Dissertation Report- Varun Kumar.docx

Dissertation Report On Consumer perception about the CSR activities of MNC’s in India By

Varun Kumar A1802011048 MBA-INTERNATIONAL BUSINESS of 2013 Under the Supervision of Dr. Meghna Sharma

In Partial Fulfillment of the requirements for the Degree of Master of Business Administration-INTERNATIONAL BUSINESS

AMITY INTERNATIONAL BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH SECTOR 125, NOIDA - 201303, UTTAR PRADESH, INDIA 14/03/2013

Declaration Title of Project Report Study on consumer perception about the CSR activities of MNC’s in India.

I declare

(a)That the work presented for assessment in this Dissertation Report is my own, that it has not previously been presented for another assessment and that my debts (for words, data, arguments and ideas) have been appropriately acknowledged

(b)That the work conforms to the guidelines for presentation and style set out in the relevant documentation.

Date: 14.03.2013

Varun Kumar A1802011048 MBA-IB , 2013

Certificate I Dr. Meghna Sharma hereby certify that Varun Kumar student of Masters of Business Administration – IB at Amity International Business School, Amity University Uttar Pradesh has completed the Dissertation Report “The study on consumer perception about the CSR activities of MNC’s in India”, under my guidance.

Dr. Meghna Sharma Faculty-in-Charge AIBS

Abstract In this era of global competition, declining brand differentiation, and increasing media clutter, companies are going beyond the conventional marketing mix to increase the value of intangible assets. Over the years there is a shift from functionally centric brands to emotionally centric - brands to values - centric brands. Today, brands must be inspirational in a socially responsible way to all stakeholders. To achieve the same Corporate Social Responsibility (CSR) has become more common in business practices. CSR remains a very relevant strategic Marketing tool. Many companies use CSR as a way to increase their image, generate brand equity, and increase employee loyalty.

Business organizations have started concentrating on the need for being committed towards Corporate Social Responsibility. But still majority have just been taking up some form of philanthropic activities for its stakeholders. Nurturing a strong corporate culture which emphasizes Corporate Social Responsibility (CSR) values and competencies is required to achieve the synergistic benefits. The employees of an organization occupy a central place in developing such a culture which underlines CSR values and competencies. The present study, therefore, is an attempt to explore the engagement of human resource management professionals in undertaking Corporate Social Responsibility. It also suggests Human Resource Management to take a leading role in encouraging CSR activities at all levels. The combined impact of CSR and human resource activities, which reinforce desirable behavior, can make a major contribution in creating long term success in organizations.

This study explored the perceptions about corporate social responsibility (CSR) among a sample of 200 respondents. A structured questionnaire was the primary method of data gathering. The study tried to assess the activities, motivations, parameters, consumer perception and benefits of CSR activities of the sample corporations in India.

Table of contents

S.no. I

Particulars

Pg no.

ABSTRACT…………………………………………………………….

iv

CHAPTER 1: INTRODUCTION……………………………………..

1

Brief introduction

2

Background of the problem

3

CSR initiatives by few MNC’s in India

5

Purpose of study

9

Theoretical framework

10

Some basic concepts & definitions

11

Summary of the project

12

2

CHAPTER 2: LITERATURE REVIEW……………………..............

13

3

CHAPTER 3: RESEARCH METHODOLOGY……………………..

17

Research Methodology

18

Research Design

18

Sample design

19

Participants

19

Type of Sampling

19

Sample size

19

Data collection

4

5

21

Data type

21

Instruments used

21

Procedure for data collection

21

CHAPTER 4: DATA ANALYSIS & FINDINGS…………………….

22

Data Analysis

23

Procedure for data analysis

23

Result of research questions

24

Summary of findings

30

CHAPTER 5: CONCLUSIONS & RECOMMENDATIONS……….

31

Conclusions & Recommendations

32

Limitations of research

32

Implications for further research

32

II

REFRENCES……………………………………………………………

34

III

APPENDIX……………………………………………………………...

36

List of figures

Figure no.

Particulars

Page no.

4.1

Respondents’ perceptions about CSR.

24

4.2

Motivations behind corporations’ CSR practices

26

4.3

Benefits that the corporations achieved from their CSR activities

29

CHAPTER1 INTRODUCTION

Brief introduction Corporate Social Responsibility (CSR) is defined as operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business. In the last twenty years, there has been a sea change in the nature of the triangular relationship between companies, the state and the society. CSR has become increasingly prominent in the Indian corporate scenario because organizations have realized that besides growing their businesses it is also vital to build trustworthy and sustainable relationships with the community at large. This is one of the key drivers of CSR programs. CSR is coming out of the purview of ‘doing social good’ and is fast becoming a ‘business necessity’. Corporate houses are realizing that ‘what is good for workers – their community, health, and environment is also good for the business. Corporate social responsibility is a form of corporate selfregulation integrated into a business model. Essentially, CSR is the deliberate inclusion of public interest into corporate decision-making, and the honoring of a triple bottom line: people, planet, profit. A more common approach of CSR is philanthropy. Another approach to CSR is to incorporate the CSR strategy directly into the business strategy of an organization. CSR may be based within the human resources, business development or public relations departments of an organization. Corporate Social Responsibility is what an organization does to influence the society positively in which it exists. The concept of CSR has been evolving for decades. CSR is a multidimensional concept. While some take CSR as an obligation, others consider it as a strategic tool. CSR focuses on the social, environmental and financial success of the company. The increasing relevance of CSR in India has stemmed from the fact that a business cannot succeed by ignoring the human and social needs of our society. Corporations have emerged as one of the foundations of modern global society. With this increased power has come the demand by society for social accountability, commonly referred to as corporate social responsibility. CSR is a company’s activities and status related to its perceived societal or stakeholder obligation. The concept of CSR has become more and more common in business practices and customers today almost expect companies to be socially responsible. Multinational companies are the organizations or enterprises that manage production or offer services in more than one country. And India has been the home to a number

of Multinational companies. In fact, since the financial liberalization in 1991, the number of multinational companies in India has increased noticeably. Globalization and development of the new market economy in the last decade has brought the global multinationals and investment houses to India for competing in the domestic and international markets. As many as 90 percent of the Fortune 500 companies now have explicit CSR initiatives. In a globalised world, the role of the state is diminishing and non-state actors, including corporations, are undertaking many functions previously performed by the state. There is no doubt that this has created a more open and liberal business environment, promoted competition leading to a better quality of products and services, improved the efficiency and effectiveness of the services offered and, indeed, given rise to profits. But corporations have to make conscious efforts to become socially responsible, recognizing that the role and functions they perform inevitably have an impact on society. Corporate social responsibility ensures that corporations promote corporate citizenship as part of their culture. Corporate social responsibility is about businesses transforming their role from merely selling products and services with a view to making profits and increasing their revenue to the development of a society through their abilities of generating capital and investing it for social empowerment. MNCs are working hard to create their identities, reputations and the goodwill associated with being a good corporate citizen into their marketing initiatives in efforts to garner sustainable competitive advantages. India has got a huge market potential, Labor competitiveness, Macro-economic stability. It has also got one of the fastest growing economies in the world. Besides, the policy of the government towards Foreign Direct Investment has also played a major role in attracting the multinational companies in India.

Background of the problem With businesses focusing on generating profits, sustainability was not a popular concern among companies up until recently. Now, in an era of globalization, multinational corporations (those that conduct business in more than one country) and local businesses are no longer able to conduct destructive and unethical practices, such as polluting the environment, without attracting negative feedback from the general public. With increased media attention, pressure from non-governmental organizations, and rapid global information sharing, there is a surging demand from civil society, consumers, governments, and others for corporations to conduct sustainable business practices. In addition, in order to attract and retain employees and customers, companies are beginning to realize the importance of being ethical while running their daily operations. The corporate response has often meant an adoption of 'a new consciousness', and this has been known as Corporate Social Responsibility (CSR) since the 1970s. As stated by the department of Trade and Industry in the United Kingdom, CSR represents "the integrity with which a company governs itself, fulfills its mission, lives by its values, engages with its stakeholders, measures its impact and reports on its activities". Although most people appreciate the recent advancement of CSR, some argue that corporations are still not doing enough or are only acting in self interest. These people say that multinational corporations are acting ethically in areas that are highly regulated, such as North America, but at the same time, they are acting in an opposite manner in other parts of the world (such as using cheap or child labour). In addition, while corporations must have good CSR policies in order to maintain their reputation, they are also expected to maximize profits for stakeholders such as shareholders, employees, and customers. Therefore, people argue that businesses do not put in a sufficient amount of resources to achieve what they have promised in their CSR policies. In any case, companies are now expected to perform well in non-financial areas such as human rights, business ethics, environmental policies, corporate contributions, community development, corporate governance, and workplace issues. Some examples of CSR are safe working conditions for employees, environmental stewardship, and contributions to community groups and charities. The problem is that many companies that claim to be socially responsible often do not live up to such a standard. Because CSR is becoming more commonplace among corporations, there are concerns that some companies

promote an image of CSR whether or not they have a true strategy in place and the results to show for. Accountability and transparency are key to conducting business in a responsible manner. Corporations have emerged as one of the foundations of modern global society. With this increased power has come the demand by society for social accountability, commonly referred to as corporate social responsibility. CSR is a company’s activities and status related to its perceived societal or stakeholder obligation. The concept of CSR has become more and more common in business practices and customers today almost expect companies to be socially responsible. With the development and progress of the society, people are beginning to realize that in addition to providing products or services, companies have broad responsibilities towards the society, customers, environment and other stakeholders. Therefore, this study has been conducted to find out the perception of consumers about this multidimensional concept of Corporate Social Responsibility. The objectives of this research are: 1. To find out consumer perception about CSR activities. 2. To find out the motivations behind practicing CSR activities. 3. To find out the benefits that the companies have achieved from these activities.

CSR initiatives by MNC’s in India Several major CSR initiatives have been launched in India since the mid1990s.Nearly all leading corporates in India are involved in corporate social responsibility programmes in areas like education, health, livelihood creation, skill development, and empowerment of weaker sections of the society. Notable efforts have come from the Tata Group, Intel, Microsoft, Infosys, HUL, ITC Welcome group, Indian Oil Corporation among others. The 2010 list of Forbes Asia’s ‘48 Heroes of Philanthropy’ contains four Indians. The 2009 list also featured four Indians. India has been named among the top ten Asian countries paying increasing importance towards corporate social responsibility disclosure norms. Today, CSR in India has gone beyond merely charity and donations, and is approached in a more organized fashion.

It has become an integral part of the corporate strategy. Companies have CSR teams that devise specific policies, strategies and goals for their CSR programs and set aside budgets to support them. CSR has come a long way in India. From responsive activities to sustainable initiatives, corporates have clearly exhibited their ability to make a significant difference in the society and improve the overall quality of life.

CSR at Intel Marketing is only marketing when it's sustainable. Intel has always worked on the premise that CSR Marketing without CSR substance is not marketing at all. It’s plain wrong. But when there is real substance - real activity and achievements - then there is a real marketing story to tell. One that communicates reliability and strengthens the brand. This makes corporate responsibility coupled with clever marketing and clear communications a winning formula. Intel managed to build a synergy between growing its business and spreading computer education amongst communities in India. Intel uses its CSR programme to spread computer usage ans scientific temper among the larger population in the countries it has a presence in. For the spread of computer education alone, the company spends as much as $100 million every year. One of Intel’s key programmes, called “Intel - Teach to the future”, targets teachers in schools, colleges and teacher training institutes to make them adept at handling technology in the classroom and importing digital learning to future generations. Corporate responsibility for Intel is also about innovation since it applies resources to address global challenges.

CSR at Microsoft Microsoft has been right in the forefront when it comes to programmes that address the semi-urban, rural, non-English speaking people in the country. And not just as a charity provider. Apart from the grants that Microsoft has made, to the tune of more than $1.15 million in the country, Microsoft is frequently coming up with software that addresses the needs of this section. Recently, as part of its efforts at bringing an affordable local language computing solution for India the company launched its Windows XP starter edition exclusively developed for India. Microsoft has identified the focus of Corporate citizenship in the following four areas:

1. Education and digital inclusion: to enable people, communities and nations to gain access to the technology tools, skills and innovation they need to realize their full potential. 2. Internet safety and policy leadership: to partner with governments, industry leaders and others to address key societal challenges of information and communications technology such as spam, security, privacy and children’s online safety. 3. Responsible business practices: to ensure integrity and transparency in all of our business practices and to provide a healthy and safe work environment for employees. 4. Economic opportunity: to partner with governments and communities to help strengthen local economies, growth, competitiveness and innovations.

CSR at HUL Hindustan Unilever is involved in number of CSR initiatives in India. The main objective of Project Shakti of Unilever is creating rural entrepreneurs. It trained 13,000 underprivileged Indian women distribute the company’s products to 70 million rural consumers. The company is working with women’s self-help groups to teach selling and book-keeping skills and build commercial knowledge. The women who participate in this programme are, by and large, able to double their household income. Shakti has also allowed Unilever to increase its reach to 30% more of India’s rural population since its inception in 2000. The company is joined in its efforts by some 300 groups, NGOs, banks and various government entities allowing it to take part in strategic public private partnerships.

CSR at Coca-cola Coca-cola India worked hard towards water conservation and community development has been given Golden Peacock Global award 2008 for CSR. The award has been conferred to Coca-Cola India for its efforts in water conservation and management and community development initiatives. The soft drink major now has 320 rain water harvesting implements across 17 states in India, and it has also been

successful in restoring water conservation programme. Side by side, the company is running the ‘Elixir of Life’ project that provides drinking water to 30,000 children in 100 primary and panchayat schools in around Chennai. Coca-Cola India undertakes a diverse range of activities for the benefit of the community across the country.

CSR by Tata Group The company’s corporate social responsibility (CSR) strategy was inspired by Jamshedji Tata’s conviction that, “In a free enterprise, the community is not just another stakeholder, but is, in fact, the very purpose of its existence.” Tata Steel’s approach to its business has evolved from this concept and the wealth it has created is continuously returned to the people through its community initiatives. The mandate given to the Tata Steel CSR team was to work for the welfare of the socially and economically disadvantaged communities living in and around its areas of operation, including the mines and collieries serving the plant. Over the years, its initiatives have encompassed provision of healthcare services, drinking water, rain water harvesting, tribal development, relief and rehabilitation endeavors, income and employment generation, women’s health and education, awareness programmes on the ill-effects of drugs, alcohol and HIV/AIDS, and patronage to sports and cultural activities. The CSR programme is managed by three organizations — Tata Steel Rural Development Society (TSRDS), Tata Steel Family Initiatives Foundation (TSFIF) and the Tribal Culture Society (TCS). Of these, TSRDS assumes (and uses) the lion’s share of Tata Steel’s services and resources, because of the sheer range and volume of its activities. TSRDS also serves as an implementing agency for other international organizations engaged

in

socio-economic

development

and

empowerment initiatives. The two other organizations are newer and more focused in their specific areas.

The Tata Steel CSR policy encompasses initiatives to conserve, sustain and renew the environment, to encourage sustainable socio-economic development of the community and to improve the quality of life of the people living in the areas in which it operates. In all their programmes, the organizations seek to engage the ultimate beneficiaries of an initiative right from the conceptualization and planning stage to the implementation, with the company playing the role of a catalyst eliciting positive change. The attempt is to get the people to act out of their own convictions, and support them in their efforts to build a better future.

Purpose of study Corporate social responsibility is a form of corporate self-regulation integrated into a business model. Essentially, CSR is the deliberate inclusion of public interest into corporate decision-making, and the honoring of a triple bottom line: people, planet, profit. A more common approach of CSR is philanthropy. Another approach to CSR is to incorporate the CSR strategy directly into the business strategy of an organization. CSR may be based within the human resources, business development or public relations departments of an organization. Corporate Social Responsibility is what an organization does to influence the society positively in which it exists. The concept of CSR has been evolving for decades. CSR is a multidimensional concept. While some take CSR as an obligation, others consider it as a strategic tool. CSR focuses on the social, environmental and financial success of the company. So, in order to understand the relevance of CSR activities from customer’s point of view, the first objective of our study is “to find out consumer perception about CSR activities.”This will be beneficial for the companies as it will help them know how relevant and meaningful are their CSR initiatives for their end users, that is, the customers. CSR policy functions as a built-in, self-regulating mechanism whereby business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the

environment, consumers, employees, communities, stakeholders and all other members

of

the public

sphere.

Furthermore,

CSR-focused

businesses

would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. CSR is the deliberate inclusion of public interest into corporate decision-making, that is the core business of the company or firm, and the honoring of a triple bottom line: people, planet, profit. So, we can see that there are various ideas on as to why CSR activities are performed by the companies. Therefore, the second objective of our study “to find out the motivations behind practicing CSR activities” aims to find out from the customer’s point of view as to why they think companies indulge in CSR. The third and the last objective of our study “to find out the benefits that the companies have achieved from these activities” aims to find out the benefits that the customers think the companies have achieved by involving themselves in CSR activities. In previous years, debacles have been witnessed in some of the most highly visible corporations such as Nike and Shell suffering loss of public confidence following wide publicity of their dishonorable conduct such as operating sweatshops in developing countries contributing to environmental damage. These debacles are reminders that focusing only on economic interests is becoming increasingly detrimental not just to the reputation, but also the very survival of corporations. Therefore it is extremely important for the companies to know how do the customers take their CSR activities as and what benefits do they achieve by indulging in them.

Theoretical framework This study has been conducted with the help of a structured questionnaire that includes three research questions each on consumer perception about the CSR activities performed by companies, motivations for companies behind practicing CSR activities and the benefits that the companies have achieved by performing the CSR activities. Research Question 1 finds consumer perception on a few statements on CSR, some of which are mentioned below:

1. CSR should be completely voluntary-no laws should govern it 2. Companies need not be concerned with society. 3. CSR should be a consideration while setting corporate strategy. 4. CSR should be recognized as a core business function. Research Question 2 finds motivations for the companies behind practicing CSR activities. Some of the motivations are listed below: 1. External pressures 2. Altruism 3. Improve public welfare 4. Favorable media coverage Research Question 3 aims to find out the benefits that the companies have achieved by performing these CSR activities. Some of the benefits are mentioned below: 1. Better government relations. 2. Better business operation conditions. 3. Increased favorable media coverage. 4. Improved customer loyalty. These research questions are then analyzed using SPSS and then accordingly suitable conclusions will be drawn which will enable the companies know what exactly does their consumer think of their CSR initiatives.

Some basic concepts & definitions What is Corporate Social Responsibility? Corporate social responsibility is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism

whereby business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere.

Who is a Consumer? The "consumer" is the one who consumes the goods and services produced. As such, consumers play a vital role in the economic system of a nation because in the absence of the effective demand that emanates from them, the economy virtually collapses. What is a Multi National Corporation? A corporation that has its facilities and other assets in at least one country other than its home country is an MNC. Such companies have offices and/or factories in different countries and usually have a centralized head office where they co-ordinate global management. Very large multinationals have budgets that exceed those of many small countries. What do you mean by consumer perception? Consumer perception theory is any attempt to understand how a consumer’s perception of a product or service influences their behavior. Those who study consumer perception try to understand why consumers make the decisions they do, and how to influence these decisions. Usually, consumer perception theory is used by marketers when designing a campaign for a product or brand. However, some people study consumer perception in order to understand psychology in a much more general sense. Why do companies decide to get involved in CSR, and how do they benefit? Today, more and more companies are realizing that in order to stay productive, competitive, and relevant in a rapidly changing business world, they have to become socially responsible. In the last decade, globalization has blurred national borders, and

technology has accelerated time and masked distance. Given this sea change in the corporate environment, companies want to increase their ability to manage their profits and risks, and to protect the reputation of their brands. Because of globalization, there is also fierce competition for skilled employees, investors, and consumer loyalty. How a company relates with its workers, its host communities, and the marketplace can greatly contribute to the sustainability of its business success.

Summary of the project This report was commissioned to examine the perception of the consumers about the CSR initiatives of the Multi National Corporations in India and to facilitate these corporations know about what their consumers think of their CSR activities and suggest them about whether they should continue their activities in the same fashion or change them or stop them at all. The report aims to draw attention towards consumer perception on whether the CSR activities should be voluntary, whether the companies should be concerned with the society, whether CSR is a publicity issue etc. Then the next part focuses on the motivations behind practicing CSR activities like external pressures, altruism, improve public image, attract investors etc. And the last part aims to find out the benefits of CSR activities from the customer’s point of view like better government relations, better business operation conditions, improved customer loyalty, improved organizational culture etc. Results and findings of the report are expected to help the corporations in developing their new strategies after considering the customer’s viewpoint on their CSR activities and also improve their overall image in the minds of the consumers. The report is also expected to help the corporations in taking new paths of CSR activities after considering the perception and mindset of their consumers about their previous initiatives. This is important because the customer is the most crucial stakeholder for any corporation. The research has been conducted using descriptive research design as it is defined by prior formulation of specific hypothesis ad the information needed is clearly defined. The research instrument is a structured questionnaire which includes three research questions, the first focuses on consumer perception, the second is about

the motivations behind practicing CSR activities and the third aims to find out the benefits from CSR. For data analysis software called SPSS has been used. In short, this is a very organized research conducted primarily for the benefit of the Multi National Corporations in India that have undertaken CSR in the past so that they can make the necessary changes in their strategies to build and maintain their customers.

CHAPTER 2 LITERATURE REVIEW

This chapter contains the review of the existing research literature. A significant study by Krishnamurthy Sriramesh, Chew Wee Ng, Soh Ting Ting and Luo Wanyin titled “Corporate Social Responsibility and Public Relations: Perceptions and Practices in Singapore” explored the perceptions about corporate social responsibility (CSR) among a sample of corporate executives (512) and the CSR practices of a sample of corporations (74) in Singapore. The findings revealed that while the sample corporate executives were able to define the concept of CSR comprehensively, identifying a range of parameters and stakeholders pertaining to CSR, actual practice tended to revolve around the philanthropic dimension. The sample corporations were motivated by different factors to practice CSR, which we saw as being driven by either a proactive, accommodative, or reactive approach. It was also discovered that the lack of commitment among some corporations to evaluating CSR practices might have been because these corporations did not establish CSR goals in the first place. Based on the findings, a framework was offered to evaluate how different stakeholders (referred to as drivers) can help promote CSR in Singapore. It was evaluated the effectiveness of these drivers based on their potential impact on corporations and their current activity level pertaining to CSR, and assessed their strengths and weaknesses.

A prominent study by Suparn Sharma, Joity Sharma and Arti Devi titled “Corporate Social Responsibility: The key role of human resource management” was an attempt to explore the engagement of human resource management professionals in undertaking Corporate Social Responsibility. It suggested Human Resource Management to take a leading role in encouraging CSR activities at all levels. The combined impact of CSR and human resource activities, which reinforce desirable

behavior, can make a major contribution in creating long term success in organizations. It was concluded that successful programmes on social responsibility rely heavily on enlightened people management practices. In this context HR department is assumed to be the coordinator of CSR activities in getting the employment relationship right which is a precondition for establishing effective relationships with external stakeholders and thus can orient the employees and the organization towards a socially responsible character. There is also an increasing trend in the corporate sector which has started leveraging upon employees and their management for exhibiting their commitment towards CSR.

A significant study by Hongmei Shen, Professor Elizabeth L. Toth titled “Public Relations and MNC’s Corporate Social Responsibility: From A developing country’s perspective” examined a three-dimensional model of social responsibility management by multinational corporations operating in a developing country-China, and further built an enhanced understanding in public relations and CSR. Eighteen participants (half communicators, half employees) from eight multinationals were interviewed over the telephone. Results identified two types of strategic orientations—global and transnational and four universal CSR issues (the underprivileged, education, environment, and community). Results also showed a dominant perception of public relations as “publicity” or “media relations,” and communication at best. But most communicators and employees suggested a strategic role for public relations in managing their companies’ CSR strategies. Specifically, the public relations function was proposed to act as coordinator, leader in formulation, implementation and evaluation process, or a helping hand for the human resources function. A prominent study by Dan O’Brien titled “Integrating Corporate Social Responsibility with competitive strategy” which was the 2001 winner of the Best MBA paper in corporate citizenship, presented a conceptual framework for assessing the impact of a company’s business operations on its stakeholders and, through the analysis, create socially anchored competencies (SACs) that can be used to benefit society as well as increase profitability. By integrating SACs into their operations, companies are able to develop new or improved products and services, more efficient

production processes, a strong reputation, and brand identity. The paper also examines how some companies are using SACs to increase profitability, while others are missing this important opportunity. It was concluded that there are two primary reasons why traditional CSR programs have yielded only minimal benefits. First, CSR managers are usually given a fixed budget and encouraged to allocate the funds to a wide range of community-based charities, which allows the corporate contributions pie to be cut into more pieces and the goodwill spread among many beneficiaries. Unfortunately, any real impact is diluted. Second, corporate cash resources are allocated to social projects without taking advantage of the company’s nonfinancial assets or thinking about how the social projects could directly support business objectives. When corporate resources are allocated in this fashion, strengths that make a company competitive in its businesses are not leveraged in ways to benefit society or the company.

Yet another significant study was conducted by Dr. G. Muruganantham titled “Case study on Corporate Social Responsibility of MNC’s in India” to understand the various CSR activities carried down by select MNC’s in India and how are they integrating Corporate Social Responsibility into their marketing strategy to build and sustain a competitive advantage. It was concluded that the concept of CSR has become more and more common in business practices and customers today almost expect companies to be socially responsible. Even though CSR is very important for companies, it has historically not been a very lucrative approach for them to involve in these activities. The business of the 21-st century will have no choice but to implement CSR. Like any successful management strategy, a CSR process needs both high level management vision and support, and buy-in at all levels of the company. CSR does not give immediate results. The same CSR initiative will also not work for all types of organizations. Designing CSR initiative requires careful planning and implementation mechanism. Corporates should integrate the innovative CSR strategies into different marketing communication strategies to build and sustain a competitive advantage.

CHAPTER 3 RESEARCH METHODOLGY

Research Methodology Research is an art of scientific investigation. It’s a way to systematically solve the research problem. This research study contains the various steps in order to evaluate the research problem. The methodology of my research study can be explained as under. This research report is described as “Study of consumer perception about the CSR activities of MNC’s in India”. This research includes practical situations and findings for the same.

Research Design

Research design is a framework or blueprint for conducting a market research project. It specifies the details of the procedures necessary for obtaining the information needed to structure and solve the marketing research problem. Typically a research design involves the following tasks: 1. Define the information needed. 2. Design the exploratory, descriptive, and/or causal phases of the research. 3. Construct and pretest a questionnaire or an appropriate form of data collection. 4. Specify the sampling process and sample size. 5. Develop a plan of data analysis. This research is basically a “descriptive research study.” Its primary objective is to test specific hypothesis and examine relationships. The information needed is clearly defined and the research is preplanned and structured. This type of research design has been selected for this study because we have to determine the

perception of consumers about the CSR activities of MNC’s in India, make specific predictions and use the findings as inputs into managerial decision making.

Sampling Design

Participants: The participants mainly consist of the working class of population as they are aware of the CSR activities undertaken by various MNC’s in India.

Type of Sampling: For this project the type of sampling is deliberate/convenience sampling. The data selected is rational and with an intention to serve the purpose of this research. The sample design is based upon the non probability sampling. This is a sampling technique that does not use chance selection procedures rather it relies on the personal judgment of the researcher. The suitable technique here is Convenience Sampling because the sample has been chosen deliberately. In convenience sampling, the selection of sampling units is left primarily to the interviewer.

Sample size: As per the research problem it is not possible to carry out hypothesis on a big volume so purposely a small sample size of 200 consumers has been chosen. Instead of carrying out research on a typical huge data, small data for better judgment has been preferred. Sampling unit is Ghaziabad and Noida city. The sample size in this research is 200 customers from which it fulfills the requirements of efficiency, representativeness, reliability and flexibility. Budgetary constraints and time constraints has its influence of the sample size of research.

Data Collection

Data type: Primary data.

Primary data is that data which is originated by the researcher for the specific purpose of addressing the problem at hand. This research project required primary data because the research problem defined earlier was to be solved for the first time and required data which is collected for the first time and is fresh in nature. This research problem has been solved by using primary data that is original and fresh in nature.

Instruments used:

For the purpose of primary data collection a structured, unbiased and non-disguised questionnaire was administered to the respondents. A questionnaire is a formalized set of questions for obtaining information from the respondents. It includes a series of questions that a respondent answers. The data found was reliable, suitable and adequate for this report.

Procedure for data collection:

A structured questionnaire was developed to study the consumer perception about the CSR activities of the MNC’s in India. The questionnaire consisted of the demographic information of the respondents, their perception on a few statements on CSR, their perception about the motivations for companies behind CSR activities and their perception regarding the benefits that the companies have achieved from these

activities. All of these were five point Likert-type scales in which respondents were asked to indicate their level of agreement (1 = strongly disagree to 5 = strongly agree). Questionnaire was hand carried and personally explained to respondents by the interviewers. Instructions were given by the interviewer for completing the questionnaire and waited while respondent independently filled out the questionnaire.

CHAPTER-4 DATA ANALYSIS & FINDINGS

Data Analysis The data has been carefully collected after scrutinizing the authenticity of various terms and concepts, the data was further studied and analyzed at subtle level. The conclusions are made after observing the pattern and features of various concepts.

The relevance of the research can be explained as such research has a wide scope in helping corporations formulate their strategies and conducting their CSR activities.

The consumer perception can be easily analyzed from such kind of research study.

The limitation of research stands regarding the limited time frame and data availability.

Procedure for data analysis In order to accomplish the above stated two objectives, the data collected by means of questionnaire has been analyzed by using software called SPSS which stands for Statistical Package for Social Sciences. It is software which is used for statistical analysis and various other purposes. It includes descriptive statistics like frequencies and bar diagrams and bivariate statistics like mean and standard deviation.

Result of research questions I) Bar diagram depicting interviewee’s response on various statements on CSR:

Figure 4.1. Respondents’ perceptions about CSR. Percentage of respondents who agreed or disagreed with the statements on CSR

RQ 1: The first research question sought to know the perceptions about CSR among the sample of respondents in Noida and Ghaziabad city. We found that the awareness level was high which might be attributed to the recent increase in media coverage as well as the launch of several initiatives to promote CSR. A majority of the respondents surveyed (83%) disagreed that corporations need not be concerned with the society (Figure 4.1). This suggested that they perceived corporations to have

some obligations toward the society and viewed business and society as interwoven rather than separate entities. More than half (52%) of the respondents felt that CSR should be recognized as a core business function while almost three-quarters (74%) agreed that social responsibility should be a consideration when formulating corporate strategies. Further, a majority (63%) perceived CSR to have a positive impact on the financial performance of corporations. These findings suggested that the respondents in our sample acknowledged that CSR should be an integral part of business. Yet, nearly half (49%) agreed that CSR is largely a publicity issue. This suggests a discrepancy between how the respondents in this sample felt CSR should be practiced (normative), as opposed to how they perceived CSR is practiced (positive). We raised the appropriateness of using CSR to gain publicity with our interviewees. While some felt corporations should not leverage CSR activities for publicity purposes, others felt that the benefits derived from these activities are more important than the intended motives. One interviewee explained: “We don’t mind companies doing CSR for publicity. That’s OK as long as they are doing something good. Who knows, maybe after coming out to do something and having felt good, they might continue to do it. Whatever the reason, it’s a way to get started.” As for the need to regulate CSR, 46% of the respondents agreed that CSR should be completely voluntary and not governed by any law or regulation. A few interviewees felt that CSR should “come from the heart” rather than merely complying with government regulations or legislations. An executive from a MNC felt that CSR is not about what the government sees as right or wrong, saying, “It’s not what the government should do but what companies should do.… It is not about just operating within the rules.” An interesting issue that emerged during the interviews was the balance between profitability and CSR – whether corporations need to be profitable before engaging in CSR actions. A majority of interviewees perceived profitability as a pre-condition before their corporations could commit resources to CSR. The owner of an SME felt that it is understandable for corporations to put profitability as the top priority as “every business wants their company to be as profitable as possible.” Another common sentiment was that CSR should be placed at the higher end of the “hierarchy of needs,” which would be considered only if a corporation is profitable. On the other

hand, a few interviewees felt that CSR does not necessarily have to come after profitability, as indicated by one interviewee: It is acceptable to aim to be profitable but you don’t have to wait to do CSR. It has to be in the corporation’s roots and culture and thus CSR has to start from the first day. Your main objective can be to increase profits and sub-objective to be a socially responsible corporation. This is regardless of your size or industry or development stage. II) Bar diagram depicting interviewee’s response on corporation’s motivations behind CSR activities:

Figure.4.2. Motivations behind corporations’ CSR practices

Table 4.1 Means and standard deviations of corporations’ motivations to engage in CSR activities

RQ 2: Our survey findings indicated the listed motivators to be relatively important, with ratings of their importance ranging from 3.20 to 4.08 (with 1 = least important and 5 = very important). The only exception was avoid regulation (M = 2.87, SD = 0.940). The top three motivators were enhance reputation (M = 4.08, SD = 0.812), long term sustainability (M = 4.08, SD = 0.897), and enhance community trust and support (M = 4.04, SD = 0.920) (Table 4.1).

The results suggested that our sample of corporations considered CSR as being vital for a corporation’s survival. In addition, the focus on enhancing reputation and community support indicated that the corporations in the sample were receptive to the business and society approach reviewed earlier in this paper. Interestingly, our interviewees were more inclined to value external and punitive motivators such as “consumer pressure,” “government guidelines,” and “crisis prevention.” Interviewees also generally agreed that corporations should not be considered as being separate from the community, regardless of whether a corporation is local or multinational. One interviewee summed up these sentiments: We realize that we are part of the world. An organization doesn’t exist in isolation … For any company to go on as a perpetual entity, whoever is holding the fort needs to ensure that the economy and world that it operates in continue to be a safe environment. Economic motivators align a corporation’s CSR efforts with potential monetary returns. Attract investors, promote transactions/ partnerships, and increase profits were categorized as economic motivators. The relatively low average mean of the three motivators (M = 3.68) implied that most corporations in the sample did not practice CSR for bottom-line reasons. Although most corporations considered all the motivators listed as essential, motivators aligned with corporate agenda ranked among the lowest in importance (Figure 4.2). Some interviewees who were skeptical about certain local corporations’ CSR efforts questioned the above findings as indicated by an interviewee: There are a lot of organizations out there who are actually using (the tsunami disaster) by donating 10% of proceeds and so on. We see that as a bit gimmicky, which means they are trying to get sales. They are trying to appeal to the emotion of somebody, ultimately to get sales, because it is tagged to the sale of an item. External pressures (M = 3.20, SD = 0.811) was considered as not being such an important motivator. Only 35% of respondents agreed that external pressures coming from NGOs, government, media, consumers, and community are important in motivating CSR practices. The respondents in the sample were divided on whether government regulation should be considered as a CSR motivator. Almost half of them (49%) indicated a neutral stand toward government intervention. It is important to note that the mean (M = 2.87) indicated that the other half of the sample corporations did not consider government regulation as a motivational factor. The actual distribution of corporations between “not important” and “important” was relatively balanced.

Interestingly, some of our interviewees believed that the Government of our country should be instrumental in driving the CSR movement. Their reasons ranged from the government’s powerful financial, media, and human resources, to the large number of Government Linked Companies (GLC, or public sector enterprises) and a vast amount of regulatory power. III) Bar diagram depicting interviewee’s response on corporation’s motivations behind CSR activities:

Figure 4.3. Benefits that the corporations achieved from their CSR activities

RQ3 asked what benefits the corporations in the sample had achieved in their CSR initiatives. The most frequently cited benefits were improved customer loyalty (57%), improved organizational culture (53%), and attracting and retaining employees (35%) (Figure 4.3). The top benefits cited by the corporations in our sample were related to customers and employees, who were also the most important stakeholders identified. The interviewees also cited similar benefits. In addition, they reported that their corporations enjoyed a more cohesive workforce, enhanced image, and reduced business costs as a result of CSR practices. It was paradoxical that improved image and reputation (11%) was the least frequently cited benefit of CSR, considering an earlier finding that enhancing reputation was the most significant motivation for

corporations to engage in CSR activities. The sample of corporations might have difficulty assessing the impact of CSR on reputation because corporate reputation is hard to measure.

Summary of findings The findings of this research have been clearly stated in the preceding section. The findings have been drawn using SPSS with an aim to help the corporations know how relevant and meaningful their CSR initiatives to their end users are and make the necessary changes, if any. The first research question sought to know the perceptions about CSR among the sample of respondents in Noida and Ghaziabad city. We found that the awareness level was high which might be attributed to the recent increase in media coverage as well as the launch of several initiatives to promote CSR. A majority of the respondents surveyed disagreed that corporations need not be concerned with the society. This suggested that they perceived corporations to have some obligations toward the society and viewed business and society as interwoven rather than separate entities. Our survey findings indicated the listed motivators to be relatively important, with ratings of their importance ranging from 3.20 to 4.08 (with 1 = least important and 5 = very important). The only exception was avoid regulation. The top three motivators were enhance reputation, long term sustainability, and enhance community trust and support.The results suggested that our sample of corporations considered CSR as being vital for a corporation’s survival. The third research question asked what benefits the corporations in the sample had achieved in their CSR initiatives. The most frequently cited benefits were improved customer loyalty, improved organizational culture, and attracting and retaining employees. The top benefits cited by the corporations in our sample were related to customers and employees, who were also the most important stakeholders identified.

CHAPTER 5 CONCLUSION & RECOMMENDATIONS

Conclusions & Recommendations

We recognize that ours is by far a descriptive study from which we have made databased extrapolations such as the drivers of CSR among our respondents. However, at this point, description should be as legitimate as explanation. Because there is very little empirical data about CSR in our country, it is almost impossible to construct research instruments that will help predict phenomena related to this concept. I hope my study will spur more research on CSR in our country and help the movement grow as well. Future researches may select specific variables from the framework (e.g. employees and potential impact) and test their relationship empirically.

Limitations of research

Some elements of the questionnaire, such as evaluation and CSR activities, may have been open to wide interpretations by respondents, and the survey findings may have masked these variations. These problems associated with the survey methodology were compensated with the in-depth interviews with corporate executives and elite interviewees, which added considerable depth to our study. With regard to the external validity of this study, there is inevitably some degree of self-selection of the respondents as the sample is dependent on the respondents’ willingness to participate. Thus, those who volunteered to respond are likely to have more interest in CSR. Further, because we did not use probability sampling, we consider this study to be a snapshot at this point in time. Future studies may be able to replicate our study and confirm our findings.

Implications for further research

Generally, the CEOs and top managers are the key decision makers of CSR activities among the corporations. So, future research can conduct a deeper study of their attitudes towards CSR. Another area of study can include investigating the perceptions about consumers and employees, as they are regarded the most important stakeholders by the corporations. Future research can also examine the potential impact and current activity level of customers and employees, as well as other stakeholders such as NGOs and trade associations to test our analysis on the various CSR drivers empirically. Another possible research avenue is to explore the distinct CSR issues associated with the different industries so that specific guidelines and recommendations can be formulated. A longitudinal study to uncover any significant trend in executives’ perceptions about CSR and corporations’ CSR activities over time may also be an interesting area for future research.

References Papers Krishnamurthy Sriramesh, Chew Wee Ng, Soh Ting Ting and Luo Wanyin (2007) “Corporate Social Responsibility and Public Relations: Perceptions and Practices in Singapore”, International Public Relations Symposium. Suparn Sharma, Joity Sharma, Arti Devi (2009), “Corporate Social Responsibility: The key role of Human resource management”, Business Intelligence Journal Pg 205. Hongmei Shen, Professor Elizabeth L. Toth “Public Relations and MNC’s Corporate Social Responsibility: From A developing country’s perspective” Journal of Faculty of the Graduate School of the University of Maryland, College Park. Dan O’Brien “Integrating Corporate Social Responsibility with competitive strategy” (2001), The Centre of Corporate Citizenship Journal-Boston College. Dr. G. Muruganantham (2010), “Case study on Corporate Social Responsibility of MNC’s in India”, International Trade and Academic research conference-London 2010.

Books Marketing Research: An applied orientation By Naresh K. Malhotra and Satyabhushan Dash Sixth edition. Principles of Marketing Management a South Asian perspective By Philip Kotler, Kevin Lane Kaller, Abraham Koskoi, Mithileshwar Jha Thirteenth edition.

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Appendix QUESTIONNAIRE PART I: DEMOGRAPHIC FACTORS

Gender

Male

Female

Educational level

Secondary school or lower than secondary school 41 yrs Bachelor’s degree 41 yrs 50 Master’s degree 41 -yrs yrs Doctoral degree 50 41 -yrs yrs Any other, please specify ________________ 50 41 -yrs yrs 50 -yrs Whether employed or not? 50 ________________ yrs If employed, mention designation _________________________

PART II: CONSUMER PERCEPTION ABOUT THE CSR ACTIVITIES Rate the following items on a scale of 1 to 5 where 1=strongly disagree, 2=Disagree, 3= neither agree nor disagree, 4= Agree, 5=strongly agree. Put a tick below the suitable number. 1 1. CSR should be completely voluntary-no laws should govern it. 2. Companies need not be concerned with the society. 3. CSR should be a consideration while setting corporate

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strategy. 4. CSR should be recognized as a core business function. 5. CSR does not have a positive impact on the financial performance.

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6. CSR is about making charitable contributions. 7. CSR is largely a publicity/image issue.

PART III: CONSUMER PERCEPTION ABOUT THE MOTIVATIONS BEHIND CSR ACTIVITIES Rate the following items on a scale of 1 to 5 where 1=strongly disagree, 2=Disagree, 3= neither agree nor disagree, 4= Agree, 5=strongly agree. Put a tick below the suitable number. 1 1. External pressures 2. Altruism 3. Improve public welfare 4. Favorable media coverage 5. Enhance reputation 6. Avoid regulation 7. Enhance community trust & support 8. Promote transactions/partnerships 9. Attract investors 10. Recruit/retain employees 11. Company tradition 12. Long term sustainability

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13. Increase profits

PART IV: CONSUMER PERCEPTION ABOUT THE BENEFITS DERIVED BY UNDERTAKING CSR ACTIVITIES Rate the following items on a scale of 1 to 5 where 1=strongly disagree, 2=Disagree, 3= neither agree nor disagree, 4= Agree, 5=strongly agree. Put a tick below the suitable number. 1 1. Better government relations 2. Better business operation conditions 3. Increased favorable media coverage 4. Improved customer loyalty 5. Improved image & reputation 6. Increased profits 7. Improved management quality 8. Attracting & retaining employees 9. Improved organizational culture

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