A GENERAL ANALYSIS OF CORPORATE SOCIAL RESPONSIBILITY AND ITS LINKAGE WITH FINANCIAL PERFORMANCE IN INDIAN CONTEXT

Abstract

Despite many studies on the relationship between corporate social responsibility and financial performance, the findings are still inconclusive. This study attempts to examine the relationship between corporate social responsibility and financial performance in the Indian context. The findings of this study will provide great thoughts to the management, to combine the CSR with the strategic set of their business, and reform their business philosophy from outdated profit-oriented to socially responsible approach. A general analysis of CSR from its evolution to different schemes undertaken by some Indian firms is focused upon. It must be mentioned that most of the study here is based on secondary data. The advent of corporate social responsibility (CSR) initiatives today suggests that the corporate viewpoint of such policies has shifted from a pointless addition to a major business function. Using a stable source of data on corporate social performance, this study explores and tests the relationship between CSR and corporate financial performance. Results indicate that CSR and CFP have an immense positive relationship in both directions, supporting the view that CSR programs have positive impacts on the bottom-line. Results also indicate that increase in CSR activities leads to increase in gross profit, indicating that some customers are willing to pay more for the products or services of a company with CSR initiatives. Moreover, results also indicate that increases in CSR programs lead to a decrease in sales, which implies a decrease in customer base because fewer people are willing to buy the products at a premium.