Over the years, progressive organizations have demonstration several laudable example of responsible corporate action for social development. Unfortunately many of these efforts have not been able to reach a level of scale and dimension that can make an impact difference on a nation as large and diverse as India. Despite possessing rich and diverse managerial capability a tradition of entrepreneurship, economic resources and the right consciousness, corporate firms are still unable to participate in a more meaningful way in building natural and social capital.
The reasons are many and complex. This relate to the lack of a congenial external environment as also to organizations vision values, leadership and competitive capability. However, if there is one common thread, it is the unassailable fact that markets have failed to reward to reward CSR (Corporate Social Responsibility).They do not adequately provide in the drivers required to sustain a level of intensity of long term engagement necessary to produce results in the vast social fabric.
CSR is sustainable only if virtue pays off. The supply of corporate, virtue is both made possible and constrained by the market while there is a place in the business system for responsible firms, the market for virtue is not sufficiently important to make it in the interest of all firms to behave more responsibly.
It is sometimes argued that the â€˜reputation assetâ€™ that CSR attains is an adequate reward in itself and therefore does not need any further market incentives. However, all the present stage in India such a reputation asset has so far not led to any significant consumer support persuaded sizeable investor interest or resulted in meaningful preference in Government policies.
Therefore given the ambivalent market response, CSR initiatives by and large tend to attempt the minimum often defined by compliance to regulations and do not ignite creativity and innovation to accelerate social benefit.
There are also apprehensions amongst many that investing in CSR would put them at a disadvantage vis-Ã -vis their competitors who do not choose to carry such social overheads. Nevertheless, there are worthy exceptions, where organization have displayed sustained commitment and are certainly the harbingers of social change and an inspiration to other.
It is only when market forces make CSR a crucial component of shareholder value creation that new forces will emerge in favor of responsible corporate action. It is then that CSR will assume a new dimension â€“ one that is defined by market forces and not inspired by corporate conscience alone.
Private enterprises are well placed to play a much larger role in augmenting natural and social capital. Corporate organizations have mostly created assets and facilities that span the length and breadth of the country, and therefore, constitute the front line of engagement with civil society. The physical presence in communities around their catchments gives them an opportunity to directly engage in synergistic business activities that can create livelihoods and add to preservation of natural capital. More than financial, resources, private enterprises possess the more crucial managerial capability to ensure efficient delivery of social projects.
CSR can lead to optimum utilization of national resources, given that far higher social benefits will accrue to every unit of incremental cost incurred by the organization. Thus, given the right market incentives, Indian corporate can significantly add to Government efforts of pursuing growth with equity in constructive public private partnerships.
The key to large business houses sustaining a meaningful strategy for constructive social action therefore lies in the ability to create strong market drivers that act as incentives for CSR. Civil Regulation, including pressure groups act as strong drivers, to ensure socially responsible action. Government regulation and public policy are also influential drivers. However, these again tend to deliver the bare minimum interventions. Besides over reliance on regulation can stifle corporate creativity and innovation. A perceptible augmentation of societal capital will take place when market drivers spur innovation and a sense of competition to deliver CSR in ways that positively impact financial results. CSR initiatives then become a part of the balance sheet deliverables are quantified by the market and provide a direct incentive to the company to enhance socially responsible behavior.