Comparative analysis study on CSR expenditure in India: the case of Manufacturing and Service Industries
Akhil Krishnan Department of Management, Kochi, Amrita Vishwa Vidyapeetham, India, [email protected]
Abstract
CSR is the form of initiatives taken by the
corporates or manufacturing companies to
unify their concern in relation to social and
environmental factors with their
functioning of business. The CSR
activities are taken up by manufacturing
and service industries in order to show
their responsibilities to the society and
associate the same to manage brand image.
The initiatives of CSR activities are related
to either creating partnership with the local
communities or bringing change to protect
the environment. The companies show
their responsibilities on social, economic
and vice versa. The newspaper report was
published in “The Economic Times” titled
“India’s Best companies for CSR 2014:
Why manufacturing companies score
better than service companies” on April
28, 2015. The purpose of the study is
based on newspaper report; and to identify
the sector that contribute more on CSR and
the cause behind the spending. This study
was done on the basis of secondary
information as collected from Prowess
data resources. Also it is based on the
scholarly articles about CSR that are taken
from different journals and moreover,
based on the studies conducted by other
authors. Based on the analysis it is found
that manufacturing sector have a major
share of contribution for CSR activities
compared to service industries. Also, the
CSR spent and unspent for the selective
companies are chosen in service and
manufacturing sector for the financial
years and understood that manufacturing
contribute more on environmental
management in order to reduce the
negative impact that are faced through the
activities of the company, thus there can
result in increase the profitability, financial
gain, and competitiveness, and also the
consequence in betterment to the society.
International Journal of Pure and Applied MathematicsVolume 118 No. 9 2018, 421-443ISSN: 1311-8080 (printed version); ISSN: 1314-3395 (on-line version)url: http://www.ijpam.euSpecial Issue ijpam.eu
421
Key Terms: Corporate Social
Responsibility (CSR), Corporate Social
Performance (CSP), Corporate Reputation
(CR), Fuzzy Analytical Hierarchy Process
(FAHP)
Introduction
The initial idea related to CSR, derived by
Merrick Dodd, was to arise a feeling that
it is not only business responsibility to
contribute for the community but also, it
should be the corporate managers’ role for
looking in to the social activities without
any sought of lawful compulsion. Kotler et
al. (2005) defined CSR as commitment by
business organisations for the
improvement or community through
voluntarily execution of corporate
resources. CSR is assigned to several
terminologies like corporate social
performance (CSP), corporate
sustainability, corporate social and
responsibility on environment (Rahman et
al. 2016). CSR has been adopted by most
of the companies to react the intimidation
from stakeholders and increase the
performance and competitive edge
(Heledd (2009),Torugsa et al.(2012)).
Berrone et al. (2009), stated that the firms
which doesn’t maximize the CSR
contribution will not have positive
influence of CSR on firm performance.
Indian government makes it as obligatory
for the Indian companies to engage in CSR
initiatives under companies' act 2013.India
was the one and only country that has
made CSR activity mandatory for large
and profitable companies incorporated in
to law.
The activities has made compulsory for the
companies which has annual turnover of
Rs 1000 crore or more, or net worth of Rs
500 or more or net profit of Rs 5 crore or
more (Sangeeta Bansal and Shachi Rai,
2014).The concept of CSR activities is
voluntarily charitable activities that
business undertakes beyond their legal
requirements to fulfil their responsibility
towards the larger set of societal
stakeholders. The four key features of CSR
are economic, legal, ethical and
philanthropic Mark S. Schwartz and
Archie B. Carroll (2003). Organizational
function are important than the legal,
ethical or philanthropic issues.
Philanthropic responsibility in which the
company will be actively involved in
providing contributions for the betterment
of society as discussed in book “Brand
Equity: An Indian Perspective” written by
Vinod V. Sople and Sangeeta Trott(2016).
The corporations that belong to service
and manufacturing industries depend more
on the society for the support of developed
infrastructure like as roads, water supply,
electricity and educated workforce. It also
depends for law and order maintainence,
International Journal of Pure and Applied Mathematics Special Issue
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public health, transport facilities and
promote the same with the customers
through media. The final finished products
are drawn from the society as written by
A.C Fernando in his book “Business
Ethics: An Indian Perspective”. Today,
companies do conduct in socially
responsible mode; and other companies
undertake the activities for reasons that
are statutory while there are few that try to
confront demands of customer as their
task, as discussed by Sudeepta
Pradhan(2011). In some companies CSR
investment is recognized as liquidate of
resources or as a value addition or to be
hand back to share holders as discussed by
Hyelin Lina Kim et al. (2016). As per the
report done for the Indian companies by
Futurescape to determine the sustainability
and CSR engagement for FY 2016 on
about top 100 ranking companies
including Tata and Infosys, it is found that
there are many firms involved in
contribution for various CSR activities.
The Tata companies are generally involved
in CSR programmes for community
development also for environmental
preservation projects. Tata group
contributes for social activities such as
health, primary education, skills training
and entrepreneurship, livelihoods, women
empowerment. That apart, the Tata
companies work towards empowering
people in-order to help them to develop
their skills so that they can succeed in a
global economy which is now combined as
group CSR program known by name Tata
STRIVE as mentioned in TATA group
website. Similarly, the company like
Infosys also engaged in CSR activities as
the details in the website reveal that
company contributes as a commitment for
contribution to society and thereafter
established the Infosys Foundation in 1996
which act as a non profit trust for the
support of social initiatives. The
Foundation supports for programs and
organizations devoted to the cause of the
destitute, the rural poor, the mentally
challenged and the economically
disadvantaged sections of the society. The
Foundation also keen in preserving certain
cultural forms and dying arts of India.
It is compulsory for the companies to
spend a minimal of 2 percent of their net
profit for the improvement of the society
under ministry of corporate affairs has
notified under the Section 135 and
Schedule VII of the Companies Act, 2013
related to CSR .This norm is applied for
the companies whose net profit is not less
than Rs 5 crore or Rs 1000 crore turnover
or Rs 500 crore net worth as discussed on
newspaper article titled “Mandatory 2%
CSR spend set to kick in from April 1”
that was published in The Indian Express
dated 28th February, 2014.
International Journal of Pure and Applied Mathematics Special Issue
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A study that was conducted by IIM
Udaipur in partnership with Futurescape
for looking in to top companies of India
for a sustainable growth also for CSR in
the FY 2016.The study covers across
industries varied from automobiles, banks,
diversified, FMCG, Infrastructure,
information technology, metals and
mining, oil, power, steel, pharmaceuticals,
telecommunications, and others. The study
focuses in to four main criteria
Governance, Disclosure, Stakeholders, and
Sustainability. These four factors are
assigned as weights of 20% for
Governance, 15% for Disclosure, 35% for
sustainability and 30% for stakeholders.
On the basis of these weights, a ranking
was given to the companies. Tata group
leads the top stage followed by ITC Ltd,
Bharath Petroleum Corporation Ltd. Etc.
as per the report. The companies can carry
out CSR activities either through
affiliation with non-governmental
organisation or with their own trust,
foundations or systematize the resources
with other companies. There should be
CSR committee in the company in which
they are liable for the CSR expenditure
and undertake certain activities. The
committee has three or more directors with
at least one independent director whose
presence will fortify a certain amount of
democracy and also can assure multiplicity
in the decision-making process, argue
Sangeeta Bansal and Shachi Rai(2014). In
the year 2017 the trend of investors,
consumers and governments has to be
keen for looking to factors affecting the
environment such as scarcity of water or
key materials that results in pollution and
other side social and environmental issues
also need to be noted in to the views of the
companies. The newspaper article titled
sustainability trends that need to look out
for in 2017 as written by, N.Rana and
U.Majmudar as published in 2nd January
2017 discussed as follow
1. Contribution by companies for a
cleaner environment-
During Swachh Bharath Abhiyaan launch,
about 39 percent of the companies have
allocated their funds for this campaign in-
order to build toilets and also helped in
cleaning up the public spaces for 3 years
back. The contribution by these companies
for the campaign was highlighted in major
newspapers and also this promoted public
awareness of the health hazards of water
and air pollution.
2. CSR as a strategy, not a Charity-
The CSR investments and its disclosure
need to be done by the companies during
the preparation of the budget in the
beginning of the financial year. During the
year 2016 there were more companies
holding back their CSR funds as they find
International Journal of Pure and Applied Mathematics Special Issue
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projects not suitable and appropriate for
contribution. As per the study it’s found
that top Indian corporate spent on CSR
funds to charity is less than 45%.The
companies are keen in looking to the
method of investments to add strategic
brand value though it is not directly
related to the business. The CSR activities
also are essential to meet the legal
requirements as set by the Government of
India.
3. Zero Impact results to net positive-
The manufacturing companies are actively
involved in looking forward for creating
growth models that are sustainable. The
block chain models of supply chain is the
key area were the companies are looking
in to from that it's evident that waste,
water, energy, and materials are closely
related to the business continuity. The
companies such as Ambuja cement, ITC,
Dalmia Bharat etc are looking into
techniques that ensure minimum
utilization of water.
4. Water management measures and
evaluation-
In the year 2016 Droughts and water
shortages are the major challenges faced
by India. The companies have taken
measures to overcome these causes. In
manufacturing companies, water plays a
major role and shortage of water, which is
prevalent in India, can lead to challenges
to be faced by the manufacturers. Water is
considered as one of the top-listed entity
facing risks globally as per the ninth
edition of the Global Risk Report released
for the year 2014.In the year 2017;
companies will bring discussions to put
forward corporate initiatives for doing
water management measures and
evaluation.
5. Sustainable use of renewable energy
system-
The companies are focusing more on
renewable such as solar, bio-fuels, wind.
In remote places of India, there is shortage
of power supply from the grid system.
Considering such issues the companies
that are dependent on the grid system, are
looking for renewable energy sources. In
the year 2017, the companies will look
more into the sustainable use of renewable
energy system.
Review of Literature
The first study of article is based on the
CSR initiatives related to environment of
manufacturing units in India by Kavitha
Shanmugam (2013).The study discusses
that CSR is a commitment by the
company to operate in sustainable manner
under social, economical and
environmental aspect and also meanwhile
International Journal of Pure and Applied Mathematics Special Issue
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counteract the interest of the manifold
stakeholders. There can also be many
companies that have taken voluntarily
initiatives associated with environmental
management systems and making a report
on social and environmental performance.
Environmental initiatives and programs
are key dimensions of social
responsibility.CSR practices also cover the
management of resources that used for
production in manufacturing industries. In
India, CSR is considered as important
characteristics for business growth,
according to Brown (2001). The findings
of the study are that above 80% of
companies undertake the environmental
CSR effectiveness in highly effective
manner except rainwater harvesting,
integrated watershed development and
reclaiming of wasteland. The study was
conducted among automobile companies,
cement companies, chemical companies,
pharmaceutical companies and textile
companies. It was found from the study
that automobile companies contribute
more to environmental initiatives
compared to the other sectors. It was also
seen that the company having experience
in between 25-50 years have secured high
scores in tree plantation and least scores in
providing awareness to school and
colleges.
The study by Rahman and Faizanur(2017)
discusses about the importance behind the
contribution to CSR activities by the firm
for the sustainable development of the
society. It also shows how CSR has
become mandatory for the company by
law. The study also shows the origination
and significance of CSR and detailed
explanation note of companies act
2013.The conclusion of the study is that
there is no requirement of creating
awareness about the CSR initiatives
among general public to make CSR more
effective. As per the companies act the
spending of 2 percent on CSR is not
mandatory but reporting about it should be
strictly followed.
A study conducted by Sazzad Parwez
(2014) discusses that the corporate sector
has a key to work for sustainable
development of rural areas and also to
ensure private investment flows into these
areas. In rural areas, people have to face
numerous challenges such as hunger,
ignorance, ill health, high mortality, and
illiteracy. The private sector looks into
these areas and year wise budget is
allocated to eradicate the challenges in
rural areas. The Government of India may
not be adequate to provide basic services
to its citizen. It is also seen that welfare of
the society is not the major goal of
Government alone. The private sectors
also need to take initiative roles to
contribute to the society. The study shows
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that business corporations, governments,
individuals earn money from the society;
therefore, it needs to be given back to the
society in any form.
Dr. Madhavi S. Kulkarni (2015), discuss
about the study of CSR policies and
practices that occurs in Indian companies.
CSR is mandatory under section 135 of the
companies act. There are some companies
who concentrate on CSR activities in few
developed states like Maharashtra,
Tamilnadu. The manufacturing companies
contribute more to education, healthcare,
and sanitization. Almost all the companies
spent their contribution for the sustainable
growth of the economy and also in the
meanwhile focus on the healthcare.
Ashutosh Verma and C.V.R.S Vijaya
Kumar(2014) published a study about the
analysis of CSR expenditure by Indian
companies .In this study it shows whether
the insertion of companies act 2013
towards the CSR spent is followed by
Indian companies or not. The variables
that are identified from the study are social
and community services, environment and
pollution control expenses, staff welfare
expenses. During the period from 2001 to
2012 none of the companies spent 2
percent of the profit towards CSR
activities and moreover, the expenditure
on pollution and environmental control
measures has been undertaken only by one
company during the entire period of the
study.
The study by Sangeeta Bansal and Shachi
Rai(2014) shows that CSR has been made
mandatory for Indian companies under
Companies Act 2013.The concept about
CSR is elucidated under clause 135 of the
act. Also it is made as relevant to the
company that has annual turnover of
Rs1000 crore or more or a net worth of Rs
500 crore or more or a net profit of 5 crore
or more. Under this clause the company
needs to spend a minimal of 2% from the
average profits in the last three year for the
activities covered under CSR. The
companies can carry out this task either by
collaboration with non- governmental
organization or by their trust and
foundation or means of pooling resources
with other companies. Three or more
directors, with at least one independent
director should be involved in CSR
committee. Before 2012 -13 the company
spent voluntarily for CSR activities;
thereafter it is found that company
spending is specifically based on an
allotment of fund for CSR activities. The
result of the study is that CSR concept
brings revolution in the development of
the economy. The firms that add more to
the carbon footprints spend more on
environment related CSR activities. On
other hand the firms in iron, steel and
International Journal of Pure and Applied Mathematics Special Issue
427
power sector contribute more for
development of local communities due to
the reason that their project cause more
displacement of the locals. The activities
performed under CSR by the firms depend
on the nature of the industry and also give
restriction to the area where the firm is
located.
Joon Soo Lim and Cary A. Greenwood
(2017) conducted a study that CSR goals
can be achieved by stakeholder
responsiveness and engagement strategy
and shows the strategies in CSR has a
positive influence on achieving all three
goals of CSR like business, community
and employees. The responsive strategy is
associated with business and community
goal achievement. The public relation
researchers declare that modern companies
are increasingly involved in interactive,
mutually engaged with the stakeholders
whose interest go beyond corporate self
interest. The European business network
argues that the future of CSR sustainability
needs to shift its focus from informing to
employing a range of different
communication channels to fulfil different
stakeholder needs. A few scholars believe
that CSR goals are resulted in sustainable
community development. The main view
of CSR is to utilize and strengthen the
communities. The CSR activities are long
term approach and are motivated by self
interest in achieving goals. In order to
have an effective CSR communication it is
necessary to determine the role of CSR
communication channel for addressing
different stakeholder needs and
expectations. The choice of the company
in selecting the communication channel for
CSR not only reflects the stakeholder
groups but also gives information on its
communication strategy. The conclusion
of the study is that the stake holder
engagement strategy making in align to
their responsiveness strategy result in
achieving business goals and also the
community, employee goals. The specific
strategy that represented in the study is
stakeholder engagement strategy. The
result shows that the corporate public
executives know about the strategy in
effective communication of CSR by
engaging key stakeholders or responding
to external pressures and issues. The
contribution of the two strategies resulted
in achieving CSR related goals.
Richa Gautam and Anju Singh (2010)
conducted a study to discuss the CSR
practices in India; the study was carried
out among the top 500 companies. It
depicts that there are some companies that
promote CSR activities just for name sake
and few others as well-planned approach.
The concept behind CSR is to reduce the
cost and risk and improve the brand
International Journal of Pure and Applied Mathematics Special Issue
428
recognition, efficacy and productivity of
employees, revamp financial performance,
lower operating costs, increased sales,
customer loyalty and precision in the
working culture of business. The main
driving factors of CSR was found to be
shrivelled in the government role,
demands for greater affirmation,
increasing the interest of customer , arising
investor pressure, competition in labor
market and among the supplier relations.
The observation that was found from the
study is, about 49 % of the companies
from a total of 500 reporting on CSR and
few other companies report about the
donations, renovation of schools in
villages, mid day meals etc. Also, there are
few other companies unaware about the
procedure or it doesn’t monitor the CSR
activities of the company. The findings of
the study reveals that there is a need to
increase the regular understanding about
the CSR policies and practices to ensure an
active participation from the companies for
social development and consider as a key
area in business practice.
Suresh Chandra Bihari and Sudeepta
Pradhan (2011) had done a research study
on story of banks in India. There can be
seen a notable change and an inadequate
awareness of global warming and its
effects among public. This leads to lot of
risks for the ecology as well as economical
Protection. By taking care of
environmental and sustainable
development issues by major companies in
their firms do operations by “CSR”
activities, so that the quality of people’s
lives are improved and promote
economical sustainability. Considering the
role of financing the social and economic
developments globally, Financial
Institutions and Banks play a predominant
role in CSR activities. According to the
performance of Banks in India in terms of
CSR effectiveness, RBI (Reserve Bank of
India) initiated CSR activities on
sustainable development by different
Banks in December 2007 which should
include Non financial reporting. Non
financial reporting comprises of reporting
the activities that pertains to social,
environmental and economic development
and its performance.
Some of the Banks which have
participated in CSR activities are
a) ICICI Bank: Providing Elementary
education for 3 to 14 years age
group (Girls and Tribal Children)
about 100000 children for 14
states.
b) HDFC Bank: School Adoption
Projects, Primary education, Micro
Financing, Self Help Group
financing etc.
c) IDBI Bank: Empowering
Community Girls through a
International Journal of Pure and Applied Mathematics Special Issue
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program called “prerna” with six
computers. Child Survival India
with four computers for under
privileged and adolescent girls and
women.
d) Punjab National Bank: Micro
crediting for self help people.
e) Bank of Baroda: providing
libraries, Solar systems, and
Community Halls in villages.
f) Canada Bank: Patients who are
suffering from diseases and who
got disabled will be taken care,
Blood Donation Camp from the
employees.
g) Union Bank of India: Establishing
Village Knowledge Centres for 200
villages.
CSR and sustainability model for global
firms study done by Bahaudin G.Mujtaba
and Frank J.Cavico(2013) it discuss that
business sustainability is only done by
fulfilling the needs of clients and
stakeholders across the globe and are held
them engaged in socially responsible
activities for the growth of economy. The
essential entities of social responsibility
that leads for a sustainable business are
strong values, legal compliance and high
ethical standards. In CSR the organization
take in to consideration about the interest
of the society and are held responsible for
the effect of activities on the customer,
supplier, employees, shareholders and
other stake holders. The social
responsibility has become a significant
part of the business. The companies were
not alone looking for the profit but also
show interest in social commitment. Thus
CSR should be incorporated in to business
values, mission and models by business
leaders.
Sudeepta Pradhan (2011) is of the view
that the Indian firms contribute more in
social responsible acts; this is done to
increase the prestige, attract more
customers and also create a value in its
name. In communicating, corporate social
behaviour has become an integral
component of today’s business society.
The communication of CSR activities to
media has become behaviour for the
companies as it takes the attention of
media and society. Of late, most of the
companies are actively involved in
advertising their achievements in social
and environmental aspects (Brown et al.,
1998; Zadek et al., 1997). Indian banks
provide more contribution to CSR
activities. The banking sectors are highly
concern about beating their competitors
while providing value added services to
the customers. The finding of the study is
that the bank’s media releases discuss
about CSR activities that are involved in
social and environmental issues and
International Journal of Pure and Applied Mathematics Special Issue
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health. Customer and society are target
segments for CSR related media released
by banks. The increasing trend in the
contribution to CSR activities by banking
sector and are actively involved for the
development of society, women
empowerment, community welfare,
environmental and cultural.
A study conducted by Arjola Mecaj et
al.(2014) to determine whether any change
occurs in CSR behaviour of firms on
identification of signals that lead to
financial distress of firm. The study was
conducted in order to analyze the different
aspects of strategies in situation of distress
in financial terms and the behavioural
attitude towards the behaviour. Based on
the CSR information that was collected on
distressed US firms during the study, from
the year 2001 to 2007, it is seen that the
firm shows some feasible changes in CSR
attitude during the arise financial distress
position. The strong support and trust of
shareholders should be maintained during
this crisis. The CSR practices are adding
value to the firms in terms of their
competitiveness, efficiency and survival
and also make these companies more
attractive to the investors. The study is
directing to understand that CSR practices
lower the risk in the firm moreover to
strengthen corporate image, increase
reputation towards the stake holders and
lower the cost of capital. The socially
responsible factors improve the
competitive power of the firm, create
opportunities for the development of the
economy and also differentiate it from the
competitors. The conclusion of the study is
that situation occurs due to financial
distress in the firm has an impact on
strategies in CSR and modifies the stance
towards the responsible behaviour.
Jayati Sarkar and Subrata Sarkar (2015)
discuss about the implication of changes
that are done in company act 2013 that
made CSR mandatory for the companies.
For this study CSR behaviour of sample of
500 companies are taken in to the account
which are listed under Bombay Stock
Exchange for a period starting from 2003
to 2011.
John Elkington (1997) in his book takes in
to account of people, planet, profit that
exist in 21st century for all businesses.
According to the author’s view it is
necessary for every business to implement
the concept of triple bottom line. The
individual needs are determined in terms
of social, economical, political and
ecological context. The structure of
Cannibal with Forks was discussed around
sustaining capitalism, seven revolutions
such as (market, value, transparency,
lifecycle, technology, partnership, time
International Journal of Pure and Applied Mathematics Special Issue
431
and corporate governance), transition, and
toolbox.
Victoria K.Wells et al. (2014) conducted a
research study at individual employee
level within the heritage tourism. CSR
across the organizations varies in all
respects. The variables that identified in
pre and post intervention studies are socio
demographics, perceived self efficacy,
motivations and environmental workplace
behaviour, perceived potential to change,
perceived personal responsibility,
perceived current satisfaction with work
place behaviour, campaign awareness. The
study helps to understand that the
knowledge and awareness of issues were
important factors in relation to satisfaction
with behaviour, self efficacy and change in
perceived potential. The research finding
shows that it is necessity for the employees
to be aware on environmental activities
and pro environmental behaviour.
Kim et al.(2016), conducted a study to
determine the link between CSR and the
internal consequences that effects the hotel
employees like CSR perception, quality of
working life, affective commitment,
organizational citizenship behaviour and
job performance. The result in the study
shows that hotel employee’s perception
towards CSR had a positive impact on
quality of working life, affective
commitment and organizational citizenship
behaviour and also the quality of working
life of hotel employees has positively
influence on their job satisfaction.
Victoria K.Wells et al. (2016); conducted a
study based on exploratory research to
understand the view point on employees.
In addition to this the study attempts to
understand about the visitors in a large
heritage tourism organization with the help
of qualitative methods. According to the
comprehensive stage model as proposed
by Maon et al. (2010) the model describes
about CSR development and practices
implemented in an organization. The three
phase models as described are cultural
reluctance, cultural grasp and cultural
embedment. The findings of the study
revealed that organization needs to shift
towards the third phase i.e., cultural
embedment to fortify continuous
development.
Xavier Font et al. (2015) highlight about
the materiality analysis done in cruise
industry to determine the social
responsibility and the perception of stake
holder groups. The following result
analyzed that to have a benefit on
company’s reputation it most effectively
focus on working with the credible
stakeholders in future.
Manisha Rani(2017) has done a study on
CSR initiatives pertaining to the
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environment in manufacturing Industries
like textile, cement, pharmaceutical,
automobile and textiles, In 1992 based
survey, there was about Rs. 34,000 crores
of environmental damage cost for India.
That is identical to 4.5% of GDP and that
damage has exponentially increased by the
year 2003. This led to much health related
costs because of water and air pollution,
deforestation etc. Many manufacturing
Industries play a huge role for Indian
economy which supplies a greater work
force and provides goods to the economy.
Some of the solutions which they have
greater impact after conducting the t-test
were, waste management by collecting,
transporting, processing, disposing and
monitoring the wastes which will have a
greater significance in maintaining greater
health care for the people, letting of
Smoke, environmental audit, rain water
harvesting etc. contributed greatly in
environmental effectiveness. Nevertheless,
solutions like installation of equipment,
recycling of pollutants, and integrated
water shed development and reclaiming of
waste land were not shown any
significance after t-test which means no
greater contribution for environmental
effectiveness.
Hyewon Youn et al.(2015) conducted a
study in the restaurant industry to
determine the relation of CSR and firm
performance. In this study, it helps to
understand the correlation between CSR
and firm performance with the firm size
act as a moderator, throughout the
dimensions of CSR is divided in to two
subdivision i.e., positive CSR and negative
CSR, following, Kang et al.(2010), a test is
conducted to identify the relation of firm
size on positive CSR activities and the
performance of firm with that of negative
CSR with the firm performance.
The study about measuring consumer
perception of CSR in tourism industry was
conducted by Mobin Fatma et al. (2016) it
discusses about the new scale development
to measure, customer perception of CSR
activities that happens in tourism sector.
The study helps to identify that company
should focus on all issues such as
economic, social and environment rather
than considering in one dimension.
The study conducted to discuss about the
effect of CSR on manufacturing industry
performance, Rini Handayani et al. (2017),
in this study it describes about the role of
social partnership and green innovation in
manufacturing sector. The manufacturing
sector effectively utilizes CSR function to
minimize the corporate activities, increase
performance of firm in long run and
stakeholder trust. The study helps to
identify that there is a positive correlation
between the CSR and the performance of
International Journal of Pure and Applied Mathematics Special Issue
433
firm. The effective contribution as well as
the participation in green oriented
innovation helps to reduce social and
environmental problems through
involvement with the society by
contributing various green initiatives,
minimize hazardous emission, product
recycling, and producing environmental
and friendly products. The firm needs to
engage more on social collaboration
initiative with external parties for
betterment of firm performance by actively
involving in CSR activities.
Supriti Mishra and Damodar Saur (2010)
has articulated a study to determine that
effect of CSR influence on the
performance of firm i.e., the influence of
CSR has an impact towards the stake
holders on financial and non financial
performance and identified there occurs a
positive relationship with CSR and firm
performance Graves and Waddock(1994)
Griffin and Mahon(1997) McGuire et
al.(1988) Waddock and Graves(1997) and
also Bromiley and Marcus(1989)Wright
and Ferris(1997), establish negative
relationship and other authors like
Aupperle et al.(1985) Teoh et al.(1999)
and establish no relationship with the two
factors. The result shows that the firms
which are listed out in stock exchange had
a better contribution to CSR and financial
performance but on the other hand neither
the ownership pattern nor the firm size
influenced CSR, financial performance,
non financial performance.
A study on Global Analysis of
Corporate Social Performance, Foo
Nin Ho et al. (2012) the article aims to
discuss about the effect of national
culture and geographic environment
factors on corporate social performance
(CSP) of firms. The scope and nature of
CSP was described by several authors in
the context Carroll (1979) and
Sethi(1979)Wartick and Cochran(1985)
Ullman(1985) Wood(1991);O’Riordan
and Firbrass(2008).According to Carroll,
he expressed CSP in three dimensions
such as CSR, philosophy of corporate
social responsiveness, and the social
issues that involved. Wartick and
Cochran (1985) Wood (1991), articulate
that CSP is responsible for business and
society. The result of the study made
understood that there seems to appear a
difference in CSP to the culture exhibited
by national, geographic region, and level
of economic development. In terms of
average contribution of CSP score
European companies perform overall
better than North American companies.
But in the stage of CSP score, Asian
countries fall behind the European and
North American, but ahead as compared
to developing countries. There is
International Journal of Pure and Applied Mathematics Special Issue
434
significance difference arise due to the
national cultural difference, influencing
people attitudes.
A study was conducted to understand the
impact of CSR intensity on corporate
reputation and financial performance of
Indian firms by Sudeepta Pradhan (2016).
The result shows that if there is a
significance increase in Corporate
Reputation (CR), that can show subjected
changes to firm performance. If there is a
good CR, it can tend to competitive
advantage and moreover good reputation
can result in sustainable profits during the
long run of the company. However, there
exist no significant relationship identified
between CR and performance of firm
throughout the study.
Shouming Chen and Jiasi Fan (2011), did
a study to Measure CSR based on a Fuzzy
Analytical Hierarchy Process (FAHP), the
purpose of study is to determine the
approach that is used to measure the CSP.
The proposed method that is used based on
the research of Ruf et al. (1998), i.e. Fuzzy
AHP- framework to evaluate CSP. In this
research the model was also presented in
terms of case study. The result shows that
FAHP method is a measure that is required
for decision making and research. The
study also reveals to predict the
prominence of decisive approach on the
condition based on the assessment model;
integrated evaluation system can be used
as accurate, systematic decision support
tool.
Arun Maira(2013),articulated about
India’s 2 percent spending based on CSR
law, in this study it discuss about the new
Indian company law that was implemented
by parliament in August 2013 as it made
obligatory for the companies to spend a
minimal of 2 percent of their profit for
CSR activities. The article also discuss
about the international initiatives like
UN’s Global Compact which was put
forward by Kofi Annan it was the
organization without any support of
government bodies. The organization was
run by business leaders around the world
along with the representatives of civil
society like labour union, environmental
groups etc. The organization was focused
in to the environmental impact of business
then thereafter engaged in social and
community impact of business. The
principal requirement of the organization
is to create business as a strong backbone
for the society.
An analysis in CSR of Bombay stock
exchange listed companies, Anurag
Pahuja and Suruchi Juneja (2016), the
paper discuss about the CSR disclosure on
the stock exchange listed companies. The
analysis that conducted throughout the
study reveals that the companies are
International Journal of Pure and Applied Mathematics Special Issue
435
focusing in to the area of environment,
energy conservation; disaster management,
safety and health environment etc. about
77 percent of the companies contribute to
these areas. The study also reveals that
majority of disclosures are in the terms of
monetary and non monetary quantified
statements.
Need for the study
The study focuses to understand the
sectors that has better CSR scores i.e.
(manufacturing or service industries) and
also their year wise comparative study.
The study also helps to understand the
reason why there is a difference in CSR
spent and unspent in manufacturing and
service industries yearly wise.
Hypothesis
The study was conducted by using the
available secondary data and information
sources that are available and moreover
the secondary data was collected from
Prowess.cmie.coms. The following are the
null and alternate hypothesis
Case-1
H1: There is no significant difference in
spent on manufacturing and service
industries.
H2: This is significant difference in spent
on manufacturing and service industries.
Case-2
H1: There is no significant difference in
unspent on manufacturing and service
industries.
H2: This is significant difference in
unspent on manufacturing and service
industries
Results & Findings
FY 2014-15-
Table 1
FY 2015-16-
Table 2
From table 1, 2 we can interpret that in each scenario t value is less than 0.05. So we have significant evidence to reject null hypothesis. The analysis clearly states
International Journal of Pure and Applied Mathematics Special Issue
436
there is significant difference between manufacturing and service sector in the case related spent and unspent. Also the year wise spent and unspent of manufacturing and service industries of selective companies are explained in detail by means of graph.
Fig-1
Fig-2
From the above graphs it is clear that CSR
spending in manufacturing sector is more
than service sector due to the fact that
contribution is more towards environment-
related factors in order to reduce the
negative impact that are faced through the
activities of the company, thus there can
result in increase the profitability, financial
gain, and competitiveness, and also the
consequence in betterment to the society.
Also in the case of service sector for the
year 2015, an increase in CSR unspent and
thereafter for the consecutive years it is
getting gradually reduced.
Conclusion
Rini Handayani et al. (2017) discuss about
the CSR practices followed by
manufacturing sectors and emphasises the
need to look into environmental issues
with a need to involve in environmental
management. In the studies published by
Andrew King and Michael Lenox (2002)
Robert D.Klassen and D.Clay Whybark
(1999) it is stated that the manufacturing
companies contributes more towards
environment-related factors in order to
reduce the negative impact that are faced
through the activities of the company, thus
there can result in increase the
profitability, financial gain, and
competitiveness, and also the consequence
in betterment to the society.
From the graph analysis it is found that the
manufacturing companies have spent more
during FY 15, 16 and 17.It is due to the
fact that the budget allocated in
manufacturing industries is more and also
the industry spent more to the environment
rather compared to the service industries.
The manufacturing industries CSR spent
contribution to the environment is in such
a way that the during the operational stage
05
101520253035
2015 2016 2017
Spent in (millions)
Manufacturer
Service
05
1015202530
2015 2016 2017
Unspent(in millions)
Manufacturer
Service
International Journal of Pure and Applied Mathematics Special Issue
437
in a way or other it effects the environment
so due to this the CSR spent in
manufacturing is higher when compared to
service. The limitation in the study was
able to cover only a small sample of Indian
companies. Further no information was
received directly from the stakeholders.
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