries (Kolk and Van Tulder, 2002). Major change has also been achieved through sector-based initiatives such as the Forest Stewardship Council for sustainable forestry and the Marine Stewardship Council for sustainable fishing. More recently, this driver has been scaled up due to the so called ‘Wal-Mart effect' whereby major global and national retailers are committing to promoting sustainability and responsibility through their suppliers (Johnson, 2004).

2.6 A CSR Pyramid for Developing Countries

Till now we have considered the various factors which driver CSR in developing countries, next we would ask the question that, whether the present Western concepts and models of CSR are adequate for describing CSR in developing countries? Now if we consider the most popular model that was given by Carroll's (1991) CSR Pyramid, comprising economic, legal, ethical, and philanthropic responsibilities, we find that this is entirely based on research in an American context, hence it cannot applied globally. Also several studies have suggested that the culture has an important influence on CSR priorities (Pinkston and Carroll, 1994; Edmondson and Carroll, 1999; Burton et al., 2000). Crane and Matten (2007a) had also addressed this point by discussing CSR in a European context using Carroll's CSR Pyramid. Crane and Matten (2007a)in their research has concluded that “all levels of CSR play a role in Europe, but they have different significance, and furthermore are interlinked in a somewhat different manner”. So now the question is that can we take the Carroll's four-part pyramid structure and use it for developing countries. My contention towards this approach is that the order of the CSR layers in developing countries —if this is taken as an indicator of the relative emphasis assigned to various responsibilities—differs from Carroll's classic pyramid (Visser, 2006b). Hence, in developing countries, economic responsibilities still get the most emphasis. However, philanthropy is given second highest priority, followed by legal and then ethical responsibilities.

2.6.1 Economic Responsibilities

It is well documented fact that developing countries in general receive less foreign direct investment; also there is a widespread unemployment and poverty. Hence under these conditions the economic contribution provided by the companies in developing countries is highly appreciated by the local governments and communities alike. Fox (2004) has argued that this phenomenon should not be seen in a negative light, but rather as a more development-oriented approach to CSR which has helped in focusing and enabling countries environment for responsible business in developing countries, this has also helped to brings economic and equity aspects of sustainable development to the forefront of the agenda. This is similar to the approach to economic responsibility taken by companies in Europe, in contrast to the more narrow focus on profitability in the USA (Crane and Matten, 2007a). Therefore, in developing countries, CSR in general tends to give more importance to the ‘economic multipliers', including to the capacity to generate investment and income, it also give importance to production of safe products and services, to create jobs, to invest in human capital, to establish local business linkages, to spread international business standards, support technology transfer and build physical and institutional infrastructure (Nelson, 2003). For this reason, companies that operate in developing countries increasingly report on their economic responsibilities by constructing ‘economic value added' statements.

2.6.2 Philanthropic Responsibilities

Crane and Matten (2007a) suggest that philanthropic responsibility in Europe tends more often to be more compulsory via the legal framework than discretionary acts of successful companies or rich capitalists as in the United States In this respect, developing countries have more in common with the American model, although philanthropy generally gets an even higher priority as a manifestation of CSR (Arora and Puranik, 2004; Fig, 2005; Ahmad, 2006; Amaeshi et al., 2006; Weyzig, 2006). Partly, this is a result of strong indigenous traditions of philanthropy in developing countries, as previously discussed. However, there are several other reasons as well. In the first instance, the socio-economic needs of the developing countries in which companies operate are so great that philanthropy is an expected norm—it is considered the right thing to do by business. Second, companies realize that they cannot succeed in societies that fail, and philanthropy is seen as the most direct way to improve the prospects of the communities in which their businesses operate. HIV/AIDS is a case in point, where the response by business is essentially philanthropic (it is not an occupational disease), but clearly in companies' own medium- to long-term economic interest. Third, over the past 50 years, many developing countries have become reliant on foreign aid or donor assistance. Hence, there is often an ingrained culture of philanthropy. And a final reason for developing countries prioritization of philanthropy is that they are generally still at an early stage of maturity in CSR, sometimes even equating CSR and philanthropy, rather than embracing the more embedded approaches now common in developed countries.

2.6.3 Legal Responsibilities

In developing countries, legal responsibilities generally have a lower priority than in developed countries. This does not necessarily mean that companies flaunt the law, but there is far less pressure for good conduct. This is because, in many developing countries, the legal infrastructure is poorly developed, and often lacks independence, resources, and administrative efficiency. Many developing countries are also behind the developed world in terms of incorporating human rights and other issues relevant to CSR into their legislation (Mwaura 2004). Admittedly, there are exceptions and some developing countries have seen significant progress in strengthening the social and environmental aspects of their legislation (Visser, 2005b). However, government capacity for enforcement remains a serious limitation, and reduces the effectiveness of legislation as a driver for CSR. Hence, several scholars argue that tax avoidance by companies is one of the most significant examples of irresponsible business behavior in developing countries, often contradicting their CSR claims of good conduct (Christensen and Murphy, 2004).

2.6.4 Ethical Responsibilities

Crane and Matten (2007a) suggest that ethical responsibilities enjoy a much higher priority in Europe than in the United States. In developing countries, however, ethics seems to have the least influence on the CSR agenda. This is not to say that developing countries have been untouched by the global trend towards improved governance (Reed, 2002). In fact, the 1992 and 2002 King Reports on Corporate Governance in South Africa have both led the world in their inclusion of CSR issues. For example, the 1992 King Report was the first global corporate governance code to talk about ‘stakeholders' and to stress the importance of business accountability beyond the interests of shareholders (IoD, 1992). Similarly, the 2002 revised King Report was the first to include a section on ‘integrated sustainability reporting', covering social, transformation, ethical, safety, health, and environmental management policies and practices (IoD, 2002). This progress is certainly encouraging, but in general, it is still the exception rather than the rule. For instance, in Transparency International's annual Corruption Perception Index and Global Corruption Barometer, developing countries usually make up the bulk of the most poorly ranked countries. Furthermore, survey respondents from these countries generally agree that corruption still affects business to a large extent. The World Bank's (2005) Investment Climate Survey paints a similar picture. One of the attempts to address corruption in developing countries has been the UK-led Extractive Industries Transparency Initiative (EITI), which aims to increase transparency over payments by companies to governments and government-linked entities, as well as transparency over revenues by those host country governments. This is clearly a step in the right direction, but the refusal of countries like Angola to even participate shows that there is still a long way to go in embedding ethical responsibilities in developing countries.

2.7 Conclusion

To summarize the literature review, here I have argued that CSR in developing countries has the following distinctive characteristics (Visser et al., 2007):

1. CSR tends to be less formalised or institutionalized in terms of the CSR benchmarks commonly used in developed countries, i.e. CSR codes, standards, management systems and reports.

2. Where formal CSR is practiced, this is usually by large, high profile national and multinational companies, especially those with recognized international brands or those aspiring to global status.

3. Formal CSR codes, standards, and guidelines that are most applicable to developing countries tend to be issue specific (e.g. fair trade, supply chain, HIV/AIDS) or sector-led (e.g. agriculture, textiles, mining).

4. In developing countries, CSR is most commonly associated with philanthropy or charity, i.e. through corporate social investment in education, health, sports development, the environment, and other community services.

5. Making an economic contribution is often seen as the most important and effective way for business to make a social impact, i.e. through investment, job creation, taxes, and technology transfer.

6. Business often finds itself engaged in the provision of social services that would be seen as government's responsibility in developed countries, for example, investment in infrastructure, schools, hospitals, and housing.

7. The issues being prioritized under the CSR banner are often different in developing countries, for example, tackling HIV/AIDS, improving working conditions, provision of basic services, supply chain integrity, and poverty alleviation.

8. Many of the CSR issues in developing countries present themselves as dilemmas or trade-offs, for example, development versus environment, job creation versus higher labour standards, strategic philanthropy versus political governance.

9. The spirit and practise of CSR is often strongly resonant with traditional communitarian values and religious concepts in developing countries, for example, African humanism (ubuntu) in South Africa and harmonious society (xiaokang) in China.

The focus on CSR in developing countries can be a catalyst for identifying, designing and testing new CSR frameworks and business models, for example, Prahalad's Bottom of the Pyramid model and Visser's CSR Research into CSR in developing countries is still relatively underdeveloped and tends to be adhoc with a heavy reliance on convenience-based case studies or descriptive accounts. The focus is often on high profile incidents or branded companies and a few select countries (e.g. Brazil, China, India, South Africa), with a general lack of comparable benchmarking data. Hence, there is an urgent need for further research on CSR in developing countries at the international, regional, national and sectoral levels, as well as on theoretical constructs. There is a dearth of international research which surveys the nature and extent of CSR in developing countries, as compared with developed countries. Next to this need for more data in general, there is need for more comparative work which analyses CSR between regions (e.g. Africa, Latin America, Asia) and between countries within regions. On a more national or regional level, there is need for detailed national research on CSR, especially on the more than 100 developing countries that appear to have had no academic papers published about them in CSR journals. Alongside these efforts there seems to be a specific need for more sectoral research on CSR codes and practices, especially for the lesser covered industries like chemicals, financial services, infrastructure (including construction), manufacturing (including motor), media, retail, telecommunications, and travel and leisure. Finally, all these different streams of empirical research should inform more conceptual work on CSR conceptions, frameworks, or models that are more applicable to developing countries. What is clear from this chapter, therefore, is that CSR in developing countries is a rich and fascinating area of enquiry, which is becoming ever more important in CSR theory and practice. And since it is profoundly under-researched, it also represents a tremendous opportunity for improving our knowledge and understanding about CSR in developing countries.

3. Research Method

Research is defined as human activity based on intellectual application in the investigation of matter. It can also be said that research is an organized and systematic way of finding answers to questions.

3.1 Research Perspective

According to Bryman and Bell (2007), research can be conducted through three perspectives - positivism, interpretivism and realism. The positive paradigm demands accurate quantitative data and is conducted through analysis, surveys and experiments; while interpretivism paradigm calls for quality based data which is conducted through case studies, interviews and focus groups (Neuman, 2000). The combination of positivist and interpretivist approaches would therefore help to gain a complete prespective from both qualitative and quantitative aspects.

3.2 Research Approach

There are two types of research approach:

a) Deductive approach: in this approach the researcher starts with a hypothesis and then collects data to test the hypothesis. b) Inductive approach: The research would collect data first and then develop a theory based on the data analysis. According to Saunders et al (2003) in an inductive approach the researcher collects data and develops a theory as a result of data analysis. Whereas in a deductive approach; the researcher works from a generalist point of view to a more specific one

3.3 Data Collection

Secondary Research is an effective means of gathering information about any subject matter, it is fast and forms the foundation for further research. Published materials such as Trade journals, books, newspaper reports, government publications, internet are sources for collecting secondary data. In this research university library and online library will be extensively used, databases like Emerald, EBSCO, Econlit, Business Source Premier are predominantly used.

Primary Research is a means of gathering more relevant information regarding the topic directly from the source. In this research primary data will be collected by three different means questionnaires, semi structured interviews and focus groups.

3.4 Semi Structured Interviews

For this research, five semi structured interviews of about fifteen minutes each would be undertaken and all of them would be conducted with TATA motor officials in their office premises. This will uncover TATA's concern for social causes and the effect of NANO on Indian roads.

Questionnaires for this research aim to find out people's perspective concerning social responsibility and TATA Nano's impact on environment, roads and pollution. Around 200 different questions would be distributed among government and private sector employees who mostly belong to middle income bracket and are likely to chose TATA Nano as a vehicle for transportation. Around 100 are expected to return an in case of a shortage of response; questionnaires will be administered personally to small business owners in the surrounding areas.

Focus groups would be organised to generate response from different communities of people, five groups have been chosen to whom the topic on social responsibility would be given and the response will be recorded. Five different groups of young engineers, teachers, government servants, company directors and doctors are chosen for this purpose.

3.5 Limitations of the Research

The research aim is to identify the state of CSR in developing countries such as India with special reference to TATA Nano. TATA Nano project has itself suffered a major setback when TATA's could not start production at Singur in West Bengal and they had to move their plant to Gujurat. This delayed their production and created a lot of political drama across West Bengal.

While carrying out the research I encountered the following limitations:

* One was considerable amount of time was spent in travelling across India to various TATA factories, at Singur it was almost next to impossible to collect any information due to political drama. It definitely have been a very time consuming affair and due to limited access to both time and money some places could not be reached to give more appropriate picture.

* The questionnaires that have been distributed among 200 individuals may not represent actual feeling of the total population of India; in fact the sample size represents only a minimal fraction of the total one billion people in India.

* The focus groups selected to participate in the discussion were also very limited in size and may not give a true picture of the concern for CSR in India.

* A lot of time was spent in contacting the officials at TATA, they were not very convinced of the nature of this research and were very sceptical of the outcome; a lot of them in fact refused to give appointments and did not entertain any telephonic queries.

* The questionnaire that was distributed among the employees had a limited time to complete them as they worked to hectic schedules.


The objective of the semi structured interview was to answer the following question:

To evaluate the impact of TATA Nano on environment, traffic congestion, demand for fuel etc

To conduct a semi-structured interview, I went to one of the factories of Tata Motors located in Lucknow. To conduct the interview, a prior permission was sought by me from the Public Relation Manager, Mr. Anand Divedi, he sits in Mumbai corporate office. I decided to conduct this semi structured interview with the technical staff rather than management staff. The main reason behind this was, as the management staff are well trained in dealing with these type of interviews and in general always tow on the company lines, hence we would not able to get the real picture. The technical staff also know more about the emission standard and its impact on the environment. Although my aim was to get atleast 15 minutes of interview time with each interviewee but I was only able to get on an average 5 to 7 minutes of interview time with each individual.

The interview questions were loosely based on the following line.

How many Nano cars Tata Motors expect to sell in a year. What are the emission standard of the nano car. Don't you think the roads would be congested because of the increase in the number of cars. What about the pollution this would cause.

The rest of the questions were framed on the spot according to the response of the interviewee.

The interview was conducted with the following employees:

1. Name :Mr. Jyoti Nath

Designation: Foreman

2. Name :Mr. Salman Ahmad

Designation: Foreman

3. Name :Mr. Swayam Baral

Designation: Foreman

4. Name :Mr. Vikrant sharma

Designation: Jr. Engineer

5. Name :Mr. Chandu Seth

Designation: Jr. Engineer

Following are the excerpt from the meeting :

Meeting with Mr. Jyoti Nath

Q. How many cars you expect to sell in a year?

A. I think we would be able to around 200000 cars in first year itself.

Q. What is the emission standard of the car?

A. It is Euro4 compliant.

Q. Could you elaborate on that, for example could you please tell me amount of green house gasses emitted by Nano car?

A. What do you mean by amount of green house gasses?

Q. Gasses like carbon dioxide, carbon mono oxide.

A. you can check our website about that.

Q. wouldn't that number of cars increase the road congestion problem?

A. I think it would.

Q. So if this car is creating more pollution and congestion, don't you think it is a bad idea to launch this car.

A. No I don't think so.

Q. Why?

A. People would any how buy cars, so I think it is better if they buy our cars.

Q. But now because of the aggressive price, many families that previously were not able to buy cars would now be able to buy cars?

A. I cant answer this question.

This interview ended after this question.

Meeting with Mr. Salman Ahmad

Q. How many cars you expect to sell in a year?

A. We expect to sell around 100000 cars in first year of production and after we have reached full capacity in production, this number would increase to 250000 in a year.

Q. What is the emission standard of the car ?

A. It is fully compliant according to Indian pollution board standard.

Q. Could you elaborate on that, for example could you please tell me amount of green house gasses emmited by Nano car?

A. I don't know the exact figures.

Q. wouldn't that number of cars increase the road congestion problem?

A. No , I don't think so.

Q. Why is that?

A. If the number of cars increases on road, the government would be forced to improve the road infrastructure.

Q. But if you consider immediate future, wouldn't that number of cars increase the congestion?

A. I don't know, it may increase the congestion.

Q. So if this car is creating more pollution and congestion, don't you think it is a bad idea to launch this car.

A. This car is not creating more pollution, it is fully compliant according to the Indian Pollution Board standard.

Q. yes I agree to that, but more number of cars would create more pollution.

A. Yes it might.

Q. So don't you think it should be TATA motors social responsibility to see that its action should not harm the environment?

A. I cant answer that.

This interview ended after this question.

Meeting with Mr. Swayam Baral

Q. How many cars you expect to sell in a year?

A. We expect to sell around 250000 cars in a year.

Q. What is the emission standard of the car ?

A. It is fully compliant according to Bharat Stage 4 compliance.

Q. Could you elaborate on that, for example could you please tell me amount of green house gasses emmited by Nano car?

A. Sorry, I don't know the figures.

Q. wouldn't that number of cars increase the road congestion problem?

A. Yes , I guess it would.

Q. So if this car is creating more pollution and congestion, don't you think it is a bad idea to launch this car.

A. No I don't think so.

Q. Why is that?

A. Because it is peoples car.

Q. What do you mean by that?

A. Every body has dream of buying cars, so why should it be the responsibility of only the middleclass to care about the environment.

Q. No I am talking about the responsibility of the company not people?

A. Our company is doing this for the general people.

Q. yes I agree to that, but if your company really wants to help people in general should it not open schools and hospitals rather than manufacturing cheap cars?

A. No, comments.

This interview ended after this question.

Meeting with Mr. Vikrant Shama

Q. How many cars you expect to sell in a year?

A. We expect to sell around 250000 cars in first year of production and after that we would increase our capacity to 1000000 cars in a year. Although not all the cars would be sold in India, some of the cars would be exported.

Q. What is the emission standard of the car ?

A. It is Bhaart stage 4 compliant.

Q. Could you elaborate on that, for example could you please tell me amount of green house gasses emmited by Nano car?

A. You can check these figures on the IPB website.

Q. Wouldn't that number of cars increase the road congestion problem?

A. Yes initially it would but as the number of cars increase on the road so would the infrastructure.

Q. But if you consider immediate future, wouldn't that number of cars increase the congestion?

A. Nobody can increase the progress.

Q. But in the immediate future do you see increase in congestion?

A. It is hypothetical question, I can't answer that

Q. Okay fine, let us suppose that the increase number of cars would create more congestions and plooution, don't you think it is a bad idea to launch this car.

A. Again it is hypothetical question and I cannot answer this.

This interview ended after this question.

Meeting with Mr. Chandu Seth

Q. How many cars you expect to sell in a year?

A. Initially 250000 and later on 1000000.

Q. What is the emission standard of the car ?

A. It is Bharat stage 4 compliant.

Q. Could you elaborate on that, for example could you please tell me amount of green house gasses emitted by Nano car?

A. Sorry, I don't have the exact figure but I can get it for you later on.

Q. wouldn't that number of cars increase the road congestion problem?

A. I guess it might.

Q. So if this car is creating more pollution and congestion, don't you think it is a bad idea to launch this car.

A. This is companies policy not mine.

Q but as a company representative don't you think that company should have some CSR?

A. Our company is very much into CSR, we are into schools, hospitals, we give out charity.

Q. What about the environment?

A. recently we have a drive in which we planted more than 100000 trees all over India.

Q. But your cars are creating pollution?

A. All the cars are creating pollution not only ours.

Q but because of the cheap cars now more people would be able to have cars and hence more pollution and congestion?

A. I cannot comment on this.

This interview ended after this question.


The objective of the structured interview was to answer the following question:

To evaluate public awareness concerning issues such as CSR in India

Pre study

To design a questionnaire, information is needed about the specific target group. In order to construct the questionnaire a pre study was needed to collect basic information. To find the respondents, convenience sampling was used. The interview was conducted among government and private sector employees who mostly belong to middle income bracket and are likely to choose TATA Nano as a vehicle for transportation.

Questionnaire design

As mentioned earlier, the questionnaire was interviewer-administrated, which mean that the interviewer read the questions for the respondents and noted their answers on the answering sheet. The questionnaire was built upon the research question mentioned above, and was divided into five questions.


1. Have you heard about Corporate Social Responsibility?

The main reason behind framing this question was to see if there is a general awareness among the educated class about the corporate social hypothesis. The hypothesis is that as most of the people to be interviewed are educated and work for big corporate houses, they should be aware about the CSR.

2. Can you tell some of the activities covered under corporate social responsibility?

The main reason to frame this question was to gage the depth of the depth of understanding regarding corporate social responsibility. The hypothesis is that most the people to be interviewed would know what CSR is but won't be able to outline the detailed activities covered under CSR.

3. Can you name some companies who are actively taking up social causes?

In a recent survey conducted by Nielsen in India, it found that one-third of stakeholders believe that CSR is just a publicity stunt for most corporate houses.(1) The hypothesis is that if most of the general public is not aware of the CSR activities taken up by the big corporate houses then the argument that “CSR is just a publicity stunt for most corporate houses” does not hold ground.

4. Would you buy a product if it is in direct conflict with social responsibility?

The reason for framing this question was to see if people in general could force big corporate houses into being more socially resposible. The hypothesis is that the people at large do care about these issues.

5. Would you buy a TATA Nano car even if it causes harm to environment?

Psychologist Abraham Maslow first introduced his concept of a hierarchy of needs in his 1943 paper "A Theory of Human Motivation" (Maslow, 1943) and his subsequent book, Motivation and Personality (Maslow, 1954). This hierarchy suggests that people are motivated to fulfill basic needs before moving on to other needs. There are five different levels in Maslow's hierarchy of needs:

1. Physiological Needs

These include the most basic needs that are vital to survival, such as the need for water, air, food and sleep. Maslow believed that these needs are the most basic and instinctive needs in the hierarchy because all needs become secondary until these physiological needs are met.

2. Security Needs

These include needs for safety and security. Security needs are important for survival, but they are not as demanding as the physiological needs. Examples of security needs include a desire for steady employment, health insurance, safe neighborhoods and shelter from the environment.

3. Social Needs

These include needs for belonging, love and affection. Maslow considered these needs to be less basic than physiological and security needs. Relationships such as friendships, romantic attachments and families help fulfill this need for companionship and acceptance, as does involvement in social, community or religious groups.

4. Esteem Needs

After the first three needs have been satisfied, esteem needs becomes increasingly important. These include the need for things that reflect on self-esteem, personal worth, social recognition and accomplishment.

5. Self-actualizing Needs

This is the highest level of Maslow's hierarchy of needs. Self-actualizing people are self-aware, concerned with personal growth, less concerned with the opinions of others and interested fulfilling their potential.

In the light of ab

To export a reference to this article please select a referencing stye below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Request Removal

If you are the original writer of this dissertation and no longer wish to have the dissertation published on the UK Essays website then please click on the link below to request removal:

More from UK Essays

Get help with your dissertation
Find out more
Build Time: 0.0064 Seconds