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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

422

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.


423

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


424

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


425

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


426

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


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


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


429

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


430

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


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


432

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


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


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


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


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


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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