The turn of the century has witnessed a paradigm shift in business objectives. The economic objective of profit earning, though essential, is insufficient to satisfy the ever-growing and divergent needs of a myriad of stakeholders that modern corporations have to contend with. The corporation, being a legal entity, is viewed as any other citizen in the society, having its rights and duties. Hence, the concepts of corporate citizenship and Corporate Social Responsibility (CSR) have come into vogue. CSR initiatives, to really bear fruit, must result in a mutuality of benefits for the society/stakeholders as well as for the corporation itself. CSR initiatives should be so integrated and internalized by the corporations that they are placed at the very heart of the business and not merely as an appendage to it. Corporations that have understood this mantra of corporate success have internalized the benefits flowing from responsible corporate citizenship and can hope to reap rich dividends in terms of improved corporate reputation, gaining consumers’ trust, employee motivation and retention and favorable market positioning, just to name a few. This paper seeks to study how some Indian companies at the forefront of corporate citizenship have integrated their CSR initiatives with their business strategy, rather than undertaking some unfocused CSR measures simply as a knee-jerk reaction to external societal pressures. Such a study may throw some light on the question as to why an organization contributes to social cause and what it expects to gain in the process.

In the emerging global economy, the operations of companies worldwide are under increased scrutiny of the activist groups, media and investors. Under this new circumstance, it is imperative for the companies to closely monitor the social and environmental implications of their activities. Although for centuries, business entities have demonstrated varying degree of responsibility to the society, it is only since the late 1990s that there has been a sharp evolution of CSR in the agenda for most top managers.

Though diverse definitions of CSR exist in literature, a convenient way to define CSR would be to relate it to the triple bottom line. A triple bottom line is an overview of business performance in terms of its impact on the economy, environment and society. Apart from concentrating solely on economic viability, businesses today are expected to give considerable attention to environmental sustainability and social responsibility. While the financial bottom line has been the traditional focus of attention of most business managers, today there are many applicable sets of standards and established procedures for measuring and evaluating environmental bottom line. Nowadays, almost all companies incorporate the environmental account in their annual reports. However, the weakest point in the triple bottom line triangle is the social issue which can be considered as synonymous with CSR.

The corporate sector has a major role to play in the socioeconomic development in a country like India. However, a majority of the companies in India seem to have a myopic and narrow approach to CSR. Far too many companies approach CSR in a defensive and reactive way. For these companies, the key driving force behind CSR is to avoid or minimize the adverse impact on their corporate reputation and image due to the harm they cause to the environment and society as a consequence of their profit-maximizing activities. They view CSR as a ‘bitter pill’—an appendage, that has to be bolted on to their businesses, that distract them from the business of doing business: making profit. A majority of business managers seem to be so obsessed with the immediacy of financial results that they fail to see the vast opportunities that lie in proactively engaging in CSR, in terms of ensuring long-term sustainability and gaining competitive advantage. What these companies fail to realize is that there is a viable business case for engaging in CSR for the company itself.

Most of the companies which realize the importance of CSR as a part of the way they must conduct business, are very often found to undertake CSR initiatives which are unrelated to their business strategy and clearly outside the domain of their core competencies. This results in such CSR initiatives yielding minimal social as well as corporate benefits.

Corporate Governance Journal, Corporate Governance Reforms, Financial Disclosures, Indian Companies, Financial Sector Reforms, Globalization, Information Asymmetries, Indian Corporate Morality, Market Mechanism, International Financial Reporting Standards, IFRS, Indian Accounting Standards, Economic Development, Financial Accounting Systems, Corporate Control Mechanisms.