To Legislate or Not: That Is the Question—Comparing CSR Intent and Effects in Economies with Voluntary CSR and Legislated CSR

Part of the CSR, Sustainability, Ethics & Governance book series (CSEG)


Multinational companies (MNCs) often debate whether or not corporate social responsibility (CSR) is worthwhile pursuing, whether it is a cost for mere window dressing or whether it is an investment with promising and interesting outcomes. On the other hand, governments debate whether CSR should be legislated or voluntary. Hence, while some MNCs engage in CSR voluntarily pursuing the benefits, other MNCs are ‘forced’ to engage in CSR—regardless if they believe in the concept or not. There are various examples and approaches. Among developed economies, for example, we find Sweden who does not have CSR legislation (yet the majority of Swedish MNCs are highly active in voluntary CSR) and Denmark, Germany and Canada with various degrees of industry-specific legislation. In emerging economies, we find, for instance, Mauritius, Indonesia and India legislated CSR to cover precise monetary contributions towards the social, economic and environmental development of these countries. Whether the global economy gravitates towards some degree of responsible capitalism or not, the discussion and arguments for and against mandatory CSR is likely to increase in the near future. To contribute to the debate, this chapter describes the differences between CSR among MNCs in Sweden (a developed economy believing in voluntary CSR) and India (an emerging economy) where CSR is mandatory by law. Our research indicates that MNCs in both economies (with voluntary or legislative CSR) strategically benefits from CSR and that CSR legislation positively affects MNCs in at least one emerging economy (India).


Voluntary and legislated CSR Developed and emerging economies Strategic intent 


  1. Bansal, P., & Roth, K. (2000). Why companies go green: A model of ecological responsiveness. Academy of Management Journal, 43, 717–736.Google Scholar
  2. Barnett, M. L. (2007). Stakeholder influence capacity and the variability of financial returns to CSR. Academy of Management Review, 32, 794–816.CrossRefGoogle Scholar
  3. Barnett, M. L., & Salomon, R. M. (2012). Does it pay to be really good? Addressing the shape of the relationship between social and financial performance. Strategic Management Journal, 33, 1304–1320.CrossRefGoogle Scholar
  4. Beloe, S., Elkington, J., Prakash-mani, K., Thorpe, J., & Zollinger, P. (2004). Gearing up: From corporate social responsibility to good governance and scalable solutions. SustainAbility/Global Compact.
  5. Bhowmick, N. (2014). 37% of all the illiterate adults in the world are Indian. Time World. Accessed February 10, 2014, from
  6. Brady, M. K., & Cronin, J. J., Jr. (2001). Customer orientation: Effects on customer service perceptions and outcome behaviors. Journal of Service Research, 3, 241.CrossRefGoogle Scholar
  7. Carroll, A. B., & Shabana, K. M. (2010). The business case for corporate social responsibility: A review of concepts, research and practice. International Journal of Management Reviews, 12, 85–105.CrossRefGoogle Scholar
  8. Chatterjee, B., & Mitra, N. (2016). Cases and developments after the legal mandate. In N. Mitra & R. Schmidpeter (Eds.), Corporate social responsibility in India. Basel: Springer International Publishing.Google Scholar
  9. DeTienne, K., Agle, B., Phillips, J., & Ingerson, M.-C. (2012). The Impact of moral stress compared to other stressors on employee fatigue, job satisfaction, and turnover: An empirical investigation. Journal of Business Ethics, 110, 1–15.CrossRefGoogle Scholar
  10. Drucker, P. F. (1984). The new meaning of corporate social responsibility. California Management Review, 26, 53–63.CrossRefGoogle Scholar
  11. Du, S., Bhattacharya, C. B., & Sen, S. (2010). Maximizing business returns to corporate social responsibility (CSR): The role of CSR communication. International Journal of Management Reviews, 12, 8–19.CrossRefGoogle Scholar
  12. Economic Times. (2015). Aditya Birla Group-owned idea cellular’s CSR spend remains zero. ETTelecom, September 30, 2015.Google Scholar
  13. Erin Reid, M., & Michael Toffel, W. (2009). Responding to public and private politics: Corporate disclosure of climate change strategies. Strategic Management Journal, 30, 1157–1178.CrossRefGoogle Scholar
  14. Ernst & Young FICCI. (2012). Knowledge paper on skill development in India. Accessed February 10, 2014, from$FILE/FICCI_skill_report_2012_finalversion_low_resolution.pdf
  15. FICCI EY. (2015). Reaping India’s promised demographic dividend—Industry in driving seat. Ernst & Young (EY) and Federation of Indian Chamber of Commerce and Industry (FICCI). Accessed December 1, 2015, from$FILE/EY-Reaping-Indias-promised-demographic-dividend-industry-in-driving-seat.pdf
  16. Fombrun, C. J. (2000). Opportunity platforms and safety nets: Corporate citizenship and reputational risk. Business and Society Review, 105(1), 85.CrossRefGoogle Scholar
  17. Gebhardt, G. F., Carpenter, G. S., & Sherry, J. F. (2006). Creating a market orientation: A longitudinal, multifirm, grounded analysis of cultural transformation. Journal of Marketing, 70, 37–55.CrossRefGoogle Scholar
  18. Government of India Ministry of Finance. (2013). Report of the Inter-Ministerial Committee for boosting exports from MSME sector. Accessed June 1, 2015, from
  19. Harrison, J. S., Bosse, D. A., & Phillips, R. A. (2010). Managing for stakeholders, stakeholder utility functions, and competitive advantage. Strategic Management Journal, 31(1), 58–74.CrossRefGoogle Scholar
  20. Human Development Report. (2013). UNDP. Accessed December 31, 2016, from
  21. Indian Government Department of Public Enterprises. (2015). Guidelines on corporate social responsibility for central public sector enterprises. Government of India, Ministry of Heavy Industries and Public Enterprises (Department of Public Enterprises). Accessed December 28, 2015, from
  22. Indian Institute of Corporate Affairs. (2014). CSR India: Ready Reckoner. Gurgaon: Centre for Institutional Partnerships and Communication.Google Scholar
  23. Isaksson, L. (2012). CSR: A study of strategic management and performance. Doctoral Dissertation, Bond University.Google Scholar
  24. Isaksson, L., Kiessling, T., & Harvey, M. (2014). Corporate social responsibility: Why bother? Organizational Dynamics, 43, 64–72.CrossRefGoogle Scholar
  25. Kang, J. (2009). Corporate social responsibility? Not my business any more: The CEO horizon problem in corporate social performance. Academy of Management Proceedings, 2009(1).CrossRefGoogle Scholar
  26. Khan, S. (2007). Corporate social responsibility from an emerging market perspective: Evidences from the Indian Pharmaceutical Industry. University of St. Gallen, Business Dissertations. Accessed December 15, 2015, from;db=buh&;AN=64282075&;site=ehost-live&;scope=site
  27. Kiessling, T., Isaksson, L., & Yasar, B. (2015). Market orientation and CSR: Performance implications. Journal of Business Ethics, 137, 269–284.CrossRefGoogle Scholar
  28. Kirca, A. H., Jayachandran, S., & Bearden, W. O. (2005). Market orientation: A meta-analytic review and assessment of its antecedents and impact on performance. Journal of Marketing, 69, 24–41.CrossRefGoogle Scholar
  29. Kohli, A. K., & Jaworski, B. J. (1990). Market orientation: The construct, research propositions, and managerial implications. Journal of Marketing, 54, 1–18.CrossRefGoogle Scholar
  30. KPMG. (2011). KPMG international survey of corporate responsibility reporting 2011. KPMG, 1.Google Scholar
  31. Kytle, B., & Ruggie, J. G. (2005). Corporate social responsibility is risk management.Google Scholar
  32. Lam, S. K., Kraus, F., & Ahearne, M. (2010). The diffusion of market orientation throughout the organization: A social learning theory perspective. Journal of Marketing, 74, 61–79.CrossRefGoogle Scholar
  33. Levis, J. (2006). Adoption of corporate social responsibility codes by multinational companies. Journal of Asian Economies, 17, 50–55.CrossRefGoogle Scholar
  34. Maira, A. (2004). Remaking India: One country, one destiny (Response Books) (1st ed.). New Delhi: Sage.Google Scholar
  35. Mattingly, J. E. (2012). Corporate social performance: A review of empirical research examining the corporation–society relationship using Kinder, Lydenberg, Domini social ratings data. Business & Society, 56, 796–839.CrossRefGoogle Scholar
  36. McWilliams, A., & Siegel, D. (2000). Corporate social responsibility and financial performance: Correlation or misspecification? Strategic Management Journal, 21, 603–609.CrossRefGoogle Scholar
  37. McWilliams, A., & Siegel, D. S. (2011). Creating and capturing value. Journal of Management, 37, 1480–1495.CrossRefGoogle Scholar
  38. Mintzberg, H. (1983). The case for corporate social responsibility. Journal of Business Strategy, 4, 3.CrossRefGoogle Scholar
  39. Mitra, N. (2014). Corporate social responsibility should contribute towards developing human capital – The India perspective. New Delhi: Excel India Publishers.Google Scholar
  40. Mitra, N. (2015a). In pursuit of building the foundation for sustainability. In 2nd International Conference on CSR, Sustainability, Ethics and Governance. Nanjing University of Finance and Economics, China, International Centre for CSR and Sustainability.Google Scholar
  41. Mitra, N. (2015b). Community engagement models in real estate – A case study of Tata Housing Development Company. Asian Journal of Business Ethics, 5, 111–138.CrossRefGoogle Scholar
  42. Mitra, N. (2015c). Embedded corporate social responsibility through community engagement in the real estate sector of India: Case study of Tata Housing Development Limited. In Fourth International Conference on Global Business Economics, Finance and Social Sciences.Google Scholar
  43. Mitra, N., & Schmidpeter, R. (2016). Cases and developments after the legal mandate. In N. Mitra & R. Schmidpeter (Eds.), Corporate social responsibility in India. Basel: Springer International Publishing.Google Scholar
  44. Moon, S.-G., & de Leon, P. (2007). Contexts and corporate voluntary environmental behaviors: Examining the EPA’s green lights voluntary program. Organization Environment, 20, 480–496.CrossRefGoogle Scholar
  45. MSME. (2012). Government of India. Report of the Inter-Ministerial Committee for Boosting Exports from MSME Sector. Ministry of Finance. Accessed June 1, 2015, from
  46. Muller, A. (2006). Global versus local CSR strategies. European Management Journal, 24, 189–198.CrossRefGoogle Scholar
  47. Murray, K. B., & Montanari, J. R. (1986). Strategic management of the socially responsible firm: Integrating management and marketing theory. The Academy of Management Review, 11, 815–827.CrossRefGoogle Scholar
  48. Nilekani, R. (2011). Corporate social responsibility in India: No clear definition, but plenty of debate. Wharton University. Accessed January 10, 2016, from
  49. Porter, M. (2008). Managerial applications of corporate social responsibility and systems thinking for achieving sustainability outcomes. Systems Research and Behavioral Science, 25, 397–411.CrossRefGoogle Scholar
  50. Porter, M., & Kramer, M. (2006). Strategy & society. The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84, 78–92.Google Scholar
  51. Porter, M. E., & Kramer, M. R. (2011, January–February). The big idea: Creating shared value. Harvard Business Review. Google Scholar
  52. PriceWaterhouse Coopers PWC. (2013). Handbook on corporate social responsibility in India. Confederation of Indian Industry.Google Scholar
  53. Ramchander, S., Schwebach, R. G., & Staking, K. I. M. (2012). The informational relevance of corporate social responsibility: Evidence from Ds400 index reconstitutions. Strategic Management Journal, 33, 303–314.CrossRefGoogle Scholar
  54. Rao, K. (2013). India’s poverty level falls to record 22%: Planning Commission. The Wall Street Journal and Live Mint. Accessed February 10, 2014, from
  55. Ruekert, R. W. (1992). Developing a market orientation: An organizational strategy perspective. International Journal of Research in Marketing, 9, 225–245.CrossRefGoogle Scholar
  56. Shen, J., & Benson, J. (2016). When CSR is a social norm: How socially responsible human resource management affects employee work behavior. Journal of Management, 42(6), 1723–1746.CrossRefGoogle Scholar
  57. Swedish-Institute. (2009). Sharing Sweden with the world. Swedish Institute. Accessed October 16, 2009, from
  58. Tata. (2015). Leadership with trust. Accessed September 12, 2015, from
  59. Tata Housing Imprints. (2015). Sustainability report 2013–2014. Accessed December 11, 2015, from
  60. UNESCO. (2014). Adult and youth literacy: National, regional and global trends, 1985–2015. UNESCO Institute for Statistics. Accessed December 14, 2014, from
  61. Wieseke, J., Ahearne, M., Lam, S. K., & von Dick, R. (2009). The role of leaders in internal marketing. Journal of Marketing, 73(2), 123–145.CrossRefGoogle Scholar
  62. Zadek, S., & MacGillivray, A. (2008). The responsible competitiveness index.Google Scholar

Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  1. 1.Queensland University of TechnologyBrisbaneAustralia
  2. 2.KolkataIndia

Personalised recommendations