This study examines corporate stakeholder orientation (CSO) across industries and over time prior to the introduction of mandatory CSR. We argue that CSO is a legitimacy signal consciously employed by firms to demonstrate their shareholder and specific non-shareholder orientations in the midst of institutional pressures emerging from country and industry contexts. Using a 7-code index of CSO on CEO–shareholder communications from India, we find that in general large firms in India exhibit a pre-dominant, significant and rising trend of pro-shareholder orientation in the six-year period immediately preceding the CSR law. Yet, we uncover significant industry differences in CSO potentially driven by four key factors: the degree of competitive dynamics, nature of products and services, extent of negative externalities and social activism, and exposure to international markets. Our findings support the view that while some minimum threshold of regulatory intervention is required to balance the interests of business with society, legislation raises questions in relation to the usefulness of a uniform one-size-fits-all CSR across all industries.
This is a preview of subscription content, access via your institution.
Buy single article
Instant access to the full article PDF.
Tax calculation will be finalised during checkout.
Subscribe to journal
Immediate online access to all issues from 2019. Subscription will auto renew annually.
Tax calculation will be finalised during checkout.
Under this law, all companies in India, public and private, domestic as well as foreign, having a net worth of at least US $83 million or a turnover of US $160 million or a net profit of US $830,000 will have to contribute 2 % of their net profits to CSR in India for activities such as promoting poverty reduction, education, gender equality, health, vocational skills development, and environmental sustainability. As per a PWC report (2014), this law is likely to impact about 16,000 companies across all industries operating in India. It is expected that this law could change the course of CSR approaches of large firms. Our study is based on a six-year period preceding this legislation.
Adams, C., Hill, W., & Roberts, C. (1998). Corporate social reporting practices in Western Europe: Legitimating corporate behaviour. British Accounting Review, 30(1), 1–21.
Aguilera, R. V., Rupp, D. E., Williams, C. A., & Ganapathi, J. (2007). Putting the S back in corporate social responsibility: A multilevel theory of social change in organizations. Academy of Management Review, 32(3), 836–863.
Ananthanarayanan, R. (2015, April 2). Contract workers make up 46% of workforce of India’s largest industrial companies. Livemint.
Angelidis, J., & Ibrahim, N. (2004). An exploratory study of the impact of degree of religiousness upon an individual’s corporate social responsiveness orientation. Journal of Business Ethics, 51, 119–128.
Arora, A., & Gambardella, A. (2005). The globalization of the software industry: Perspectives and opportunities for developed and developing countries. In A. Jaffe, J. Lerner, & S. Stern (Eds.), Innovation policy and the economy (Vol. 5). Cambridge, MA: MIT Pres.
Aupperle, K. E. (1984). An empirical measure of corporate social orientation. Research in corporate social performance and policy, 6, 27–54.
Aupperle, K. E., Carroll, A. B., & Hatfield, J. D. (1985). An empirical examination of the relationship between corporate social responsibility and profitability. Academy of Management Journal, 28(2), 446–463.
Balasubramanian, N. K., Kimber, D., & Siemensma, F. (2005). emerging opportunities or traditions reinforced. Journal of Corporate Citizenship, 17, 79–92.
Battelle. (2014). 2014 Global R&D funding forecast. www.rdmag.com.
Berman, S. L., Wicks, A. C., Kotha, S., & Jones, T. M. (1999). Does stakeholder orientation matter? The relationship between stakeholder management models and firm financial performance. Academy of Management Journal, 42(5), 488–506.
Booth, A. L., & Snower, D. J. (1996). Acquiring skills: Market failures, their symptoms and policy responses. Cambridge: Cambridge University Press.
Boutilier, R., & Thomson, I. (2001). Modelling and measuring the social license to operate: fruits of a dialogue between theory and practice (pp. 1–10). Sociallicence.com. Available online:http://socialicense.com/publications/Modelling%20and%20Measuring%20the%20SLO.pdf.
Boyatzis, R. (1998). Transforming qualitative information, thematic analysis and code development. Thousand Oaks: SAGE Publications Incorporated.
Braun, V., & Clarke, V. (2006). Using thematic analysis in psychology. Qualitative research in psychology, 3(2), 77–101.
Burton, B., Farh, J., & Hegarty, W. (2000). A cross cultural comparison of corporate social responsibility orientation: Hong Kong vs United States students. Teaching Business Ethics, 4(2), 151–167.
Burton, B. K., & Goldsby, M. (2009). Corporate social responsibility orientation, goals, and behavior: A study of small business owners. Business and Society, 48(1), 88–104.
Campbell, J. (2007). Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. Academy of Management Review, 32(3), 946–967.
Carroll, A. (1979). A three-dimensional conceptual model of corporate performance. Academy of Management Review, 4(4), 497–505.
Castelló, I., & Lozano, J. M. (2011). Searching for new forms of legitimacy through corporate responsibility rhetoric. Journal of Business Ethics, 100, 11–29.
Chakraborty, S. K. (1997). Business ethics in India. Journal of Business Ethics, 16(14), 1529–1538.
Clarkson, M. (1995). A stakeholder framework for analysing and evaluating corporate social performance. Academy of Management Review, 20(1), 92–117.
Companies Act. (2013). Affairs. http://www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf.
Dacin, M. (1997). Isomorphism in context: The power and prescription of institutional norms. Academy of Management Journal, 40, 46–81.
Dahlsrud, A. (2008). How corporate social responsibility is defined: an analysis of 37 definitions. Corporate Social Responsibility and Environmental Management, 15(1), 1–15.
David, R. (2007). Indian IT Industry Faces Competition. Forbes.
DiMaggio, P., & Powell, W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147–160.
Donaldson, T., & Preston, L. E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20(1), 65–91.
Economist. (2015, March 21). The business of business: An old debate about what companies are for has been revived.
Field, A. (2009). Discovering statistics using SPSS. London: Sage Publications Ltd.
Forbes. (2007). Indian IT industry faces competition. Retrieved from http://www.forbes.com/2007/02/09/nasscom-forum-india-markets-equity-cx_rd_0209markets20.html.
Freeman, R. (1984). Strategic management: A stakeholder approach. Marshfield, MA: Pitman Publishing Inc.
Fukukawa, K., & Teramoto, Y. (2009). Understanding Japanese CSR: The reflections of managers in the field of global operations. Journal of Business Ethics, 85(1), 133–146.
Fynas, J. (2010). corporate social responsibility and societal governance: Lessons from transparency in the oil and gas sector. Journal of Business Ethics, 93(2), 163–179.
Galaskiewicz, J., & Wasserman, S. (1989). Mimetic processes within an inter-organizational field: An empirical test. Administrative Science Quarterly, 34, 454–479.
Gamerschlag, R., Möller, K., & Verbeeten, F. (2011). Determinants of voluntary CSR disclosure: empirical evidence from Germany. Review of Managerial Science, 5(2–3), 233–262.
Goldberg, L. (2009). Understanding banking sector globalization. Frontiers of Research on Financial Globalization, 56(1), 171–197.
Hoekstra, B. (2003). CSR and the IT industry in Bangalore: Observations of a practitioner. IIMB Management Review, 15(4), 78–81.
Hoffman, D. (2006). The “Duty” to be a rational shareholder. Minnesota Law Review, 90(3), 537–611.
Human Rights Watch. (2012). World report. New York: Seven Stories Press.
Ibrahim, N., & Angelidis, J. P. (1991). Effects of board members’ gender on level of involvement in strategic management and corporate social responsiveness orientation. In Proceedings of the Northeast Decision Sciences Institute. Riverside County, CA: Sage Publications.
Ibrahim, N., & Angelidis, J. (1995). The corporate social responsiveness orientation of board members: Are there differences between inside and outside directors? Journal of Business Ethics, 14, 405–410.
Jackson, G., & Apostolakou, A. (2010). Corporate social responsibility in Western Europe: an institutional mirror or substitute? Journal of Business Ethics, 94(3), 371–394.
Jain, T. (2015). Decoupling corporate social orientations a cross-national analysis. Business & Society. doi:10.1177/0007650315610609.
Jamali, D., Lund-Thomsen, P., & Jeppesen, S. (2015). SMEs and CSR in developing countries. Business & Society, 1, 1–12.
Jamali, D., & Neville, B. (2011). Convergence versus divergence of CSR in developing countries: An embedded multi-layered institutional lens. Journal of Business Ethics, 102(4), 599–621.
Jamali, D., Sidani, Y., & El-Asmar, K. (2009). A three country comparative analysis of managerial CSR perspectives: Insights from Lebanon, Syria and Jordan. Journal of Business Ethics, 85(2), 173–192.
Kagan, R., Gunningham, N., & Thornton, D. (2003). Explaining corporate environmental performance: How does regulation matter. Law and Society Review, 37(1), 51–90.
Kanagasabapathi, P. (2007). Ethics and values in Indian economy and business. International Journal of Social Economics, 34(9), 577–585.
Kapelus, P. (2002). Mining, corporate social responsibility and the “community”: The case of Tiro Tinto, Richards Bay Materials and the Mbonanbi. Journal of Business Ethics, 39, 275–297.
Khan, A. F., & Atkinson, A. (1987). Managerial attitudes to social responsibility: A comparative study in India and Britain. Journal of Business Ethics, 6(6), 419–432.
Khanna, T., & Palepu, K. (1997). Why focused strategies may be wrong for emerging markets. Harvard Business Review, 75, 41–54.
Kolk, A., Tulder, R. V., & Welters, C. (1999). International codes of conduct and corporate social responsibility: Can transnational corporations regulate themselves? Transnational Corporation, 8, 143–180.
KPMG. (2005). KPMG international survey of corporate responsibility reporting 2005. Amsterdam: KPMG international.
Krishna, C. G. (1992). Corporate social responsibility in India: A study of management attitudes. New Delhi: Mittal Publications.
La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. W. (1998). Law and finance. The Journal of Political Economy, 106(6), 1113–1155.
Lee, J. (2013, August). China and India hope higher prices will spur gas production.
Livemint. (2009, August 25). A natural gas oligopoly. Retrieved from http://www.livemint.com/Opinion/wf1IRlycsytDmQR9RU5lsL/A-natural-gas-oligopoly.html.
Logsdon, J. M., & Wood, D. J. (2005). Global business citizenship and voluntary codes of ethical conduct. Journal of Business Ethics, 59(1–2), 55–67.
Luo, Y., & Tung, R. L. (2007). International expansion of emerging market enterprises: A springboard perspective. Journal of International Business Studies, 38(4), 481–498.
Mahoney, L. S., Thorne, L., Cecil, L., & LaGore, W. (2012). A research note on standalone corporate social responsibility reports: Signaling or greenwashing? Critical Perspectives on Accounting, 24(4), 350–359.
Mathew, G., & Unnikrishnan, M. K. (2012). The Emerging Environmental Burden from Pharmaceuticals. Economic and Political Weekly, 47(18), 31–34.
Matten, D., & Moon, J. (2008). Implicit and explicit CSR: A conceptual framework for a comparative understanding of corporate social responsibility. Academy of Management Review, 33(2), 404–424.
Meyer, J. W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. American journal of sociology, 340–363.
Mishra, S., & Suar, D. (2010). Does corporate social responsibility influence firm performance of Indian companies? Journal of Business Ethics, 95(4), 571–601.
Mitra, R. (2011). “My Country’s Future”: A culture-centered interrogation of corporate social responsibility in India. Journal of Business Ethics, 106(2), 131–147.
Nayar, B. (1998). Political structure and India’s economic reforms of the 1990s. Pacific Affairs, 71, 335–358.
Neubaum, D., & Zahra, S. (2006). Institutional ownership and corporate social performance: The moderating effects of investment horizon, activism, and coordination. Journal of Management, 32(1), 108–131.
Ntim, C., & Soobaroyen, T. (2013). Corporate governance and performance in socially responsible corporations: New empirical insights from a neo-institutional framework. Corporate Governance: An International Review, 21(5), 468–494.
O’Riordan, L., & Fairbrass, J. (2008). Corporate social responsibility (CSR): Models and theories in stakeholder dialogue. Journal of Business Ethics, 83(4), 745–758.
O’Connor, A., & Shumate, M. (2010). An economic industry and institutional level of analysis of corporate social responsibility communication. Management Communication Quarterly, 24(4), 529–551.
O’Donovan, G. (2002). Environmental disclosures in the annual report. Accounting, Auditing and Accountability Journal, 15(3), 344–371.
Pande, S., & Kaushik, K. (2012). Study on the state of corporate governance in India. New Delhi: Indian Institute of Corporate Affairs.
Patel, T., & Schaefer, A. (2009). Making sense of the diversity of ethical decision making in business: An illustration of the Indian context. Journal of Business Ethics, 90(2), 171–186.
Perez-Batres, L. A., Doh, J. P., Miller, V. V., & Pisani, M. J. (2012). Stakeholder pressures as determinants of CSR strategic choice: Why do firms choose symbolic versus substantive self-regulatory codes of conduct? Journal of Business Ethics, 110(2), 157–172.
Pless-Mulloli, T., Howel, D., & Prince, H. (2001). Prevalence of asthma and other respiratory symptoms in children living near and away from opencast coal mining sites. International Journal of Epidemiology, 30(3), 556–563.
Prakash, A. (2000). Responsible care: An assessment. Business and Society, 39(2), 183–209.
PWC. (2014, April 1). Retrieved July 15, 2014, from www.pwc.com: http://www.pwc.com/gx/en/audit-services/corporate-reporting/publications/world-watch/articles/india-companies-act-corporate-social-responsibility.jhtml.
Rajagopalan, N., & Zhang, Y. (2008). Corporate governance reforms in China and India: Challenges and opportunities. Business Horizons, 51(1), 55–64.
Raman, R. (2006). Corporate social reporting in India: A view from the top. Global Business Review, 7(2), 313–324.
Rupp, D. E., & Williams, C. A. (2011). The efficacy of regulation as a function of psychological fit: Reexamining the hard law/soft law continuum. Theoretical Inquiries in Law, 12(2), 581–602.
Scott, W. R. (2001). Institutions and Organizations (Vol. II). Riverside County, CA: Sage.
Scott, W. R. (2008). Approaching adulthood: the maturing of institutional theory. Theory and Society, 37(5), 427–442.
Shah, A. (2009, January 13). Getting the right architecture for corporate governance. Financial Express.
Sharma, S. (2002). Research in corporate sustainability: What really matters? In S. S. Starik (Ed.), Research in corporate sustainability: The evolving theory and practice of organizations in the natural environment (pp. 1–30). Cheltenham: Edward Elgar.
Shleifer, A., & Vishny, R. (1997). A survey of corporate governance. The Journal of Finance, 52(2), 737–783.
Som, A. (2006). Bracing MNC competition through innovative HRM practices: The way forward for Indian firms. Thunderbird International Business Review, 48(2), 207–237.
Sotorrío, L. L., & Sánchez, J. L. (2008). Corporate social responsibility of the most highly reputed European and North American firms. Journal of Business Ethics, 82(2), 379–390.
Stebbins, R. A. (Ed.). (2001). Exploratory research in the social sciences (Vol. 48). Riverside County, CA: Sage.
Stout, L. A. (2012). The shareholder value myth: How putting shareholders first harms investors, corporations, and the public. San Francisco, CA: Berrett-Koehler Publishers.
Suchman, M. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 20, 571–610.
Sundar, P. (2000). From merchant charity to corporate citizenship. New Delhi: Tata McGraw Hill.
Tang, Z., & Tang, J. (2012). Stakeholder–firm power difference, stakeholders’ CSR orientation, and SMEs’ environmental performance in China. Journal of Business Venturing, 27(4), 436–455.
Tengblad, S., & Ohlsson, C. (2010). The framing of corporate social responsibility and the globalization of national business systems: A longitudinal case study. Journal of Business Ethics, 93(4), 653–669.
Tsamenyi, M., & Uddin, S. (2009). Accounting in Emerging Economies. Bingley: Emerald Group Publishing Limited.
Verboven, H. (2011). Communicating CSR and business identity in the chemical industry through mission slogans. Business Communication Quarterly, 74(4), 415–431.
Visser, W. (2008). Corporate social responsibility in developing countries. In A. Crane, A. McWilliams, D. Matten, J. Moon, & D. Siegel (Eds.), The Oxford handbook of corporate social responsibility (pp. 473–479). Oxford: Oxford University Press.
Waddock, S. A., & Graves, S. B. (1997). The corporate social performance. Strategic Management Journal, 8(4), 303–319.
Waldman, D., de Luque, M., Washburn, N., House, R., Adetoun, B., Barrasa, A., et al. (2006). Cultural and leadership predictors of corporate social responsibility values of top management: A GLOBE study of 15 countries. Journal of International Business Studies, 37, 823–837.
Walls, J., Phan, P., & Berrone, P. (2012). Corporate governance and environmental performance: Is there really a link? Strategic Management Journal, 33(8), 885–913.
Washington, M., & Patterson, K. D. (2011). Hostile takeover or joint venture: Connections between institutional theory and sport management research. Sport Management Review, 14(1), 1–12.
Weber, J., & Marley, K. (2012). In search of stakeholder salience: Exploring corporate social and sustainability reports. Business and Society, 51(4), 626–649.
Williams, C., & Aguilera, R. (2008). Corporate social responsibility in a comparative perspective. In A. Crane (Ed.), The Oxford handbook of corporate social responsibility. Oxford: Oxford University Press.
Wood, D. (2010). Measuring corporate social performance: A review. International Journal of Management Reviews, 12(1), 50–84.
The authors gratefully acknowledge guest editors Thomas Beschorner and Thomas Hajduk, and the two anonymous reviewers for their detailed feedback and constructive comments on this article. They are grateful to Peter Li and Michael Hitt for their helpful suggestions during the Vth Emerging Market Consortium at Rice University and Andrew Crane for his constructive comments during the 2015 International Association of Business and Society. The first author thanks M. M. K. Jain for his generous help as the second coder of the study and Tanushree Dutta (IIM) for her guidance with data analysis. A previous version of this paper received the best paper award in the CSR track during CLADEA 2014.
About this article
Cite this article
Jain, T., Aguilera, R.V. & Jamali, D. Corporate Stakeholder Orientation in an Emerging Country Context: A Longitudinal Cross Industry Analysis. J Bus Ethics 143, 701–719 (2017). https://doi.org/10.1007/s10551-016-3074-1
- Corporate stakeholder orientation (CSO)
- Corporate social responsibility (CSR)
- Industry CSR
- Mandatory CSR
- Institutional theory
- Emerging country