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According to Keith Davis (1960) CSR is "Decisions and actions taken for reason atleast partially beyond the firm's direct economic or technical interest" (Carroll, 1991)
Almost every organization talks about CSR in terms of providing quality of life to the workforce but how many of them actually practice it? Companies in India have a tradition of helping communities this ranges from education, health, drinking water, assistance during natural calamities such as earthquake. As part of their corporate social responsibility, companies like Reliance, Tata, and Infosys e.t.c are doing many works towards the society as whole.
Corporate social responsibility is finally being taken seriously by Indian companies as they engage in humanitarian activities. As per Mr. Narayan Murthy chairman and chief mentor of INFOSYS, who firmly underlines the significance of CSR: "for benefit of globalization and technology to reach the poor, the private sector, humanitarian institutes and individuals should cooperate and establish partnership with government institutions? This would lift millions of our people out of the poverty (company website).
The motive of the study is to find out whether Small and medium enterprises are doing enough in comparison to MNCs in India in terms of CSR. According to trade India website (2010) SMEs industry constitutes more than 90% of the total economy. Still, it's far behind in the race of CSR. The study will also focus on the upliftment of the quality of life of workforce in SME's sector.
SMEs in India consider CSR activities mainly as a part of their marketing campaign, goodwill and tax saving in the target market. Many other boast of discharging CSR amongst their employees only. The core of real CSR is serving the suffering people who have no access to basic facilities enjoyed by anyone in a civilized society. (Kumar, 2010)
Rao (2003), A famous Indian writer states: "Employees at the grass root level experience a sense of frustration because of poor working conditions, unfavorable terms of employment, inhuman treatment by their superiors & the like, whereas managerial personnel feel frustrated because of alienation over their conditions of employment, lack to freedom in work, absence of challenging work etc" (Rao, 2003; p.403).
The vice president of human resources of Calvert Group, Evelyne Steward states "it's because of who we are and how we treat employees" (Dawn.1995), emphasizing on the fact that employee are the backbone of any organization so they must be addressed well in terms of quality of life.
Literature also enabled me to understand the concept of CSR during "Recession (2008)" and why many companies HR department jump into CSR. Is it just a Marketing tactic, making many people wary of its genuineness? Or something really fruitful. Considering Bajaj Hindusthan my previous internship company as an example basically focused on CSR in terms of society but now they have started upliftment of workforce in terms of providing quality of life to employees but still falling short in front of MNCs. For example Reliance industries has opened 10 schools which caters 14000 students across India while Bajaj industries (SME) has establish just 1 school.
The problem here is that the available literature is quite rich in one or the other circle mentioned in the mapping process but couldn't relate that well with each other in terms of human resource department, CSR, & Quality of life in various organizations. As per the recent survey by World economic forum(2010), the Indian youth seem to believe that multinational companies (MNCs) are more value-driven in their approach than domestic SME's. But on the other hand, the global youth seem to put more trust in small and medium businesses as opposed to MNCs. Why is there a stark difference among the Indian youth and the Global youth? In a way Indians should prefer in bringing up our SME's to a level which matches the MNC's but that is not the case in India, So, Why Indian youth prefer MNC's than domestic firms?
To clearly understand CSR in Indian Context.
To clearly understand how Indian SMEs can contribute to CSR.
"How can Indian SMEs CSR strategy help improve the quality of life of Indian workforce"?
CSR and HRD linkage:
Corporate social responsibility (CSR) also called corporate responsibility, corporate citizenship, responsible business and corporate social opportunity is a concept whereby organizations takes the responsibility of society's interest and their influence on customers, suppliers, employees, shareholders, communities & stakeholders, as well as the environment. Organizations voluntarily take certain steps to improve the quality of life for employees and their families as well as for the local community and society at large.
CSR has become a topic of debate and criticism around the world. Any action or decision apart from firm's profitability is CSR (Devis, 1960). On the other hand, Caroll(1979) argues that CSR is the combination of four ideas economic, legal, ethical and discretionary (Carroll, 1991) and others argue that it is superficial window-dressing and marketing campaigning.(Kumar 2010).
Human Resource Department (HRD) is playing significant role in CSR to upgrade or improve the knowledge of workforce in SMEs. Tara (2009) stated "workforce upliftment falls into HR's lap by Default"; which emphasize on the fact that whether the HR department is interested or not, CSR comes to them automatically as HR department is the link between the organization and the workforce. Nancy (2004) emphasize on the fact, the task of HR department is not only to implement CSR policies nationally but internationally but author Mehta(2003) states, only 13% companies HR department consider the CSR activities and think for workforce (Sharma, 2009) and my research would be rotating around this fact and the policies HR department should make to uplift the workforce.
SMEs and CSR:
Before taking into consideration the role of CSR in SMEs, let's first discuss what are SMEs? Small and medium enterprises (SMEs) are companies with less formal structure, limited turnover and limited people.
According to Bolton (1971) SMEs don't have a formal structure, which influences organisation's CSR approach. Author Spence (1999), Tilley (2000) and Dex & Scheibl (2001) while discussing the role of CSR in SMEs states, managers focus rarely on CSR issues due to lack of awareness and less institutional pressure i.e. in terms of legal, government agencies, competitor etc (Jenkins, 2006). Welford (2005) & Perrini (2006) also agree to the fact stating, forming CSR policies not always mean implementation (Fassin, 2008). On the contrary Goffee & Scase (1995) argues that SMEs can perform well in terms of CSR with the help of niche markets (Jenkins, 2006). Other argues that SMEs stay silent in order to protect brand image or reputation of the company (Jenkins, 2006). Spence & Rutherfoord (2000) suggests reasons why SMEs jump into CSR-profit is the priority, subsistence, self interest and social priority. The basic responsibilities of SMEs for providing quality of life to workforce in relevance to CSR, highlighted by (Bacon et al., 1996; Gibb, 2000; Hillary, 2000)
Good working condition
Fair distribution of wealth
Protection of environment (Jenkins, 2006)
Good CSR efforts lead to reduced employee absenteeism in Indian SMEs, So constant and rigorous CSR strategies are key to quality of life of workforce and their loyalty towards the organization.
Indian SMEs & CSR-The role of HR department
CSR in Indian SMEs is not a new concept but a traditional one (Mitra, 2007). CSR affects business activities socially, economically & environmentally, But Chahoud et al. (2007) & Gupta (2007) stated, to understand CSR in depth it is necessary to understand it globally. Indian MNCs like Reliance and Tata are doing a lot but as far as SMEs are concerned it's still a question.
SMEs constitute 90% to Indian economy and Dr RK Pachauri on World Creativity & innovation day stated "We felt that this day would be appropriate for acknowledging and appreciating innovative CSR initiatives by SMEs. A vibrant SME sector is the backbone of any economy". (SME TIMES, 2010). On the contrary other argues that, CSR in Indian SMEs is source of advertising nothing more than that (SME WORLD, editorial).
HR department plays a significant role in any organization (SMEs) whether it's Recruitment, Performance appraisal, Training & Development, Corporate social responsibility etc. CSR in terms of SME workforce would focus on creating good work atmosphere with efficient HRM strategy (Fassin, 2008). Agarwal (2007) emphasize on the fact that HR department has maximum contribution in employee retention in an organization by the formulation of various CSR strategies like:
CSR activities highlighted in the official get together.
Training programmes made insisting on the CSR culture. (Sharma et al. 2009)
So just to conclude, all three terms i.e. Corporate Social Responsibility, HR Department, SMEs are interrelated and this research would be taking a step towards what extra effort Indian SMEs can make through CSR to uplift quality of life of Employees.