Management & Change by IILM Institute for Higher Education

Volume 18

Number 1

2014

Management & Change Jonas Haertle

Foreword: Responsible Management

Gurram Gopal

Sustainability in Business: Moving Beyond Narrow Efforts and Integrating Sustainability into the Business Curriculum

Sudipta Mondal Santanu Kumar Ghosh

Role of Corporate Citizenship in Achieving MDGs: A Study on the Asian Countries

Deepak Malik Mukesh Saxena Niraj Sharma

Environmental Management Plan for Satellite Town of Gurgaon

Ranjani Matta

Key Drivers Of Sustainability Reporting: A Study In Indian Perspective

Priyanka Jain Vishal Vyas Ankur Roy

Mediating Role of Intellectual Capital and Competitive Advantage on the Relation between CSR and Financial Performance

Ranjani Swamy

Inculcating Social Responsibility At Goa Institute Of Management (GIM): A Case Study

Journal of IILM Institute for Higher Education

Management & Change Journal of IILM Institute |for Higher Education (Listed in Cabell’s Directory of Publishing Opportunities, Texas, USA)

Editor Prof. Vandana Srivastava Professor Operations and Management Sciences IILM Institute for Higher Education |management.change@iilm.edu

EDITORIAL ADVISORY BOARD Ahmed, Abad Ex-Pro-Vice Chancellor, University of Delhi, Delhi. Balachandran, V. Bala Distinguished Professor, J.K. Kellogg Graduate School of Management, Northwestern University, Evanston, Illinois. Baxi, Chetan Former Dean, Research, Management Development Institute, Gurgaon. Chatterjee, N.R. Dean Emeritus, IILM Institute for Higher Education, New Delhi. Coree, Joseph Professor, Robert Morris College, Pittsburgh, USA. Ghosh, Avijit Professor, Stern School of Business, New York University, USA. Jain, P.K. Professor of Finance, Dept. of Management Studies, Indian Institute of Technology, New Delhi & Former President, GIFT Society. Joshi, J. Rama Professor, Shri Ram Centre for Industrial Relations, New Delhi. Khan, M.Y. Ex-Professor, Dept. of Financial Studies, University of Delhi, Delhi. Mamkoottam, K. Professor, Faculty of Management Studies, University of Delhi, Delhi. Mukherji, Badal Professor TERI University & Former Director, Delhi School of Economics, Delhi. Nair, N.K. Professor Shri Ram Centre for Industrial Relations, Human Resources, Economic & Social Development, New Delhi. Panchmukhi, V.R. Ex-Chairman, Indian Council of Social Science Research. Pandey, I.M. Chairman, Academic Council, Pearl School of Business, Sector 32, Gurgaon. Pandit, V.N. Ex-Professor, Delhi School of Economics, University of Delhi, Delhi. Sheth, N.R. Ex-Director, Indian Institute of Management, Ahmedabad. Singh, J.D. Director, Jaipuria Institute of Management, Noida. Szell, Gyorgy Professor, University of Osnabruck, Germany. Vrat, Prem Professor Emeritus, MDI Gurgaon, Former Vice-Chancellor, U.P. Technical University, Lucknow and Former Director, IIT Roorkee. Manuscript Submission Contributions are invited in diverse areas of management from interested authors. In each issue of the journal it is normally planned to include research papers, case studies, original conceptual papers/ perspectives, short communications, management cases and book reviews. For contributors guidelines, authors may refer to the inside back cover. Enquiries should be electronically made to the Editor, Management & Change, IILM Institute for Higher Education at e-mail management.change@iilm.edu Frequency and Subscriptions Management & Change is published bi-annually i.e. twice a year (No.1: Summer; No.2: Winter). Annual subscription rates are as follows: Within India – Institutional: Rs. 750; Individual: Rs. 500 Overseas – Asian Countries: $50; Other Countries: $150 (Air mail) Demand Draft should be drawn in favour of: IILM Institute for Higher Education, payable at New Delhi. Advertisement rates full page Rs. 20,000; half page Rs. 10,000. Editorial/Subscription Information For editorial queries, please write to the Editor, Management & Change, IILM Institute for Higher Education, Tel: 91-11-40934335, Fax: 91-11-40934335, E-mail: management.change@iilm.edu For subscription related queries please contact Editorial Coordinator (aarti.sharma@iilm.edu). Order for print copies to be made at management.change@iilm.edu Online version for 2012 and later issues are being made available through IILM website (www.iilm.edu) on free downloadable basis. Copyright @ 2013 IILM Institute for Higher Education. All Rights Reserved.

Chronology of Editorial Team of ‘Management & Change’ Volume & Issue (Year)

Editor

Vol. Vol. Vol. Vol.

Prof. Prof. Prof. Prof.

1 1 1 2

No. No. No. No.

1 1 2 1

(1997) (1997) (1997) (1998)

Editorial Coordinator

Prof. Debi S. Saini

Sami A. Khan

Vol. 3 No. 1 (1999) Vol. 3 No. 2 (1999)

Prof. Debi S. Saini Prof. Debi S. Saini

Sami A. Khan Sami A. Khan

Vol. 4 No. 1 (2000)

Prof. Gautam Bhattacharyya

Sami A. Khan

Vol. 4 No. 2 (2000)

Prof. Gautam Bhattacharyya

Vol. 5 No. 1 (2001)

Prof. Gautam Bhattacharyya Prof. Gautam Bhattacharyya Prof. Gautam Bhattacharyya Prof. Gautam Bhattacharyya Dr. Irfan A. Rizvi Dr. Irfan A. Rizvi Dr. Irfan A. Rizvi Dr. K.M.Mital Dr. K.M.Mital Dr. K.M.Mital Dr. K.M.Mital Dr. K.M.Mital Dr. K.M.Mital Dr. K.M.Mital Dr. K.M.Mital Dr. K.M.Mital Dr. K.M.Mital Dr. K.M.Mital

Yusuf Siddiqui

Prof. M.K. Moitra Prof. M.K. Moitra Dr. Siri D. Vivek Dr. Rajesh Pilania Dr. Rajesh Pilania -

Vol. 14 No. 2 (2010)

Dr. K.M.Mital

Vol. 15 No. 1 & 2 (2011)

Dr. P. Malarvizhi

Mr. George Skaria

Vol. 16 No. 1 & 2(2012)

Dr. Sangeeta Chopra

Vol. 17 No. 1 & 2 (2013)

Prof. Vandana Srivastava

Dr. Sangeeta Chopra

Yusuf Siddiqui Yusuf Siddiqui Johnson E.P Johnson E.P Johnson E.P Johnson E.P Johnson E.P Johnson E.P Johnson E.P Johnson E.P Johnson E.P Arun Thomas Arun Thomas Ms. Deepa Khanna Ms. Sarla Rawat Ms. Deepa Khanna Ms. Sarla Rawat Ms. Deepa Khanna Ms. Shipra Jain Ms. Aarti Sharma Ms. Shipra Jain Ms. Aarti Sharma

Vol. 18 No. 1 (2014)

Dr. Vandana Srivastava

Vol. 6 No. 2 (2002) Vol. Vol. Vol. Vol. Vol. Vol. Vol. Vol. Vol. Vol. Vol. Vol. Vol. Vol.

7 No. 1 (2003) 7 No. 2 (2003) 8 No. 1 & 2 (2004) 9 No. 1 (2005) 9 No. 2 (2005) 10 No. 1 (2006) 10 No. 2 (2006) 11 No. 1 (2007) 11 No. 2 (2007) 12 No. 1 (2008) 12 No. 2 (2008) 13 No. 1 (2009) 13 No. 2 (2009) 14 No. 1 (2010)

Saini Saini Saini Saini

Associate Editor

Vol. 2 No. 2 (1998)

Vol. 6 No. 1 (2002)

S. S. S. S.

Sami A. Sami A. Sami A. Sami A.

Zafar H. Anjum Zafar H. Anjum Zafar H. Anjum Zafar H. Anjum Lincy Sebastian Yusuf Siddiqui Zafar H. Anjum Lincy Sebastian Yusuf Siddiqui Zafar H. Anjum Lincy Sebastian Yusuf Siddiqui Zafar H. Anjum Lincy Sebastian Yusuf Siddiqui Zafar H. Anjum Lincy Sebastian Yusuf Siddiqui Yusuf Siddiqui

Vol. 5 No. 2 (2001)

Debi Debi Debi Debi

Khan Khan Khan Khan

Dr. Silky Kushwah Dr. Sangeeta Chopra Dr. Silky Kushwah

Ms. Aarti Sharma

ACKNOWLEDGEMENT TO REFEREES Following management professionals acted as referees for contributions made for Management & Change, Vol. 18 No. 1 (2014). Management & Change acknowledges their valuable comments and suggestions for improving papers included in the following issue. Management & Change, Vol. 18 No. 1 Dr. Vandana Srivastava

Professor, Operations and Information Technology, IILM Institute for Higher Education, 3 Lodhi Institutional Area, New Delhi – 110003.

Dr. Sangeeta Chopra

Associate Professor, Organizational Behaviour & Human Resource Management, IILM Institute for Higher Education, 3 Lodhi Institutional Area, New Delhi – 110003.

Dr. Smitha Girija

Associate Professor, Marketing & Sales, IILM Institute for Higher Education, 3 Lodhi Institutional Area, New Delhi – 110003.

Dr. Silky Kushwah

Associate Professor, Finance, Accounting & Control, IILM Institute for Higher Education, 3 Lodhi Institutional Area, New Delhi – 110003.

Management & Change VOLUME 18

NUMBER 1

2014

ARTICLES

Foreword: Responsible Management

Jonas Haertle

Sustainability in Business: Moving Beyond Narrow Efforts and Integrating Sustainability into the Business Curriculum

Gurram Gopal

Role of Corporate Citizenship in Achieving MDGs: A Study on the Asian Countries Environmental Management Plan for Satellite Town of Gurgaon

Sudipta Mondal Santanu Kumar Ghosh

Deepak Malik Mukesh Saxena Niraj Sharma

Key Drivers Of Sustainability Reporting: A Study In Indian Perspective

Ranjani Matta

Mediating Role of Intellectual Capital and Competitive Advantage on the Relation between CSR and Financial Performance

Priyanka Jain Vishal Vyas Ankur Roy

Inculcating Social Responsibility At Goa Institute Of Management (GIM)

Ranjani Swamy

Contributors Jonas Haertle

Head, PRME Secretariat Team, UN Global Compact. E-mail: haertle@unglobalcompact.org

Gurram Gopal

Associate Professor, Elmhurst College, Illinois - 60126, USA. E-mail: ggopal@elmhurst.edu Phone: 630-617-3108

Sudipta Mondal

Research Scholar, The University Of Burdwan (Dept. of Commerce), Golapbug Campus, Burdwan (W.B.) - 713104, India. E-mail:monsudipta@gmail.com Phone: 91+ 9007599379

Santanu Kumar Ghosh

Professor, The University Of Burdwan (Dept. of Commerce), Golapbug Campus, Burdwan (W.B.) - 713104, India. E-mail: shantanu.kaizen@gmail.com Phone: 91+ 9434360561

Deepak Malik

Research Scholar, University of Petroleum and Energy Studies, Dehradun - 248007, India. E-mail: mk24deepak@gmail.com

Mukesh Saxena

Professor, College of Engineering Studies, University of Petroleum and Energy Studies, Dehradun 248007, India. E-mail: msaxena@ddn.upes.ac.in Phone: 9897906297

Niraj Sharma

Principal Scientist, Environmental Science Division, CSIR- Central Road Research Institute, New Delhi - 110025, India. E-mail: sharmaniraj1990@rediffmail.com Phone: 011-26845943

Ranjani Matta

Associate Professor, IILM Institute for Business and Management, 1 Knowledge Centre, Golf Course Road, 71 - 1, Sector 53, Gurgaon - 122003, India. E-mail: ranjani.matta@iilminstitute.ac.in Phone: 9999340965

From the Editor’s Desk RESPONSIBLE MANAGEMENT AND MANAGEMENT EDUCATION: A VIEWPOINT Traditionally, we have always associated management with responsibility; there couldn’t possibly be any other way of practicing management! However several events in the past have forced academia and industry to ponder over the reliability of this belief. These events have highlighted the need for renewed focus and reassertion on responsible management practices, where each individual and organization acts responsibly and ethically. The term “responsible management” has various connotations and has been interpreted in various ways by different practitioners and researchers. While some view it in terms of corporate social responsibility and ethical business practices, others view it in terms of sustainable development. Irrespective of the viewpoint, what emerges is the need for embedding each of these in the warp and woof of practices both at individual as well as organizational levels. Over the years, there has been an increased acceptance on the part of businesses to be more socially, ethically and environmentally responsible. However, sensitivity and acceptance are just the first step. The biggest road block faced by the organizations is in the form of lack of technical know-how and leadership initiatives (Adams and Petrella, 2010). A similar view was shared by Prof C K Prahlad (2010) who found that though the focus on responsible management practices has been considerable at the organizational level, very little attention has been paid to the managers’ responsibility as individuals. He has posited that the role of a responsible manager encompasses leadership, personal excellence, team work, fairness and loyalty to the organization, profession, community, society and family. In his column in the HBR, Prof Prahlad (2010) enumerates how he, as an academician, has been imparting his perspectives to students on how they can become responsible managers. However, given the situation, this cannot be a one-off incident and needs widespread proliferation. This brings to forefront the role of academia in developing the requisite skills for responsible management. For responsible management to permeate all segments of the society, a major role can be played by academia in sensitizing budding managers. This has been affirmed by Sumantra Ghoshal

that “to get to the bottom of the recent wave of corporate scandals, start with what is being taught in business schools” (Ghoshal, 2005). In a country like India, where corruption is widespread, it is all the more pertinent to produce ethically strong and socially responsible students who are poised to be “responsible” managers of tomorrow (Srinivasan, 2012). But how can this be achieved? It is not fair to rely only on the government and the businesses to achieve this. The commitment to an ethical, socially responsible, sustainable and long-term view of business compels us academicians to introduce in business education a more global and systemic understanding of the mission of business in society. This entails a paradigm shift in management education. While B-School curriculum aims at imparting requisite theoretical grounding and skills, efforts in sensitizing students to responsible management is paramount. It has been observed that students who are not exposed to activities related to the knowledge of sustainability, business ethics and social responsibility are less apt to engage in these practices in their personal and professional lives (Albinsson, Perera and Suatter, 2011). At the global level, the cause has been championed by Principles for Responsible Management Education (PRME), a United Nations-supported initiative to promote and inspire responsible management education and research in academic institutions around the globe. The PRME initiative, to a large extent, is the result of efforts by the UN, AACSB International, EFMD, the Aspen Institute’s Business and Society Program, EABIS, GMAC, GRLI, and Net Impact in conducting major learning and educational initiatives on responsible management worldwide. The synergy between responsible business and responsible business education was seen as having tremendous potential. According to Manuel Escudero, founder of the PRME initiative, it is difficult for B schools to continue defending their role as a very positive transformational experience for students while not imparting knowledge about the future social and environmental impact of their decisions as professionals. He proposed that business education had to be redefined to emphasize that though the goal of organizations would remain profit maximization, yet this has to be subject to two constraints, namely, the sustainability of the company itself and the sustainability of the society and the environment (Alcaraz and Thiruvattal, 2010). Accreditation bodies have also been found to have played a substantial role in the awareness of incorporating responsible management as a part of curriculum by providing the required impetus. Realizing the role of inculcating a base for responsible management, AACSB surveys have shown that a substantial number of management schools have made steady strides by major concentration on Management & Change, Volume 17, Number 1 & 2 (2013)

ethics, social/environmental responsibility, sustainability, or non-profit management (Drozdowski, 2011). Education on these lines results not just in responsible employees and citizens, but also impacts their future professional decisions both as employees as well as entrepreneurs. Higher education institutions play a significant role in influencing and shaping the studentsâ&#x20AC;&#x2122; perception of organizations and the role of organizations as well as individuals towards the society (Sobczak, Debucquet,& Havard, 2006). Studies have shown that several initiatives have been taken by B-Schools across the globe in adopting mechanisms for inculcating ethos of responsible management in educating their students. A significant development is this direction has been observed in India as well. While some institutes have incorporated CSR, Ethics and Sustainability in the form of electives, others have incorporated it in the curriculum in the form of research projects and workshops (Srinivasan, 2012). The impetus for inclusion of elements of responsible management in MBA curriculum has also been found to be driven by students (Kiran and Sharma, 2011). While the initiatives are a positive development, the approach of educational institutions is highly debated. Some researchers feel that B-Schools need to change their attitude towards responsible management. So far it has been found to be generally piece meal and fragmented, in the form of courses. However, this demands a major overhaul by way of curriculum review for embedding responsible management in the entire programme structure, spanning courses and assessments. It has been emphasized that apart from curriculum redesign to incorporate courses, educational institutional can sensitize students by various other activities such as organizing seminars, encouraging green initiatives, pictorial symbols in the campus, talks and discussions on social and environmental issues (Mishra, 2013). This brings me to the final thought: should the role of business schools be limited to just incorporating responsible management in the curriculum? Would it not be pertinent for B-Schools to introspect about their own role, both as a facilitator and as an organization? Educational institutions can themselves act as role models by explicitly extending their own social responsibility towards a better society (Mishra, 2013). Mishra, 2013, has emphasized the role of embedding responsible management in the mission and vision of the B-School. According to Haski-Leventhal, 2012, business schools play a very important role by teaching and adopting academic social responsibility. Just as responsible management refers to involvement of all stakeholders, the practices by B Schools need to manage the expectations of all their stakeholders: students, alumni, employees, government and industry. The faculty also needs to demonstrate high ethical practices in the Management & Change, Volume 17, Number 1 & 2 (2013)

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manner in which they deal with the students, apart from being a facilitator who can bring out sensitive issues both at the national and global level in a way that students can appreciate and reflect upon. Before we start preaching, would it not be more prudent for us to practice what we preach and present ourselves as responsible managers? REFERENCES

Adams.C. and Petrella.L. (2010). Collaboration, connections and change: The UN Global Compact, the Global Reporting Initiative, Principles for Responsible Management Education and the Globally Responsible Leadership Initiative. Sustainability Accounting, Management and Policy Journal. 1(2), 292 – 296. Albinsson P.A, Perera, B.Y and Sautter,P. (2011). Integrating Sustainability into the Business Curriculum through E-Learning ,MERLOT Journal of Online Learning and Teaching, 7( 1)117-137. Alcaraz,J.M and Thiruvattal, E. (2010). An Interview WithManuel Escudero, The United Nations’ Principles for Responsible Management Education: A Global Call for Sustainability, University of Academy of Management Learning & Education, 9(3), 542– 550. Drozdowski, H. (2011). The Hush-Hush side of Business Ethics Education. Available at http://aacsbblogs.typepad.com/ dataandresearch/2011/06/the-real-inside-job-of-businessethics-education.html, accessed on May 29, 2014. Ghoshal, S. 2005. Bad management theories are destroying good management practices. Academy of Management Learning & Education, 4(1): 75–91. Haski-Leventhal, D (2012). Academic Institutes must adopt a socially responsible attitude. http://www.ft.com/cms/s/2/37f2a7f40956-11e2-a5e3-00144feabdc0.html#axzz331PD4h9K, Accessed on May 29, 2014 Kiran, R. and Sharma, A (2011). Corporate Social Responsibility and Management Education: Changing Perception and Perspectives, Management & Change, Volume 17, Number 1 & 2 (2013)

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Global Journal of Management and Business Research, 11(6), 56-67 Mishra, Geeta. (2013). Reflecting Responsible Initiatives for Successful CSR In Context of Higher Education Institutions, Journal of Business Management & Social Sciences Research (JBM&SSR) ISSN No: 2319-5614, 2(6), 36-42. Prahalad, C.K. (2010). Column: The Responsible Manager, Harvard Business Review, January, 2010. PRME (2008). Principles for Responsible Management Education) Outcome Statement of the 1st Global Forum for Responsible Management Education. New York City, 5 & 6 December 2008. Sobczak, A., Debucquet, G & Havard, C., “The Impact of Higher Education on Student’s and Young Manager’s Perception of Companies and CSR: an Exploratory Analysis”. Emerald Group Publishing Ltd, Vol. 6, No. 4, pp.463-474,2006. Srinivasan,V. (2012). Developing a “Responsible Business” Course for B-Schools in India, Vikalpa, Vol 37, No. 2, pp.102-107,2012. IILM Institute for Higher Education

Dr. Vandana Srivastava

Management & Change, Volume 17, Number 1 & 2 (2013)

FOREWORD - RESPONSIBLE MANAGEMENT

Jonas Haertle 1 With increasing regularity, business leaders and board rooms around the world are noticing the growing relevance and urgency of responsible management and corporate citizenship as material to long-term growth and prosperity. They see how environmental, social, economic and governance issues affect the financial bottom line of their companies, and they begin to look beyond traditional financial factors to map out their priorities and strategies. Nonetheless, efforts to eliminate global poverty and hunger, eradicate child labour and systemic human rights abuses, combat environmental degradation and safeguard against market failures, have yet to come to fruition. Over the last decade, fundamental shifts have occurred and the UN Global Compact as well as its sister initiative, the Principles for Responsible Management Education (PRME) argue that responsible management and corporate citizenship can address some of the current challenges which impede the full materialisation of a sustainable, prosperous and just world. In order to catalyse responsible management in public and private entities around the world, the institutionalisation and diffusion of responsible management education is imperative, since todayâ&#x20AC;&#x2122;s students of business schools and management universities are the business leaders of tomorrow. Ultimately, they are the students who must navigate in uncertain and vulnerable global markets facing the continuous rise of normative and legal pressures for compliance with environmental, social and governance norms as responsible leaders of corporate enterprises. In order to successfully do so, leaders need to be prepared â&#x20AC;&#x201C; and what better way to be prepared than through oneâ&#x20AC;&#x2122;s education.

Head, PRME Secretariat Team, UN Global Compact. E-mail: haertle@unglobalcompact.org

2 Foreword - Responsible Management

This proposition established the foundation on which the Principles for Responsible Management Education were formed at the 2007 UN Global Compact Leaders Summit in Geneva. Today over 540 business schools in over 80 countries have signed on to the Principles, declaring their willingness to progress in implementing Corporate Social Responsibility values and issues into curricula, research and school operations. Signatory schools report publicly on their progress every 24 months, have the possibility to engage in Working Groups on issue-specific areas, and join or form PRME Regional Chapters, all in an effort to inspire and champion responsible management education, research and thought leadership globally. By educating responsible leaders for and in the context of a large and continuously expanding economy, Indian business schools play a vital role in the global market for Higher Education. It is therefore with noteworthy that a Regional Meeting was convened the first time ever in India at IILM in January 2014. The conference took its point of departure in responsible management as a core business strategy, while providing engaging discussions and shared best practices through academic research and presentations, impeccably echoing the message and values of PRME. Currently, 29 business schools have signed on to the Principles in India.

Taking the achievements of PRME into account, there is still a long way to go before responsible management education is the mainstream approach in business schools worldwide. While some incentive structures for systemic change are now in place (such as new accreditation standards by EFMD and AACSB on responsibility issues), more attention will need to be given to enhancing the impact of PRME. For this reason, Regional Meetings such as the one convened at IILM as well as continued engagement are remain vital to embedding and spreading the values of PRME.

Management & Change, Volume 18, Number 1 (2014)

SUSTAINABILITY IN BUSINESS: MOVING BEYOND NARROW EFFORTS AND INTEGRATING SUSTAINABILITY INTO THE BUSINESS CURRICULUM

Dr. Gurram Gopal1 Organizations, whether they are for-profit or not for profit, are facing increasing pressure to be socially responsible and ensure sustainable use of resources in their activities. Consequently business schools, which are responsible for educating the managers of the future, are experimenting with various ways of incorporating sustainability into their programs. This paper presents a review of the literature on the teaching of sustainability in the business school curriculum. This review reveals a glaring lack of focus on this subject. While sustainability concepts like the triple bottom line of people, profits and planet have been developed over the past fifteen years, they have not been broadly adopted across business disciplines. Efforts in integrating sustainability concepts into specific courses within disciplines are reviewed in this paper. Also examined is the literature on the tools used to teach sustainability and the assessment of their effectiveness. This paper also outlines a conceptual framework for incorporating sustainability into business education. INTRODUCTION Corporate Social Responsibility (CSR) and Sustainability are becoming increasingly important for business managers, as evidenced by the CSR principles stated visibly on organizations’ websites. Press reports alleging “unsustainable” business practices of leading global firms like Apple Inc. have drawn greater attention to the need for managers to be sensitive to sustainable growth. Apple’s managers received criticism for poor environmental and labor management for more than a decade. Recently, its Chief Executive Officer, Tim Cook, stated that there are many things 1

Associate Professor, Elmhurst College, Illinois - 60126, USA. E-mail: ggopal@elmhurst.edu Phone: 630-617-3108

4 Sustainability in Business: Moving Beyond ...

Apple does because they are right and just, and that a return on investment (ROI) was not always the primary consideration. He referred to projects dealing with environmental issues, worker safety and accessibility as examples of company’s commitment to corporate responsibility. He further stated that investors who wanted Apple to focus only on financial ROI should take their portfolios elsewhere (Price, 2014). Organizations are also realizing that environmental and social problems can hamper economic growth. At a basic level, business activities take inputs and convert them to “value-added” outputs. Firms attempt to capture a part of this added value from the customer through an exchange. The “resource view” implies that firms (and entities within firms) are competing for limited and sometimes dwindling resources. Rex, in his 2011 article in Business Week titled “Sustainability Comes to European BSchools” states that senior business executives once considered world’s resources to be limitless waiting to be exploited. Now, according to Paul Kleindorfer, Professor of Sustainable Development at INSEAD, “the reality is we must look at the world through the lens of scarcity.” He states that business risk has moved beyond employment or product-related hazards to include potential threats to the supply chain like bioterrorism and global warming. The challenges posed by limited supplies of raw materials like metals and petroleum and increasing need for food and water are compounded by the need to constrain greenhouse gases emissions. Rex also notes that climate change and the welfare of factory workers 10,000 miles away are now part of the risk pool. The 2013 report of the Intergovernmental Panel on Climate Change (AR5 Working Group I) reports that “human influence has been detected in warming of the atmosphere and the ocean, in changes in the global water cycle, in reductions in snow and ice, in global mean sea level rise, and in changes in some climate extremes…” It further notes that “it is extremely likely that human influence has been the dominant cause of the observed warming since the mid-20th century.” According to IPCC’s report, more emissions of greenhouse gases will cause further warming and will affect all components of the climate system. Limiting climate change will require substantial and sustained reductions of greenhouse gas emissions. The IPCC’s 2007 Report estimated that between 75 million and 250 million Africans will be exposed to increased water stress due to climate change (IPCC, 2007, p. 13). The report also states that many European regions can be significantly impacted Management & Change, Volume 18, Number 1 (2014)

Dr. Gurram Gopal 5

by climate change and that this can severely challenge growth. Underscoring the importance of the issue, United Nations issued a declaration calling for the Decade of Education for Sustainable Development (2005-2014; UNESCO, 2004). WHAT IS SUSTAINABILITY? The 1987 Brundtland Report, Our Common Future (World Commission on Environment and Development, 1987) defines sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. The Brundtland Report also presented a framework for addressing ways of protecting the Earth’s ecosystems while taking into consideration economic and social justice concerns. The concept of sustainability involves the integration of social and environmental factors with economic considerations (Beyond Grey Pinstripes, 2001). According to UNESCO (2008) sustainability education encompasses three major dimensions: economic, social, and environmental. Bonnet et al., (2006) assert that the focus has also shifted from environmental management and regulatory compliance to sustainability, pro-activeness and environmental leadership. Underlying the broad concept of sustainability is the notion that organizations need to focus on the value they add or destroy in environmental and social areas, in addition to the economic value they generate. This concept has been called the Triple Bottom Line (Savitz & Weber, 2006) and has also been referred to as the People, Planet and Profit, or the 3P bottom line (Elkington, 1997). CHALLENGES IN INCORPORATING SUSTAINABILITY INTO BUSINESS EDUCATION The higher education sector, especially the business schools, is important in dealing with the challenges of unsustainable growth but embedding sustainability in universities has proved to be challenging. In the view of Segovia and Galang (2002) a university provides an environment for critical analyses of the actions of government or business. They also state that Academia has “social acceptability, technical credibility and the moral ascendancy” to advance Sustainable Development (SD). According to

Management & Change, Volume 18, Number 1 (2014)

6 Sustainability in Business: Moving Beyond ...

Marshall et al., (2010) the age of sustainability requires academia to examine and transform how and what it teaches. While business education has a key role to play in the shift toward sustainability, the authors regret that many business schools worldwide have little apparent motivation to change as demand for business degrees continues to grow and the endowment funds continue to be generated by wealthy alumni. Despite the criticism of management education (Mintzberg & Gosling, 2002, and Pfeffer & Fong,2002), there is seemingly little incentive to transform business schools and redesign their curricula (Marshall et al., 2010). As the visibility of sustainability has increased, universities around the world are feeling the pressure to create business curricula that trains managers to focus not exclusively on maximizing short-term returns to shareholders but also to consider sustainable use of resources in decision making. Bonn and Fisher (2011) studied business curricula in Australia and reported that “23 out of 40 universities (or 57.5%) did not include the term sustainability in any of their business / management course or subject information.” They concluded that business sustainability has a low profile in over half of Australian universities’ business/management courses. They also found that 17 universities (42.5%) addressed sustainability in their courses but did so, in most cases, only within a single functional area or context (e.g. Marketing or Tourism) and that only seven (14.58%) of the 48 identified courses included a core subject that mentioned sustainability in either the title or description. Petocz and Dixon (2011) argue that “the traditional focus in university learning on epistemology – what a student comes to know – is not enough when considering the development of dispositions such as sustainability and ethics: the ontological dimension – who a student is and who they are becoming – is also needed.” This is important because the common world-view of business, the “neo-classical economic paradigm” (Stubbs & Cocklin, 2008) with the emphasis on current economic growth might run counter to longer-term sustainability. While universities highlight the benefits of education such as status, earning power and access to desirable jobs, it is important to produce graduates who understand their social responsibilities and hold high standards of ethical behavior. A number of sustainability declarations beginning with the Talloires Declaration (AULSF,1990) call upon universities to embrace sustainability Management & Change, Volume 18, Number 1 (2014)

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(however defined) in their research, teaching and administrative operations (Johnston, 1995).Bonn and Fisher (2011) report that 14 of the universities in their study were institutional signatories to the Talloires Declaration as of July 2009 and have agreed to ‘create programs to develop the capability of university faculty to teach environmental literacy to all undergraduate, graduate, and professional students.’ More than 660 institutions have signed the American College and University Presidents’ Climate Commitment. Beyond Grey Pinstripes (2005), a biennial survey of business schools’ sustainability curricula, paints a more optimistic outlook, reporting that (a) 54% of the schools they surveyed (91) require one or more courses in ethics, corporate social responsibility, sustainability, or business and society (many of these courses may discuss ethics but not the wider concept of sustainability) and (b) students at the top 30 schools are exposed to social and environmental issues in roughly 25% of their core coursework (vs. only 8% of students at the remaining schools). However, the data suffers from self-selection bias as the business schools with courses that address some aspect of sustainability are more likely to respond to the survey. Christensen et al., (2007) conducted a survey of business school deans in the top 50 global business schools (as identified in Financial Times) and reported that an increasing number of schools were offering sustainabilityrelated courses. A growing number of students are expressing interest in learning more about the role of sustainability in business decision-making (Christensen et al., 2007). Sleeper et al., (2006) conducted a survey of 851 undergraduate and graduate students and found that a substantial sample of business students reacted very positively to business school education on corporate conduct affecting social issues. Docksai (2010) reports that “more than 80% of undergraduate students surveyed jointly by nonprofits Net Impact and the Aspen Institute said that they want more sustainability and corporate responsibility material in their curricula. Only 23% said they were satisfied with the quantity of material that their schools currently offer.” Yen-Chun Jim et al., (2010) collected curriculum data from two leading global business school accreditation systems, The European Quality Management & Change, Volume 18, Number 1 (2014)

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Improvement System (EQUIS) and the Association to Advance Collegiate Schools of Business (AACSB) and found a “distinct overall trend of business schools to encourage more sustainability-related curricula (Matten & Moon,2004; Christensen et al., 2007).” They note that business schools from Oceania and Europe are more active in offering sustainability-related courses than those of American business schools and that business schools from the EQUIS system (favor an approach in which their sustainabilityrelated curricula are offered as electives while AACSB schools favor a more mandated approach. Accredited schools from the AACSB system appear to believe that sustainability-related curriculum should be rooted at the undergraduate stage. Palma and Viacava (2011) studied 40 universities in Brazil and reported that “the inclusion of new courses that involve sustainability in business administration programs is still irregular and slow.” Only 13 (around 33 percent) offered courses related to the topic. Beyond the topic of sustainability, many authors including LukeaBhiwajee (2010) have emphasized the importance of including values in management education. INCORPORATING SUSTAINABILITY INTO A PROGRAM Efforts to include sustainability into the business education curriculum have focused primarily at a discipline-specific approach, at the course or module level. Some authors have argued for a more comprehensive approach to incorporating sustainability into the entire business curriculum. Uhl et al., (1996) argue that many university students graduate with only a rudimentary knowledge of Earth processes. They assert that “If U.S. universities are to truly fulfill their responsibilities of education, research, and leadership, they must (1) begin producing students who are ecologically literate and who understand both the demands and power of an active citizenry; (2) take a proactive role in convincing public and private sector funders to support research on pressing sustainability-linked issues; and (3) operate according to sustainable practices.” The authors propose that universities consider sustainability as the foundation for organizing undergraduate education. A core curriculum under the rubric Sustainable Society and Citizenship, consisting of a foundation course and a practicum, is studied in their paper. Management & Change, Volume 18, Number 1 (2014)

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McDemott and Tippins (2012) explore different methods of integrating sustainability in the curricula of business education at both graduate and undergraduate levels. They refer to the database on sustainability in business education created by the Association for the Advancement of Sustainability in Higher Education (AASHE). The framework of sustainability, as developed by AASHE, emphasizes three areas- integration of sustainability, the offer of disciple-specific courses and/or programs, and the offer of interdisciplinary courses. As of November 2013 AASHE listed 112 business programs (degree or certificate) in sustainability, including 27 MBA, 26 Graduate Certificates and 13 B.S. programs. According to Rex (2011) the new reality is increasingly reflected in curricula at European business schools like France’s INSEAD, the Rotterdam School of Management (RSM), and the Copenhagen Business School which have added courses on sustainability that are required of all students. Docksai (2010) describes the Certificate of Advanced Studies in Sustainable Enterprise offered by The Whitman School which students can earn by completing five courses dealing with the challenges faced by businesses that strive to practice social and environmental responsibility. In this program, faculty from Syracuse University and State University of New York (SUNY) jointly teach a course called “Managing Sustainability”. Barth and Timm (2011) use the Higher Education for Sustainable Development (HESD) approach with its emphasis on students’ development of transformation competencies. They examined undergraduate students’ view on the HESD approach at the Leuphana University of Lüneburg (Germany) and found that 75.4% of the undergraduate students indicated their commitment towards the Leuphana University study model. Simultaneously they showed a sophisticated understanding of the concept of sustainability and agreed with the associated values. Rusinko (2010) develops a holistic, matrix-based approach to integrating sustainability in management and business education. She compares the narrow, discipline-specific approach to sustainability (which results in addition of sustainability related content into existing courses) to a broad, cross-disciplinary approach which integrates sustainability into the common core and results in the creation of new cross-disciplinary courses, and specializations. Figure 1 shown below also integrates coManagement & Change, Volume 18, Number 1 (2014)

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curricular activities with the curricular in the development of a sustainability program in management and business education. Focus

Delivery Existing Structures

Narrow (Discipline-Specific) Curricular Co-Curricular Options Broad (Cross-Disciplinary) Curricular

New Structures

I. Integrate into existing II. Create new discipline course(s) course(s) specific sustainability

Service learning, Competitions, Commonexperiences, Clubs, Activities, Committees IIII. Integrate into common core requirements

IV. Create new, cross-disciplinary sustainability course(s), minor(s), major(s), program (s)

Figure 1: Matrix to Integrate Sustainability in Management and Business Education (Curricular & Co-Curricular Learning). Source: Rusinko (2010).

Goby (2012) discusses a third-year course in the penultimate year of a Bachelor of Science in Business Sciences Program with a group based assignment (study of the literature and website content analysis of CSR) followed by report and presentation. He finds that students show a substantial increase in their awareness of the value and practice of CSR. Kurland et. al (2010) discuss the process of the creation and teaching of a 15-week undergraduate course on sustainability at California State University Northridge by seven faculty members from different disciplines (family and consumer sciences, geography, management, political science, psychology, recreation and tourism, and urban studies). This course was expected to be a core course in a university-wide minor program in sustainability consisting of six courses (18 units). The authors note that to create these programs, it is best to â&#x20AC;&#x153;develop a course home separate from any one department, have access to a secure source of faculty compensation, have technology that allows faculty to share access to class lists and the like, have a pool of faculty willing to participate in any given semester, and ensure faculty explore their connections to make these intersections more alive for the students.â&#x20AC;?

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INCORPORATING SUSTAINABILITY INTO SPECIFIC DISCIPLINES As Rusinko (2010) and others point out, the majority of efforts in sustainability-related business education have focused on adding content to existing courses or modules within disciplines. The literature review revealed several examples of Marketing, Accounting and Economics faculty adding sustainability as an additional topic in their courses. Surprisingly, operations and supply chain management, which can significantly impact the carbon footprint of a firm, has not seen as much activity in the curriculum as would be expected. MARKETING Bridges and Wilhelm (2008) state the need for a “more sustainable marketing curriculum for the next generation of marketing students, one that reimagines the marketing profession and what it means to be a marketing educator.” This curriculum, in their view, should take a global view of sustainability and should teach students to make business decisions that are simultaneously “in the best long-run interests of customers, the environment (both ecological and social), as well as the firm’s interests and thus by extension, in the best interests of society.”Rundle-Thiele and Wymer (2010) analyze marketing programs in Australia and New Zealand and report that “only 27% of universities in Australia and New Zealand presently require marketing students to take a dedicated ethics, social responsibility, or sustainability course.” They suggest that requirements for ethics courses in non-accredited universities may be lower than in their accredited counterparts. ACCOUNTING Ostas and Loeb (2002) argue that accounting students, based on their analyses of case studies, tend to approach ethical issues from a perspective of legal requirements and focus on economic trade-offs. Undergraduates often use the terms soft, aspirational, vague, personal, and ‘of little importance’ when referring to ethical considerations. Ostas and Loeb speculate that teaching topics such as ethics and CSR to business students for whom scientific, numerate subjects such as economics, accounting,

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and finance predominate, will be challenging in that students may not be receptive to philosophical or abstract topics such as ethics. Collison et al., (2007) interviewed members of different European accounting associations (represented in the European Federation of Accountants) and concluded that social and environmental aspects are important for the profession and that many accountants and auditors underestimated their importance. They also determined that there is a need to emphasize education in these areas. Mangion (2006) presents twelve aspects for study in social and environmental accounting: environmental accounting – external reporting; environmental accounting – management systems; social accounting; theoretical frameworks in social and environmental accounting; sustainable development; social auditing; social financial reporting; non-financial reporting ethical reporting; human rights accounting; history of social and environmental accounting, and international comparative reporting on social and environmental accounting. The 45 teaching hours for the “Environmental Accounting” course are divided into bi-weekly ninety minute sessions for fifteen weeks. Seven master class sessions, ten assignments and three activities that focus on business practice are given throughout the course. The eight teaching methods listed by McPhail (2001) - interdisciplinary focus, group learning, real life case studies, role play, films, literature, personal experiences and timing are used to motivate change in students’ values. Coulson and Thomson (2006) describe the dialogic design of an honours level undergraduate degree course, Accounting and Sustainability. They note that the course was designed to introduce elements of dialogic education (Freire, 1970, Pedagogy of the Oppressed, London: Penguin) into the accounting curriculum and to make praxis an integral part of the students’ learning experience. The main component of the course was a large group collaborative project to produce a shadow account. Hazelton and Haigh (2010) chronicle the journey of two projects that sought to incorporate principles of sustainable development into predominantly technical postgraduate accounting curricula. The first author introduced sustainability-related material into a core technical accounting Management & Change, Volume 18, Number 1 (2014)

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unit and created an elective unit. The second author participated with students to evaluate critically social reports of employers, current and potential. Both projects were marked by some success, but efforts to create permanent curriculum change were hampered by the predominantly vocational orientation of student cohorts. In addition, the traditionally technical focus of the professional bodies and competing educational reform agendas (such as vocational skills) add to the difficulties for sustainability in penetrating already overcrowded curricula. ECONOMICS Maxfield (2011) observes that while the foundational role of economics in management education is generally accepted, economics content in business school curricula can vary widely. She notes that while MBA programs might require one or two courses in economics, these are often unpopular with students and the instructors are challenged to explain contemporary relevance of classic economic concepts. Maxfield suggests teaching important economic concepts through the lenses of corporate citizenship and sustainability (Figure 2). Using the theory of imperfect markets, an instructor can teach economics concepts applied to the field of corporate social responsibility, taking advantage of the popularity of CSR.

Figure 2: Aligning Economic Concepts, Social Issues, and CSR Management Practices Source: Maxfield (2011).

ENTREPRENEURSHIP This is another area that can benefit from incorporating sustainability into its curriculum, given the success of firms like Whole Foods and Honest Management & Change, Volume 18, Number 1 (2014)

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Tea, founded by entrepreneurs using sustainability as a core operating pillar of their firms. Bonnet et al., (2006) describe the process by which Delft University of Technology introduced a subject on sustainable entrepreneurship and technology in the programs of Chemical Engineering and Materials Sciences Engineering. They apply the triple P (People, Profit, Planet) framework to integrate of sustainability into the entrepreneurship course. Sustainability is embedded in all the key elements of the business plan, which the students develop as part of their project work. The authors demonstrate that entrepreneurship, sustainability and project education can be combined successfully in a subject for undergraduate students. OPERATIONS AND SUPPLY CHAIN MANAGEMENT The fields of operations management and supply chain management, with the constituent areas of procurement, manufacturing, logistics and distribution, provide rich opportunities to integrate sustainability concepts and the triple bottom line methodologies into the curriculum. However the academic literature is scant on this topic. Case studies that focus on sustainability concepts and the supply chain have been used in teaching operations management and supply chain courses, but there is a lack of published research focusing on integrating sustainability across the supply chain and operations management curricula. Godfrey and Manikas (2009), in an effort to emphasize sustainability in their Supply Chain & Operations Management curriculum, conducted a benchmarking study in 2008. They note that only one other program required a course in sustainability and no other programs required concepts of sustainability to be covered within their required courses. They also emphasize the value of experiential sustainability exercises in supply chain & operations management courses. Godfrey and Manikas, in their 2012 paper present an application of the analytic hierarchy process (AHP) in supplier selection, incorporating the triple bottom line and highlight the conflicting objectives faced by a purchasing manager. Fredriksson and Persson (2011) also highlight the lack of adequate coverage of sustainable development in Operations Management text books, and the disparity between teacher competence and curriculum needs in sustainable development. Goldschmidt et al., (2013) emphasize the role of procurement in teaching sustainability-related strategies. Instructors can use their own universities as examples in teaching students about sustainable procurement. Management & Change, Volume 18, Number 1 (2014)

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The topic of sustainable supply chains is of increasing importance to the private sector and companies have been taking initiatives to promote this topic in the curriculum. The article, Sustainability Challenge (2011) describes the efforts of Xpedx (a business to business distributor of packaging, facility and printing supplies and equipment) which held a nationwide competition among student members of Net Impact to develop a sustainability survey and scorecard for its supply chain. A team of students in the MBA program at the University of Michigan submitted the winning entry. Corns & Mayer (2010) in their paper, â&#x20AC;&#x153;Logistics, sustainability and educationâ&#x20AC;? promote collaboration between academia, industry, and students in developing both curricular content and work placement experiences. Such efforts can lead to the development of technically competent professionals and managers who can deal with the challenges in reducing the dependency on carbon-based globalized supply chains. METHODS AND TOOLS FOR TEACHING SUSTAINABILITY Heuer (2010) evaluates the use of simulations involving sustainability and finds them valuable since there is uncertainty about the meaning of sustainability and how it connects to management theories such as the theory of competitive advantage. It also helps students understand how sustainability should be implemented in the business environment. Clemens and Curt (2010) suggest that the sustainability landscape is ripe for integrating film into the classroom discussions on sustainability. They examine the main challenges for educators in using films: finding works that advance course learning objectives, selecting movies that are germane to the course/topic and which resonate with students; and managing the screening logistics in the classroom. A list of movies is also provided for use in the classroom. Audebrand (2010) stresses the importance of metaphors to the way we act, interact, and think about the world. He asserts that while various metaphors have come and gone over the years, the war metaphor still guides strategic management theory, research, and education. He provides insights into how new metaphors can be created, assessed, and promoted to establish sustainability as a framework for strategic management education. Management & Change, Volume 18, Number 1 (2014)

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Shrivastava, P. (2010) asserts that managing business activities sustainably requires students to develop a passion for sustainability. He stresses a holistic pedagogy that integrates physical and emotional or spiritual learning with traditional cognitive (intellectual) learning about sustainable management. He outlines a prototype course design on managing with passion for sustainability Brower, H. (2011) suggests that the complexity of the issues of sustainability is best addressed using a service-learning pedagogical approach and illustrates it with a business elective about sustainable community development in a third world country involving a one-month travel and service-learning methodology. He presents a framework which combines the characteristics of sustainable community development that may be used in developing similar courses. Active learning can play an important role in introducing education for sustainability into business-related degree programs, according to MacVaugh and Norton (2012). They describe the development and implementation of education for sustainability within their programs applying the principles of active learning along with problem-based learning. Their findings suggest that active learning enables learners to move away from “dependence on (possibly illegitimate and unprepared) educators and towards a personal responsibility approach.” Denbo (2008) analyses Rider University’s interdisciplinary ‘‘businessscience’’ courses with a travel component, which are designed to allow undergraduate science and liberal arts students and undergraduate and graduate business students to not only study, but also experience, the complex interaction of legal, economic, social, and environmental factors in an international setting. These courses are part of the interdisciplinary Nature’s Business program which aims to educate business and liberal arts students on international business and cultural and biological diversity. The program exposes students to corporate social responsibility, environmental law, sustainable business practices, ecotourism, and selected biodiversity topics. The travel course enables students to experience these subjects during a short-term study tour outside of the United States.

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A UNIFIED FRAMEWORK FOR INCORPORATING SUSTAINABILITY INTO BUSINESS EDUCATION It is clear that for business education to meet the needs of organizations and of society at large, sustainability has to be woven into the curriculum, it has to be cross-disciplinary, and students have to “experience” it. Since 2007, this author has taught a course titled “Local Choices, Global Effects” in partnership with the Dean of Residence Life at Elmhurst College. The Dean, with her background in Educational Psychology, brought the cocurricular aspect of sustainability into the course. Over a period of seven years we have experimented with several topics and approaches, and used hands-on activities like a “waste audit” and organizing a recycling event for the community, to teach principles of sustainability in business (Gopal and Smith, 2010). Based on our experiences, we have proposed the following framework (Figure 3) for a holistic, integrated development of a business student educated on the importance of Environmental (E), Social (S), and Corporate Governance (G) in sustainable business management.

E= Environmental; S = Social; G= Governance Figure 3: Framework for Integrating Sustainability in Business Education

In this framework, students are exposed to sustainability through personal and experiential development as part of a first year program. An introductory seminar course in the first term or year provides a good opportunity to educate students on the broad concepts of sustainability and the need for all business functions to manage sustainably. As students progress through the business core curriculum, courses in all major fields can be supplemented with visits to companies and other organizations that Management & Change, Volume 18, Number 1 (2014)

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are successful and are leaders in sustainability. Guest lectures by business leaders, with a mix of senior and younger managers, can significantly enhance the importance of sustainable management to students. As students progress through their disciplines, their courses should have increasing levels of integration using sustainability as a common element. Furthermore, students should be required to have a mix of field experiences that incorporate sustainable management, including properly designed internships, study abroad and travel experiences. The integration of the â&#x20AC;&#x153;out of classroomâ&#x20AC;? experiences with in-class or online coursework can result in significantly better educated students. We have begun our journey using this framework recently, and further research and development of unified frameworks can aid in the development of business programs that generate the kind of leaders that are needed for a sustainable future. CONCLUSIONS All business disciplines, including professional areas requiring certification like accounting, are incorporating sustainability into their curricula. Each discipline could benefit by having a set of resources on sustainability that is easily accessible to all educators. Further, sustainability can promote inter-disciplinary teaching within the business field, and this area is open for experimentation. Incorporating co-curricular activities and field experiences and internships related to sustainability into the business curriculum should also be explored. Frameworks for creating an integrated business school experience which produces sustainabilityconscious managers, like the one proposed in this paper, should be developed and analyzed. All organizations irrespective of size and whether they are for profit or not for profit, need managers who take into account the people and the planet, in addition to profits, in decision-making. The responsibility is on business schools to produce such leaders. REFERENCES Audebrand, L. K. (2010). Sustainability in Strategic Management Education: The Quest for New Root Metaphors. Academy of Management Learning & Education, 9(3), 413-428. Association of University Leaders for a Sustainable Future (AULSF). (1990).The Talloires Declaration: University Presidents for a Management & Change, Volume 18, Number 1 (2014)

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Sustainable Future (Winnipeg, International Institute for Sustainable Development).Available at http://www.iisd.org/educate/declarat/ talloire.htm (accessed 17 May 2005). Barth, M., & Timm, J. M. (2011). Higher Education for Sustainable Development: Students’ Perspectives on an Innovative Approach to Educational Change. Journal of Social Sciences, 7(1), 13-23. Beyond grey pinstripes: Preparing MBAs for social and environmental stewardship. 2001. World Resources Institute and the Aspen Institute Initiative for Social Innovation Through Business. Bonn, I., & Fisher, J. (2011). Sustainability: the missing ingredient in strategy. Journal of Business Strategy, 32(1), 5-14. Bonnet, H., Quist, J., Hoogwater, D., Spaans J. and Wehrmann, C. (2006). Teaching sustainable entrepreneurship to engineering students: the case of Delft University of Technology. European Journal of Engineering Education, 31 (2), 155–167. Bridges, C. M., & Wilhelm, W. (2008). Going Beyond Green: The “Why and How” of Integrating Sustainability Into the Marketing Curriculum. Journal of Marketing Education, 30(1), 33-46. Brower, H. H. (2011). Sustainable Development Through Service Learning: A Pedagogical Framework and Case Example in a Third World Context. Academy of Management Learning & Education, 10(1), 58-76. Christensen, L., Peirce, E., Hartman, L., Hoffman, W. W., & Carrier, J. (2007). Ethics, CSR, and Sustainability Education in the Financial Times Top 50 Global Business Schools: Baseline Data and Future Research Directions. Journal of Business Ethics, 73(4), 347-368. Clemens, B., & Curt, H. (2010). Classroom as Cinema: Using Film to Teach Sustainability. Academy of Management Learning & Education, 9(3), 561-563.

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Collison, D., Ferguson, J. & Stevenson, L. (2007).Sustainability accounting education. In Unerman, J., Bebbington, J. & O’Dwyer, B. (Eds.), Sustainability Accounting and Accountability (327-344). London and New York: Routledge. Corns, C., & Mayer, R. (2010).Logistics, sustainability and education. Logistics & Transport Focus, 12(3), 32-35. Coulson, A., & Thomson, I. (2006).Accounting and sustainability, encouraging a dialogical approach; integrating learning activities, delivery mechanisms and assessment strategies. Accounting Education, 15(3), 261-273. Denbo, S. M. (2008). Nature’s Business: Incorporating Global Studies, Environmental Law and Literacy, and Corporate Social Responsibility into the Business School Curriculum Through Interdisciplinary “Business-Science” Study Tour Courses. Journal of Legal Studies Education, 25(2), 215-240. Docksai, R. (2010). A New Generation of Business Leaders. Futurist, 44(4), 12-14. Fredriksson, P., & Persson, M. (2011).Integrating sustainable development into operations management courses. International Journal Of Sustainability In Higher Education, 12(3), 236-249. Goby, V., & Nickerson, C. (2012). Introducing Ethics and Corporate Social Responsibility at Undergraduate Level in the United Arab Emirates: An Experiential Exercise on Website Communication. Journal of Business Ethics, 107(2), 103-109. Godfrey, M., & Manikas, A. (2012). Integrating Triple Bottom Line Sustainability Concepts Into A Supplier Selection Exercise. Business Education & Accreditation, 4(1), 1-12. Godfrey, M., & Manikas, A. (2009). Revising A Supply Chain Curriculum With An Emphasis On The Triple Bottom Line. Business Education & Accreditation, 1(1), 45-54.

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Goldschmidt, K., Harrison, T., Holtry, M., & Reeh, J. (2013). Sustainable Procurement: Integrating Classroom Learning with University Sustainability Programs. Decision Sciences Journal Of Innovative Education, 11(3), 279-294. Gopal, G., and Smith, C. (2010).”Enabling First-Year Students to Achieve Academic and Social Goals through a Project-Based Course.”ESource for College Transitions. National Resource Center for the First-Year Experience and Students in Transition (NRC), 7(5), 6-9. Hazelton, J., & Haigh, M. (2010).Incorporating Sustainability into Accounting Curricula: Lessons Learnt From an Action Research Study. Accounting Education, 19(1/2), 159-178. Heuer, M. (2010). Foundations and Capstone; Core Values and Hot Topics; Ethics-LX; SkyTech; and The Green Business Laboratory: Simulations for Sustainability Education. Academy of Management Learning & Education, 9(3), 556-561. Intergovernmental Panel on Climate Change (IPCC) (2007) Summary for policymakers, in M. L. Parry C et al., (Eds) Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, pp. 7–22 (Cambridge, Cambridge University Press). Johnston, D. (1995). Declarations for Sustainable Development: The Response of Universities. Winnipeg: International Institute for Sustainable Development. Available at http://www.iisd.org/educate/ declare.htm (accessed April 15, 2014). Kurland, N. B., Michaud, K. H., Best, M., Wohldmann, E., Cox, H., Pontikis, K., & Vasishth, A. (2010).Overcoming Silos: The Role of an Interdisciplinary Course in Shaping a Sustainability Network. Academy of Management Learning & Education, 9(3), 457-476.

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Lukea-Bhiwajee, S. D. (2010). Reiterating the Importance of Values in Management Education Curriculum. International Journal of Interdisciplinary Social Sciences, 5(4), 229-240. MacVaugh, J., & Norton, M. (2012).Introducing sustainability into business education contexts using active learning. International Journal of Sustainability In Higher Education, 13(1), 72-87. Mangion, D. (2006). Undergraduate education in social and environmental accounting in Australian Universities. Accounting Education: An International Journal, 15(3), 335-348. Marshall, S., Vaiman, V., Napier, N., Taylor, S., Haslberger, A., & Andersen, T. (2010). The End of a “Period”: Sustainability and the Questioning Attitude. Academy of Management Learning & Education, 9(3), 477-487. Maxfield, S. (2011).Teaching Economics to Business Students through the Lens of Corporate Social Responsibility and Sustainability. Journal of Economic Education, 42(1), 60-69. McDemott, M., & Tippins, S. (2012). Sustainability in the Undergraduate Business School Curriculum. Insights To A Changing World Journal, (9), 103-114. McPhail, K. (2001). The other objective of ethics education: re-humanising the accounting profession – a study of ethics education in Law, Engineering, Medicine and Accountancy. Journal of Business Ethics, 34(3/4), 279-298. Ostas, D.T., & Loeb, S.E. (2002).Teaching corporate social responsibility in business law and business ethics classrooms. Journal of Legal Studies Education, 20, 61–88. Owens, D. (1998). From the Business Ethics Course to the Sustainable Curriculum. Journal of Business Ethics, 17(15). Palma, L., Oliveira, L., & Viacava, K. R. (2011).Sustainability in Brazilian federal universities. International Journal of Sustainability In Higher Education,12(3), 250-258. Management & Change, Volume 18, Number 1 (2014)

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Petocz, P., and Dixon, P. (2011).Sustainability and Ethics: Graduate Dispositions in Business Education. Asian Social Science, 7(4), 18– 25. Price, D. (2014). Green Apple: Why Apple was bad for the environment (and why that’s changing). MacWorld UK. Rex, E. (2011). Sustainability Comes to European B-Schools. Businessweek.Com. Rundle-Thiele, S. R., & Wymer, W. (2010). Stand-Alone Ethics, Social Responsibility, and Sustainability Course Requirements : A Snapshot From Australia and New Zealand. Journal of Marketing Education, 32(1), 5-12. Rusinko, C. A. (2010). Integrating Sustainability in Management and Business Education: A Matrix Approach. Academy of Management Learning & Education, 9(3), 507-519. Savitz, A. W., & Weber, K. (2006). The triple bottom line: How today’s best-run companies are achieving economic, social and environmental success—And how you can too. New York: John Wiley. Segovia, V. M, and Galang, A .P. (2002) Sustainable development in higher education in the Philippines: The case of Miriam College, International Journal of Sustainability in Higher Education, 3(3), 288–296. Sleeper, B.J., Schneider, K.C., Weber, P.S., and Weber, J.E. (2006).Scale and Study of Student Attitudes toward Business Education’s Role in Addressing Social Issues. Journal of Business Ethics, 68(4), 381391. Shrivastava, P. (2010). Pedagogy of Passion for Sustainability. Academy of Management Learning & Education, 9(3), 443-455. Stubbs, W., & Cocklin, C. (2008). Conceptualizing a “Sustainability Business Model.”Organization & Environment, 21(2), 103-127.

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Sustainability Challenge.(2011). American School & University, 83(7), 46. Uhl, C., Kulakowski, D., Gerwing, J., Brown, M., and Cochrane, M. (1996). Sustainability: A Touchstone Concept for University Operations, Education, and Research. Conservation Biology ,10(5), 1308-1311. UNESCO.(2004). United Nations decade of education for sustainable development. Retrieved March 13, 2007, from http:// portal.unesco.org/education/en/en/ World Commission on Environment and Development (1987).Our common future (the Brundtland Report).Oxford: University Press. Yen-Chun Jim, W., Shihping, H., Lopin, K., & Wen-Hsiung, W. (2010). Management Education for Sustainability: A Web-Based Content Analysis.Academy of Management Learning & Education, 9(3), 520531.

Management & Change, Volume 18, Number 1 (2014)

ROLE OF CORPORATE CITIZENSHIP IN ACHIEVING MDGS: A STUDY ON THE ASIAN COUNTRIES Sudipta Mondal1

Prof. Santanu Kumar Ghosh1

Since the inception of UNGC, large number of business firms have joined, which are suppose to make significant contribution to fulfill the targeted goals of MDGs. Present study seeks to examine the role of selected Asian companies in achieving the said target over the periods. Content analysis method has been used to find out the extent of such contribution of the selected Asian companies for the period 2009-2012. The results are showing that Korean companies are contributing most significantly and the UAE companies have least contribution in support of MDGs. And, there is an increasing trend in the corporate social performances. The study also brings out the MDGs related performance of the UNGC member companies from the selected Asian countries. As the study has been conducted on the basis of publicly available reports for a relatively small period, a better result could be obtained by using observation for a longer period of time. Key Words: Corporate Citizenship, Sustainable Development, MDG, UNGC, CSR INTRODUCTION After the lapse of a decade since the inception of Millennium Development Goals (MDGs), though a significant part has been achieved, and a considerable amount still remains to be attended (MDG Report, 2012). Different socio-economic organizations (e.g., OHCHR, UNFIP, UNFCC etc.) have been formed by the United Nation (UN) for ensuring time based implementation and achievement of MDGs (MDG Gap Task Force Report, 2012). Governments of the member countries are regularly advised and 1

Research Scholar, The University Of Burdwan (Dept. of Commerce), Golapbug Campus, Burdwan (W.B.) - 713104, India.E-mail:monsudipta@gmail.com Phone: 91+ 9007599379 2 Professor, The University Of Burdwan (Dept. of Commerce), Golapbug Campus, Burdwan (W.B.) - 713104, India. E-mail: shantanu.kaizen@gmail.com Phone: 91+ 9434360561

26 Role of Corporate Citizenship in Achieving MDGs: ...

motivated to ensure timely achievement of the declared goals. In addition to this, United Nation has initiated a specific non-profit activity by the formation of United Nation Global Compact (UNGC) which includes both the business and non-business organizationsâ&#x20AC;&#x2122; voluntary participation. The member companies which have joined this initiative are supposed to perform their active citizenship role for the achievement of the goals. The concept of Corporate Citizenship (CC) activities is not new and has been considered by scholars from the mid of twentieth century. But since 1980s, it has gained more popularity among the scholars and companies. At the initial stage, the role of citizenship has been viewed in terms of the companiesâ&#x20AC;&#x2122; involvement in the matter of local community development (Crane, Matten and Moon, 2008; Valor, 2005). Thereafter, its domain has been enhanced to include the corporate rights equivalent to a person and the specific duties to be performed for the community (Waddell, 2000). But, during the last one decade, the corporate citizenship role has been extended towards the development of the natural and sociocultural environment (Crane, Matte and Moon, 2008). The UNGC has been formed to organize and mitigate all of these CC activities with a view to achieve the millennium development goals. After its inception in July, 2000, important issues namely human rights, social and environmental have been identified, which are said to be the outcome of rapid industrialization and failure of the economic as well as political systems around the globe (UNGC Annual Review, 2010). Under such a situation, therefore, business enterprises besides the governments of the member countries, have been appealed by the UNGC to take the responsibilities of citizens (corporate citizenship, CC) by means of following the appropriate principles identified by it. However, by following the UNGC, the companies are very much expected to perform CC more effectively through various internal and external activities by assigning utmost priority to the said principles. Till date the UNGC membership or signatories have gone up from only 47 in the year 2000 to more than 10000 during 2011-12. The member organizationsâ&#x20AC;&#x2122; performances are surveyed and reported through the Annual Review Reports of the UNGC. A study of such Annual Review for the year 2011 shows that the numbers of signatories are significantly increasing Management & Change, Volume 18, Number 1 (2014)

Sudipta Mondal, Prof. Santanu Kumar Ghosh 27

over the years. But, participation of the business organizations from the Asian and African regions is much lower than those from the other parts of the world. Moreover, 40% of the UNGC members from the said regions belong to the SME category. From the said review it also appears that regarding their support towards the fulfillment of the millennium development goals, most of the GC member companies are doing social investment in partnership with the NGOs and less emphasis has been given in the companyâ&#x20AC;&#x2122;s own activities with respect to the different non-financial issues. For example, in case of environment related targets, the companies are highly advocating, investing socially and even performing more environmental issue related activities by themselves, rather than limiting themselves by advocating and investing in NGOs. From the Annual Review Reports prepared by the UN and UNGC, it appears that a considerable part of the MDG is yet to be achieved (Bappenas, 2010; MDGs Annual Report, 2011 & 2012; Melamed, 2012; Preuss & Barkemeyer, 2011). Also, it brings out the fact that corporate contribution towards achievement of the declared targets are not as per expectations. These review reports provide only an average global view of the CC initiatives. Again, rare studies can be found regarding the reality of the company CC performances (Mattern, Crane and Chapple, 2003) in support of the MDGs within the Asian region. As no such specific study is seen to have been performed regarding the actual progress of CC initiatives by companies operating in the Asian countries, (Banerjee, 2002; Hamann, 2007; Wang, Qin and Cui 2010), the present study seeks to address this issue. The study, against this objective, is expected to be of interest for academicians and policy makers, with the help of its two way contributions. The first is the use of a different method for measurement of social performances, and the second is to understand the trend in the social performances with respect to the MDGs. The rest of the paper has been divided into different sections. Section two provides a brief literature review and thereafter, the objective of the study has been mentioned in section three. This is followed by the specification of the methodology of the study. Analysis of empirical findings has been made in section five, while conclusion and recommendations have been treated in the section six. Management & Change, Volume 18, Number 1 (2014)

28 Role of Corporate Citizenship in Achieving MDGs: ...

LITERATURE REVIEW The Millennium Development Goals (MDGs) are a set of eight specific objectives for the betterment of the human conditions (Reddy & Heuty, 2004). Though some of these targeted objectives have been achieved significantly, some others like poverty reduction, environmental pollutions, corruption etc. are yet to be achieved (Antrobus, 2003; Bappenas, 2010; Cahyandito, 2011; MDGs Annual Report, 2011 & 2012). Beside governmental organizations, business units under the leadership of UNGC have been contributing towards such achievements. According to Asslander (2011) companies are a part of the society and therefore, they should act in such a way, as would be expected from a good citizen. A study report has been narrated by Nelson & Prescott (2008) about the rationale behind the CC activities and the means to perform CC activities through the normal courses of the companies’ performances. But, nothing has been mentioned regarding the measurement of the company’s performances to understand about the contribution of citizenship role played by the companies in the fulfillment of MDGs. Mattern et. al. (2003) have provided a different interpretation of CC role. They have argued that the company shares citizenship role with the government, if the government is unable to perform its duties properly. Also, they are in favour of differentiating between ‘corporate citizen’ and ‘good corporate citizen’ (Mattern, Crane and Chapple, 2003). But, the extent of the responsibility sharing as a corporate citizen and the measurement tools to distinguish corporate performance like a ‘citizen’ or ‘good citizen’ have not been mentioned specifically. Regarding the evaluation of CC role for the achievement of millennium development, Frynas (2005) has provided several examples of the selected oil companies operating in African region, which are reported to have performed social activities only for the purpose of their own benefits. According to him, several of the community initiatives taken by the oil companies have gone in vain (Frynas, 2005) due to multiple reasons. However, the author traced out the limitations behind the lower level of success of the social initiatives by the selected companies. According to this study, the contextual heterogeneity, miss-match between the corporate objectives and the national developmental objective etc. have contributed significantly to the poor performances in respect of corporate social objectives. In another study, Belal & Cooper (2011) have examined the Management & Change, Volume 18, Number 1 (2014)

Sudipta Mondal, Prof. Santanu Kumar Ghosh 29

CSR activities of Bangladeshi companies and found that the sample companies are almost at the zero level of disclosure about child labour, equal opportunity and poverty alleviation related issues. Through an interview of the senior managers, they have found that the reasons behind such non-disclosure of the above three issues are the lack of resources, profit motive of small investors, lack of legal requirement, lack of knowledge and the fear of bad publicity. Warnakulasooriya (2010) has conducted an interview method to study the CC role played by fifty Sri Lankan companies’. The study reports that most of the sample companies are significantly considering economic, labour and environmental issues in their policies; whereas the policies regarding child labour, equality, freedom of association and diversity related issues are being disclosed below the expected level. Noticeable is that the significant level has not been tested with its (policy’s) practical implications. Similarly, Ebner & Baumgartner (2006) have surveyed 95 Japanese, American, European and Austrian companies listed in Nikkei, DJSI, Eurostoxx50, ATX respectively to find out ‘how the sustainable development’ concept has been initiated by these companies. The findings show that the American companies are performing less ecological activities in comparison to the Japanese and European companies. On the contrary, the American companies are reported to have performed better in terms of social activities. The said study has identified a huge gap between the policies relating to the corporate social activities and their actual implementation by the selected firms. The gap between policy and its implication has been also considered by a study conducted by Edward & Tallontire (2009) in the form of CSR conceptualizations and its real impact on the community development. Based on some earlier studies (Fig, 2005; Blowfield & Murray, 2008), they have argued that only certification and standardization cannot provide real development. The development is possible by re-politicization of the CSR activities. Thus, from the above studies, it can be seen that there are some differences between the theoretical descriptions and the reality of corporate social responses. The studies also show that some uneven corporate contributions exist in the MDGs among the Asian countries (CSR Asia, September 2010; Bello, 2010; CSR Impact, 2012). But, it is not clear about how the UNGC member companies are contributing through CC activities? To find out a proper answer to these questions, there is a need Management & Change, Volume 18, Number 1 (2014)

30 Role of Corporate Citizenship in Achieving MDGs: ...

to know the reality of the companies’ social performances with respect to the role played as a citizen. Usually, the companies’ contributions towards society are published in several forms, such as Corporate Citizenship Report, Sustainability Report and Corporate Social Responsibility Report etc (GRI Reporting List-2012). These reports are generally prepared on the basis of some specified guidelines/standards prescribed by different organizations like UNGC, GRI, ISO and CEPAA etc. The reporting formats suggested by these are COP, G3.1 (current), ISO26000 and SA8000 (Morley, Balza and Zechnich, 2010; UNCTAD, 2012; Chatterji & David, 2005; Giannarakis, Litinas and Sariannidis, 2011). Though it is not mandatory on the part of the companies, many of them are seen to prepare CSR / Sustainability Reports voluntarily using any one or more of these guidelines (GRI Reporting List; CorporateRegister.com). Therefore, it is expected that a proper amount of relevant information regarding companies’ social contribution can be found through these social performance disclosures (Callan, 2012, Cahyandito, 2012). However, these social performance disclosures are being criticized by scholars for several reasons (Corporate Watch, 2006; Wang et. al., 2010). For example, the contribution of companies towards the society cannot be monitored properly due to subjectivity of information disclosed in the social performance reports. In relation to this, Dasgupta (2007) and Aryeetey et. al. (2012) have identified the causes behind this subjectivity as, the voluntariness of the CC activities and its disclosures and lack of companies’ accountability to any stakeholder etc. Again, there are some companies which are disclosing their social performances in quantitative form, but those are only related with the expenditure for the social causes (Callan, 2012). Chatterji & David (2005) have suggested that the effective evaluation of non-financial performance disclosure can be possible on the basis of the properties relating to reliability, comparability and validity. They have mentioned that the social performance disclosure lacks evaluation due to its heterogeneity from different perspectives and lack of proper standard selection on the basis of the above three properties. They have even criticized that the general survey literatures could not be able to reveal the reality of social Management & Change, Volume 18, Number 1 (2014)

Sudipta Mondal, Prof. Santanu Kumar Ghosh 31

performances as these lacks application of the three properties and improper responses (i.e., person specific responses/ subjective responses) from the company managers. Therefore, presentation of subjective information by the companies appears to be the main problem in evaluating their CC performance (UNDP, 2004; Iamandi & Filip, 2008; Lucci, 2012; Kosi, & Harazin, 2011). Hence, the present study seeks to evaluate the companiesâ&#x20AC;&#x2122; CC performance by a different method after specification of the following objectives. OBJECTIVES OF THE STUDY As per the descriptions in the forgoing sections, the scope of the present study is related with the comparative CC performance evaluation of the UNGC member companies, in achieving the said target of the MDGs. More specifically, the purpose of the present study is to examine the CC performances of the companies operating in the Asian countries, with the help of objectively/quantitatively disclosed social performances. In order to accomplish the above mentioned purpose, an attempt will be made to answer the following two specific questions: i)

What is the role of the sample firms belonging to a country in the Asia region?

ii)

What is the state of the issue specific performance of the selected companies operating in Asia?

RESEARCH METHODOLOGY For the achievement of the said objectives, the following methodology has been initiated with respect to the sample data, variables declaration and setup of the criteria to evaluate the study results. i)

Sample Data:

The sample data consists of the UNGC member companies, who have joined GC during 2001 to 2012 and operating in the selected Asian countries namely India, China, Japan, Korea, Bangladesh, Indonesia, Singapore and UAE. The UNGC list shows that there are 851 member companies, who have joined within 2001 to 2012 [Table 1]. Among these Management & Change, Volume 18, Number 1 (2014)

32 Role of Corporate Citizenship in Achieving MDGs: ...

851 companies, the UNGC has listed 594 companies as active and the remaining 257 have been considered as in-active [Table 2 & Table 3]. Table 1: Year wise total active and in-active UNGC member companies for the selected countries Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total Total

222 115

851

Active

125

594

Inactive

257

Table 2: Number of active member companies, who have joined since 2001 to 2012 -data taken on 10.11.13 Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total Country UAE

Sri Lanka

Singapore Korea

Indonesia Japan

1 1

China India

101

187

101

125

594

Bangladesh Total

Management & Change, Volume 18, Number 1 (2014)

4 75

Sudipta Mondal, Prof. Santanu Kumar Ghosh 33

Table 3: Number of in-active member companies, who have joined since 2001 to 2012 -data taken on 10.11.13 Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total

Country

UAE

Sri Lanka

Singapore

Korea

Indonesia

China

India

Bangladesh

107

Japan

Total

257

From the total active member companies, the final sample remains confined within 122 companies due to language related problem and inadequacy of disclosure (See the Table 4 for the number of selected sample companies and the causes behind the rejection of several sample companies from selected countries, like Bangladesh, Indonesia, UAE etc.). The published non-financial performance reports of the sample firms for the four years period (2009 to 2012) have been studied to collect necessary information for the present purpose.

Management & Change, Volume 18, Number 1 (2014)

34 Role of Corporate Citizenship in Achieving MDGs: ...

Table 4: The sample companies from the Asian countries (selection procedure with few examples) Country

Selected

Total Active

Remarks*

UAE

Indonesia

Bangladesh

Nothing found (14), no site found (2), marginal info with no time period (3) Nothing found (14), no site found (5), marginal info with no time period (5) Site problem (1), just narrated (2), nothing found (9)

Sri Lanka

Singapore

ii)

Just narrated (5), nothing found (6), marginal info with no time period (5), no site found (3) Just narrated (7), no site found (4), nothing found (10), marginal info with no time period (7)

India

Korea

101

China

101

Japan

187

*All the searches are through Google search engine.

Total

122

594

?Explanation about these countries is not possible here, due to the substantial no. of companies.

Method:

The companiesâ&#x20AC;&#x2122; social performances are measured on the basis of the GRI- G3 guidelines. Because, the Global Compact Practical Guide to Communication on Progress (COP-2008), the GC principles and GRI indicators are strongly associated (UNGC News on 13.06.2012) [Table 5]. Table 5: Relation between UNGC Principles & GRI Performance Indicators UNGC Principles GRI-Performance Indicators Principle-1 HR 1-9; EC 5; LA 4,6,7,8,9,13,14; SO 5; PR 1,2,8 Principle-2 HR 1-9; SO 5 Principle-3 LA 4,5; HR 1,2,3,5; SO 5 Principle-4 HR 1,2,3,7; SO 5 Principle-5 HR 1,2,3,6; SO 5 Principle-6 HR 2; LA 13,14; HR 1,2,3,4; EC 7; SO 5 Principle-7 EC 2; EN 18,26,30; SO 5 Principle-8 EN 1-30; SO 5; PR 3,4 Principle-9 EN 2,5,6,10,18,26,27,30; SO 5 Principle-10 SO 2-6 Source: COP Practical Guide- 2008 Management & Change, Volume 18, Number 1 (2014)

Sudipta Mondal, Prof. Santanu Kumar Ghosh 35

Again, it is also found that the most of the sample companies have a common match with the G3 guidelines, which could be helpful for the aggregated performance measurement of the companies, including the provision of comparability. Chatterji & David (2005) have said that the GRI based non-financial performance disclosure framework has less compliance cost with more reliability and comparability properties, which are very much essential for the evaluation of company social performances. However, the GRI-G3 reporting framework suggests 79 performance indicators reflecting the economic, environment and social issues. The indicator-wise performance is again divided on the basis of the nature (i.e. if indicator is only descriptive then as ‘subjective’ and if quantitative data are given for the activities then as ‘objective’) of the information disclosed in the report. From the total segregated social performances, the ‘subjective’ information are counted and taken together for each of the sample companies. Similarly, the total numbers of ‘objective’ information are counted. On the basis of this information, both ‘subjective’ and ‘objective’, the company specific CC performances as well as the country specific CC performances are measured, using the following variables: PTIi,j = Proportion of actual performance indicators, which have been disclosed against the targeted performance indicators for the ith issues of the jth company, where ‘i’ varies from 1 to 6 for the issues. The issues are Economic, Environmental, Labour, Human Rights, Social and Product Responsibility. The ‘j’ indicates a sample company. And, ‘T’ means ‘Total’ or ‘Overall’, i.e. both the ‘subjectively’ and ‘objectively’ disclosed indicators. Now, indicates the total value of the proportional performance disclosure for six issues of the jth company. An average value of the (i.e., ACPTI c) has been calculated by

, where ‘n’ is the total number of Sample Company

in a specific country ‘c’. Another variable called as ‘IPTIi,N’, has been defined as the summation of an issue specific PTIi,j for the entire sample companies in the Asian region. Here, ‘N’ is the total number of sample companies in the Asian region. The above formulae are for the ‘overall’ social performance measurement purpose. But, to account for the ‘subjective’ and ‘objective’ Management & Change, Volume 18, Number 1 (2014)

36 Role of Corporate Citizenship in Achieving MDGs: ...

performances separately, ‘PTI’ is shown as ‘PSI’ and ‘POI’ respectively. By the consideration of ‘objectivity’ the reliability, comparability and validity of the social performances can be measured properly (Chatterji & David, 2005). Therefore, ‘objective’ information disclosure is believed to be more useful for measuring CC contribution of the companies. So, this decomposition of total/overall performance indicator (PTI) into ‘PSI’ and ‘POI’ would help the researcher to form appropriate idea about the role of the corporate in achieving the stated targets of MDGs. iii) Scope of Sustainability Performance and Expected Level of Disclosure: Following the GRI-G3 guidelines and considering the detail of the performance indicators, an expected level of performance can be set. For example, the Environmental issues are very much related with the mandatory legal requirement (For example, in India the Ministry of Corporate Affairs has issued green initiative Circular No. 17/2011 and 18/2011 dated 21st April, 2011 and 29th April, 2011 respectively), for which a high degree of performance and its ‘objective’ disclosure is expected. In the same way, due to the national and international labour laws (e.g. ILO specifications) require a high degree of performance disclosure in respect of labour related issues. The Economic issue includes donation, governmental acknowledgement regarding subsidies, supply chain support etc. and Product Responsibility issue includes quality improvement, care for customers, compliance of customer’s related rules etc. Regarding all of these Economic and Product related issues, business organization’s can be seen to have own interest for ensuring promotion and customers satisfactions (KPMG CSR Report, 2011). Therefore, a high degree of ‘objective’ performance disclosure is also expected. At last, an increasing trend in the level of performance disclosure is also expected for the Human Rights and Social issues, which are gaining its popularity over the years due to the human rights laws, propagation by the social activists etc. The companies are therefore, expected to follow the relevant rules in order to earn trust and support from the local community (Broomhill, 2007; Wilburn & Wilburn, 2011). Now, so far as country specific CC performance is concerned, an increasing trend in the performance disclosure (including ‘objectivity’) is also expected due to the recent prioritization of sustainable development by the national governments. However, considering the above methodology, Management & Change, Volume 18, Number 1 (2014)

38 Role of Corporate Citizenship in Achieving MDGs: ...

Table 6.1b: Change in ‘ACPTI’ from 2009 -2012

A higher rate of improvement in the CC performance can also be found among UAE, Singaporean and Japanese companies for 2009-10 [Table 6.1b]. Hence, a tendency of quick improvement in the CC performances can be seen here. In addition to this, there is continuous improvement in the CC performance for the period 2009-12, of the companies from UAE, Singapore, Sri Lanka and Bangladesh. But, in case of Chinese, Indian, Japanese and Korean companies, the CC performances are found to have decreased in 2010-11 [Shown by the ‘+’ or ‘-‘symbol]. As far as ‘subjective’ (ACPSI) CC performance disclosure is concerned, the first rank is held by Korean companies in 2009 and 2012 [Table 6.2a]. The companies from Sri Lanka have ranked first in 2010 and 2012 with respect to the ‘subjective’ performances (1.53 & 1.80 in 2010 & 2011 respectively). From the study it is also seen that except Sri Lankan companies, others have improved in the ‘subjective’ CC performance disclosure in 2011-2012 [Table 6.2b: ‘+’ symbol].

Management & Change, Volume 18, Number 1 (2014)

Sudipta Mondal, Prof. Santanu Kumar Ghosh 39

Table 6.2a: Country Rank by ‘ACPSI’ from 2009-2012 ACPSI

Score Rank 2009 2010 2011 2012 2009 2010 2011 2012 Bangladesh* 0.85 0.51 0.74 1.01 7 9 6 7 China 1.15 1.12 0.91 1.28 4 5 5 3 India 1.44 1.29 1.36 1.37 2 4 2 2 Indonesia* 1.44 0.94 0.45 0.98 3 6 9 8 Japan 0.85 1.30 0.95 1.26 6 3 4 5 Korea 1.47 1.37 1.32 1.42 1 2 3 1 Singapore 0.28 0.76 0.74 1.24 9 7 7 6 Sri Lanka 0.97 1.53 1.80 1.27 5 4 1 1 UAE 0.81 0.70 0.72 0.82 8 8 8 9 * Average of two to three company

Table 6.2b: Change in ‘ACPSI’ from 2009 -2012 ACPSI 09-10 10-11 11-12 Bangladesh* -39.52 43.94 35.81 China -2.66 -18.71 40.43 India -10.26 5.25 0.90 Indonesia* -34.99 -51.93 117.82 Japan 52.81 -26.86 33.08 Korea -6.57 -3.89 7.94 Singapore 171.08 -2.51 67.58 Sri Lanka 57.33 17.95 -29.33 UAE -13.58 2.86 13.48 * Average of two to three company

Sign 09-10 + + + -

Sign 10-11 + + + +

Sign 11-12 + + + + + + + +

Now, on the basis of ‘objectively’ (ACPOI) measured CC performance scores [Table 6.3a], Korean companies are consistently ranked first, which is followed by Indian, Chinese and Japanese companies. The UAE is ranked last, almost for the total sample period. But slight improvement in the rank can be found among the companies from Singapore, Sri Lanka, UAE and Bangladesh for the total sample period. Surprisingly, this improvement is not supported by the improvement in the ‘objectively’ disclosed CC performances, as the companies of Bangladesh, Management & Change, Volume 18, Number 1 (2014)

40 Role of Corporate Citizenship in Achieving MDGs: ...

Indonesia, Singapore, Sri Lanka and UAE are unable to improve their ACPOI score from 2009-2012 on a continuous basis [This is shown by the ‘-‘ symbol in the Table 6.3b]. Table 6.3a: Country Rank by ‘ACPOI’ from 2009-2012 ACPOI

Score 2009 2010 2011 Bangladesh* 0.54 1.02 1.19 China 1.83 1.98 2.17 India 1.76 2.56 2.34 Indonesia* 1.41 1.03 1.11 Japan 1.33 2.21 2.06 Korea 2.25 2.64 2.66 Singapore 1.20 1.58 1.81 Sri Lanka 0.87 1.85 1.62 UAE 0.21 1.00 1.01 * Average of two to three company

Rank 2012 2009 2010 2011 1.01 8 8 7 2.65 2 4 3 3.34 3 2 2 0.55 4 7 8 2.10 5 3 4 3.65 1 1 1 1.53 6 6 5 1.43 7 5 6 0.95 9 9 9

2012 7 3 2 9 4 1 5 6 8

Table 6.3b: Change in ‘ACPOI’ from 2009 -2012

ACPOI

Bangladesh*

09-10

10-11

89.48

16.3

11-12

15.46 China 8.10 9.70 22.12 India 45.5 -8.62 42.73 Indonesia* -26.67 7.36 50.61 Japan 65.87 -6.62 1.90 Korea 17.48 0.63 37.03 Singapore 31.48 14.72 15.69 Sri Lanka 112.52 -12.38 11.87 UAE 76.19 1.00 -6.41 * Average of two to three company Management & Change, Volume 18, Number 1 (2014)

Sign 11-12

Sign 1011 +

+ + -

+ +

+ + -

+ + +

+ +

+ + -

Sign 09-10

Sudipta Mondal, Prof. Santanu Kumar Ghosh 41

However, the extent and reality of CC performances are being checked in comparison with the maximum score of ‘6’, as stated earlier [Table 7.1a and Table 7.1b]. From the Table 7.1a, it can be seen that Korean companies ‘overall’ CC performance is 84.23% of the targeted score in 2012 and the same is around 62% to 66% for the period 2009 to 2011. Again, Korean companies are in the leading position to achieve the targeted social performances for the sample period, which is followed by Indian companies. Interestingly, Indonesian companies are seen to have been in the last position (25.43%) in 2012, which is also showing a decreasing trend in the achievement of the targeted CC performance. Now, assuming an increasing trend in the ‘overall’ social performance, it may be noted that the target has been achieved around 80% till 2012, since the inception of UNGC. But this achievement is observed only for two countries (Korea & India) among the nine sample countries. Table 7.1a: ACPTI as % of the Targeted Score ‘6’ Year Country 2009 2010 Bangladesh* 23.17 25.62 China 49.83 51.63 India 53.67 64.02 Indonesia* 47.67 33.20 Japan 36.33 58.29 Korea 62.00 66.94 Singapore 24.50 38.95 Sri Lanka 30.50 56.25 UAE 17.00 28.33 * Average of two to three company

2011 32.17 51.50 62.00 26.00 50.17 66.33 42.50 57.00 28.83

2012 33.45 65.63 78.24 25.43 56.07 84.23 46.10 45.00 29.37

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42 Role of Corporate Citizenship in Achieving MDGs: ...

Table 7.1b: ACPOI as % of the Targeted Score ‘6’ Year Country 2009 2010 2011 Bangladesh* 9.00 17.05 19.83 China 30.50 32.97 36.17 India 29.33 42.68 39.00 Indonesia* 23.50 17.23 18.50 Japan 22.17 36.77 34.33 Korea 37.50 44.05 44.33 Singapore 20.00 26.30 30.17 Sri Lanka 14.50 30.82 27.00 UAE 3.50 16.67 16.83 * Average of two to three company

2012 16.77 44.17 55.67 9.14 34.99 60.75 25.43 23.80 15.75

The proportions of ‘objectively’ disclosed CC performances against the targeted score have been presented in Table 7.1b. Here again it can be seen that Korean companies’ are in the first position with a continuous improvement in the ‘objective’ performance disclosure. It has also been found that Chinese companies have an increasing trend in rate of ‘objective’ performance score against the target. Poor performance can be seen from the companies of UAE, Bangladesh, Indonesia and Sri Lanka for the total sample period. Now, a relation (in %) between the ‘objective’ performance score and the ‘overall’ performance score has been considered in the Table 8. Here, it can be seen that Singaporean companies have higher rate of ‘objective’ disclosure against its ‘overall’ disclosed performances in the year 2009 to 2011. Korean companies are confined within 60% to 72% (approx.) of the ‘objectively’ disclosed social performances against its ‘overall’ performance for the total period. In addition to this, the highest rank in term of ‘objective’ performance disclosure has been occupied by the Korean companies in 2012; whereas other companies from different countries are disclosing their ‘objective-wise’ performances, around 50% (approx.), against their ‘overall’ performances. So, if objective reporting is considered as an indicator of reliability or transparency, among the reported performances reliability varies between 60%-72% (approx.) in case of Korea, which is the highest level among the total sample companies Management & Change, Volume 18, Number 1 (2014)

Sudipta Mondal, Prof. Santanu Kumar Ghosh 43

in 2012. For Singapore it varies from 68%-82% (approx.) in the year 2009 to 2011. Table 8: Proportion of ACPOI on ACPTI- by Country (%) Year Country 2009 2010 Bangladesh* 23.17 25.62 China 49.83 51.63 India 53.67 64.02 Indonesia* 47.67 33.20 Japan 36.33 58.29 Korea 62.00 66.94 Singapore 24.50 38.95 Sri Lanka 30.50 56.25 UAE 17.00 28.33 * Average of two to three company

2011 32.17 51.50 62.00 26.00 50.17 66.33 42.50 57.00

2012 33.45 65.63 78.24 25.43 56.07 84.23 46.10 45.00

28.83

29.37

In so far as the prioritization of any CC issue is concerned (as mentioned in the second objective of the study) [Table 9.1a to Table 9.3b]; the economic issue (EC) is found to have received the first rank on the basis of overall (IPTI) CC performance in the year 2009 [Table 9.1a]. However, labour issue (LA) occupies the first position from 2010 to 2012; whereas a decreasing trend in the rank of economic issue can be seen in 2010 and 2011 [Table 9.1a]. Table 9.1a: Issue Specific CC (IPTI ) performance, in Asia (Year 20092012) IPTI EC EN LA HR SO PR

2009 64.00 60.10 59.71 41.56 41.88 41.00

Actual Scores 2010 2011 2012 2009 54.00 70.22 77.33 1 45.87 71.47 75.70 2 54.86 72.64 84.64 3 38.22 50.11 55.44 5 51.75 62.75 74.00 4 45.67 51.56 67.00 6

Rank 2010 2011 2 3 4 2 1 1 6 6 3 4 5 5

2012 2 3 1 6 4 5

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44 Role of Corporate Citizenship in Achieving MDGs: ...

Table 9.1b: Change in Issue Specific CC (IPTI ) (Year 2009- 2012)

IPTI EC EN LA HR SO PR

2010 -15.63 -23.68 -8.13 -8.03 23.57 11.38

2011 30.04 55.82 32.42 31.10 21.26 12.91

2012 10.13 5.92 16.52 10.65 17.93 29.95

2010 5 6 4 3 1 2

2011 4 1 2 3 5 6

2012 5 6 3 4 2 1

Table 9.2a: Issue Specific CC (IPSI) performance, in Asia (Year 20092012) IPSI EC EN LA HR SO PR

2009 23.22 17.90 20.21 26.33 22.75 19.56

Actual Scores 2010 2011 18.22 19.56 12.57 15.00 16.71 19.57 19.11 26.22 18.00 24.38 20.11 23.89

2012 23.44 15.50 19.57 33.44 31.13 28.33

2009 2 6 4 1 3 5

Rank 2010 2011 3 5 6 6 5 4 2 1 4 2 1 3

2012 4 6 5 1 2 3

Table 9.2b: Change in Issue Specific CC (IPSI) (Year 2009- 2012) IPSI EC EN LA

2010 -21.52 -29.80 -17.30

2011 7.34 19.36 17.09

2012 19.86 3.33 0.01

2010 4 6 2

2011 6 3 5

2012 3 5 6

HR SO PR

-27.42 -20.88 2.82

37.20 35.44 18.79

27.55 27.67 18.6

5 3 1

1 2 4

2 1 4

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Table 9.3a: Issue Specific CC (IPOI ) performance, in Asia (Year 20092012) IPOI EC EN LA HR SO PR

2009 40.78 42.2 39.5 15.22 19.13 21.44

Actual Scores 2010 2011 36.00 51.00 33.23 56.5 38.64 52.93 19.11 23.33 33.75 38.5 25.67 27.89

2012 54.00 60.23 65.36 22.00 42.88 38.67

2009 2 1 3 6 5 4

Rank 2010 2011 2 3 4 1 2 1 6 6 3 4 5 5

2012 3 2 1 6 4 5

Table 9.3b: Change in Issue Specific CC (IPOI ) (Year 2009- 2012) IPOI EC EN LA HR SO PR

2010 -11.72 -21.25 -2.17 25.57 76.42 19.71

2011 41.67 70.01 36.97 22.08 14.07 8.66

2012 5.88 6.61 23.48 -5.70 11.36 38.64

2010 5 6 4 2 1 3

2011 2 1 3 4 5 6

2012 5 4 2 6 3 1

The environmental issue (EN) appears to remain confined around second and third positions, and lowest priority has been given to the human rights (HR) related issues over the sample period. But, it is also interesting to see that some considerable improvements have taken place in the social issue, environmental issue and product responsibility in the years 2010, 2011 and 2012 [Table 9.1b]. Specifically, a consistent improvement of almost 20% can be found in the social issue (SO) for the total sample period. In case of ‘subjectively’ (IPSI) disclosed CC performance [Table 9.2a], the human rights (HR) issue has been ranked first. The environmental issue (EN) has been least preferred in this respect. From Table 9.2b, ‘HR’ and ‘SO’ issues are found to have high rate of improvement in their ‘subjective’ disclosure. Now, on the basis of ‘objective’ (IPOI) performance disclosure [Table 9.3a], the environmental issue (EN) has received top priority (ranked one) in the year 2009 and 2011; whereas Management & Change, Volume 18, Number 1 (2014)

46 Role of Corporate Citizenship in Achieving MDGs: ...

‘HR’ issue has been ranked the lowest. Comparatively high rate of improvement in the ‘objectively’ disclosed social performances can be seen for the ‘SO’ issue in 2010, ‘EN’ issue in 2011 and ‘PR’ issue in 2012. It shows that priority among the CC activities has been shifted to public oriented issues (social performance) from economic issue (EC). However, in the years 2010 and 2012, labour issue is seen to have received the first rank in respect of ‘overall’ and ‘objectively’ disclosed CC performances [Table 9.1a and Table 9.3a]. As the labours are also a considerable part of community and customers, an indirect preference for the social issues can be found. On the whole, an increasing trend towards social issues can be seen from the companies’ CC performances. Hence, it can be concluded that the companies show an increasing trend in the matter of social performances over the year. CONCLUSION, RECOMMENDATIONS AND LIMITATIONS Considering the above findings it may be said that there is an increasing trend in the CC performance over the years. Consistently better performances are found from Korean, Indian, Japanese and Chinese companies and a tendency in the improvement of the CC performances have also found from most of the members companies. Emphasis is also given on the actual social activities (in terms of ‘objectively’ disclosed CC performances) by all the member companies. Among them Korean, Japanese, Indian, Chinese and Singapore companies are seen to have given more emphasis on the actual social contribution rather than on the policy reporting only. Again, the member companies have been found to emphasize more on social activities (in terms of ‘LA’, ‘SO’ & ‘PR’ issues) over the years, besides maintaining a high level of CC performances on the environment and economic issues. Another interesting observation is a parallel increase in the number of inactive member companies over the years in relation to the member companies joined from 2001 to 2012 [Figure 1]. It shows that the increase in the number of member companies is not effective enough and several companies are staying inactive even after joining UNGC.

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Figure 1: Year wise total active & in-active member of the selected Asian countries

Therefore, it can be concluded that most of the member companies are just performing their citizenship roles with marginal and negligible activities. The environmental performances are still in the driver seat over the other issues. In the starting of another decade of GC, the social issues have been preferred by the companies over other issues. Thus, it can be said that except for some selective countries (Korea, Japan, China & India) the overall CC role played by the other sample companies in Asian countries are not at its best. But at the same time, the citizenship role with respect to the social issues has been prioritized over the years, which is a positive effort for the balanced achievement of MDGs. A few recommendations can be made from this study. Asian companies should consider their role as â&#x20AC;&#x2DC;real citizen with sufficient governance (Aras & Crowther, 2009; Munoz, 2008; Zairi, 2000). Otherwise, achievement of the millennium targets may not be possible. The requirement of better governance for better CC is also opined by Mr. Thierry Buchs in the following statements: â&#x20AC;&#x153;Good corporate governance is the glue that holds together responsible business practices, which ensures positive workplace management, marketplace responsibility, environmental stewardship, community engagement, and sustained financial performance. This is even more true now as we work worldwide to restore confidence and promote economic growthâ&#x20AC;? (IFC Working Paper Series, 2009, Pg. 3). Management & Change, Volume 18, Number 1 (2014)

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In addition to the above, it is also necessary to change the corporate attitude of joining the Global Compact, where the member companies are not supposed to join UNGC, just for trust and reputation purpose but for social purpose as primary objective (UNGC Annual Review, 2012; KPMG Report, 2011; Frynas, 2005; Vogel, 2005). Another strategy can also be initiated for the members who are getting inactive without any valid reason. For example, stakeholders of the companies can be informed about its inactiveness, including the reason behind it or such inactiveness can be published in the public media. The results of the study could have been more conclusive with company data over longer periods. Some biasness may exist regarding the counting of performance indicators, where the companies are not mentioning their social performance in the prescribed format of the GRIG3 guidelines (e.g. most of the Japanese companies). REFERENCES Antrobus, P. (2003). Contextualizing the MDGs: MDGsâ&#x20AC;&#x201D;The Most Distracting Gimmick. The Aidtranperancy. 14-16. AsslĂ¤nder, M. S. (2011). Grundlagen der Wirtschafts- und Unternehmensethik. Marburg, Metropolis Verlag. Aras, G., & Crowther, D. (2009). Corporate Governance and Corporate Social Responsibility in Context. Global Perspectives on Corporate Governance and CSR, Gower Publishing Ltd. 1-41. Aryeetey, E.D., Esty, E., Feulner , T., Geiger & et al, (2012). Getting to Zero: Finishing the Job the MDGs Started. Paper presented in Global Agenda Council on Benchmarking Progress. 1-21. Banerjee, B.S. (2002). Contesting Corporate Sustainability and Stakeholder Theory: Holy Trinity or Praxis of Evil? Academy of Conference Presentation, Denver. Bappenas (Badan Perencanaan Pembangunan Nasional Indonesia/National Agency for Development Planning of the Republic of Indonesia) (2010). A Roadmap to Accelerate Achievement of the MDGs in Management & Change, Volume 18, Number 1 (2014)

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Indonesia. Document of National Agency of Development Planning of the Republic of Indonesia. Belal, A.R., & Cooper, S. (2011). The Absence of Corporate Social Reporting in Bangladesh. Critical Perspectives on Accounting, Elsevier. (in press) Bello, O. (2010). Are the Millennium Development Goals proving counterproductive? Fundación para las Relaciones Internacionales y el Diálogo Exterior (FRIDE). No., 53. Blowfield, M. & Murray, A. (2008). Corporate Responsibility: A Critical Introduction. Oxford University Press: Oxford. Broomhill, R. (2007). Corporate Social Responsibility: Key Issues and Debate. Dustan Paper, No.1/2007. Cahyandito, M. F. (2011). Accelerating the Achievement of MDGs through Corporate Social Responsibility: An Actual Discussion in Indonesia and Germany. Institute fur Forstokonomie,1-96. Cahyandito, M. F. (2012). Coupling Corporate Social Responsibility into MDGs is a Mere Wishful Thinking? Journal of Management and Sustainability. Vol. 2 (1), 67-74. Callan, M. (2012). What Do We Know about the Private Sector’s Contribution to Development? Development Policy Centre, Discussion Paper-11, January-2012,1-24. Chatterji, A., & David, L. (2005). Breaking Down the Wall of Codes: Evaluating Non-Financial Performance Measurement. Working paper Series. Center for Responsible Business. Crane, A., Matten, D., & Moon, J. (2008). The Emergence of Corporate Citizenship: Historical Development and Alternative Perspectives. Edward Elgar. USA. Hardi, P., Radacsi, G., & Schmitt, K., (2012). Evaluation of CSR Performances and Impact as Seen by Key Actors other than Business Management & Change, Volume 18, Number 1 (2014)

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(work package 1). CSR Impact. Seventh Framework Programme, 1-27. CSR Asia (2010). Sustainability in Asia: ESG Reporting Uncovered. Responsible Research Pvt Ltd. Issue- September, 2010. Dasgupta, A. (2007). Social Responsibility in India towards Global Compact Approach. International Journal of Social Economics (Emerald). Vol. 34 (9), 637-663. Ebner, D., & Baumgartner, R.J. (2006). The Relationship between Sustainable Development and Corporate Social Responsibility. Corporate Responsibility Research Conference, 4th-5th September, Dublin. Edward, P., & Tallontire, A. (2009). Business and Development: Towards Re-Politicization. Journal of International Development. Vol.21, 819-833. Frynas, J.G. (2005). The False Developmental Promise of Corporate Social Responsibility: Evidence from Multinational Oil Companies. International Affairs. Vol.81 (3), 581-593. Giannarakis, G., Litinas, N., & Sariannidis, N. (2011), Evaluation of Corporate Social Performance Standards. African Journal of Business Management. Vol. 5(17).7367-7374. GRI Reporting List (2012). Global Reporting Initiative List of Member Companies Reports Hamann, R. (2007). Is Corporate Citizenship Making a Differemce? Journal of Corporate Citizenship. Vol. (28), 15-29. Iamandi, I. E., & Filip, R. (2008). Instruments for Evaluating the Performance of CSR. The Romanian Case. The Romanian Economic Journal. Vol. 11 (27). IFC Working Paper, (2009). Corporate Governance: The Foundation for Corporate Citizenship and Sustainable Business. Brochure. Management & Change, Volume 18, Number 1 (2014)

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Kosi, K., & Harazin, P. (2011). Performance Evaluation Of Corporate Social Responsibility According to the Logic of ISO 26000 (guidance on social responsibility) standards. Regional and Business Studies. Vol. 3 (1), 739-749. KPMG CSR Report (2011). KPMG International Survey of Corporate Social Responsibility Reporting. Lucci, P. (2012). Post- 2015 MDGs: What Role for Business? Overseas Development Institute. Mattern, D., Crane, A., & Chapple, W. (2003). Behind the Mask: Revealing the True Face of Corporate Citizenship. Journal of Business Ethics. Vol. 45, 109-120. MDG Gap Task force Report (2012). The Global Partnership for Development: Making Rhetoric a Reality. UN. New York. MDG Report (2012). The Millennium development Goals Report 2012. UN (United Nation). New York. Melamed, C. (2012). Contexts, Politics and Processes for a Post-2015: Global Agreement on Development. Overseas Development Institute, UK, January- 2012. Morley, C.L., Balza, C.R., & Zechnich, D.W. (2010). Evaluating Corporate Social Responsibility/ Sustainable Development. IPPF Practice Guide, The Institute of Internal Auditor, February-2010. Munoz, E. (2008). The Millennium Development Goals: Facing Down Challenges. Briefing Paper, Bread for the World Institute. Vol. 2. (May), 2-6. Nelson, J. & Prescott, D. (2008). Business and the Millennium Development Goals: A Framework for Action. Ed. 2, UNDP, New York, 1-36.

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Preuss, L., & Barkemeyer, R. (2011). CSR Priorities of Emerging Economy Firms: Is Russia a Different Shape of BRIC. Corporate Governance (Emerald). Vol. 2 (4), 371-385. Reddy, S., & Heuty, A. (2004). Achieving the MDGs: a Critique and a Strategy. CIGI Dspace. The State of Corporate Citizenship. (2007). Time to Get Real: Closing the Gap Between Rhetoric and Reality. Center for Corporate Citizenship. Boston College. UNCTAD. (2012). Trade and Development Report, 1981-2011: Three Decades of Thinking Development. UN, Geneva. UNDP (2004). 2015: Mobilizing Global Partnerships: United Nation Development Programme Annual Report 2004. UN, New York. UNGC Annual Review (2010). United Nations Global Compact Annual Review- Anniversary Edition. June-2010, New York. Valor, C. (2005). Corporate Social Responsibility and Corporate Citizenship: Towards Corporate Accountability. Business & Society Review. Vol. 110 (2), 191-212. Vogel, D. (2005). The Market for Virtue: The Potential and Limits of Corporate Social Responsibility. The Brookings Institution Press, Washington. Waddell, S. (2000). New Institutions for the Practice of Corporate Citizenship: Historical, Intersectoral and Developmental Perspectives. Business & Society Review, Vol. 105 (1). 107-26. Wang, J., Qin, S. & Cui, Y. (2010). Problems and Prospects of CSR System Development in China. International Journal of Business and Management. Vol.5 (12).

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Warnakulasooriya, B.N.F. (2010). Survey on Corporate Social Responsibility in South Asia. South Asian Forum on Responsible Business, Bangladesh. Wilburn, K.M. & Wilburn, R. (2011). Achieving Social License to Operate: Using Stakeholder Theory. Journal of International Business Ethics, Vol.4 (2). Zairi, M. (2000). Social Responsibility and Impact on Society. The TQM Magazine. Vol. 12 (3), 172-178.

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ABBREVIATIONS CC

Corporate Citizenship

CEPAA

Council on Economic Priority Accreditation Agency

COP

Communication on Progress

CSR

Corporate Social Responsibility

DJSI

Dow Jones Sustainability Indices

FTSE

The Financial Times Stock Exchange

GRI

Global Reporting Initiative

ISO

International Standard Organization

KLD

Kinder, Lydenberg, Domini and Co.

MDGs

Millennium Development Goals

NGO

Non-Governmental Organization

OHCHR

Office of the High Commissioner for Human Rights

UNCTAD

United Nations Conference on Trade and Development

UNDP

United Nations Development Programme

UNFCC

United Nations Framework Convention on Climate Change

UNFIP

United Nations Funds for International Partnership

UNGC

United Nations Global Compact

Management & Change, Volume 18, Number 1 (2014)

ENVIRONMENTAL MANAGEMENT PLAN FOR SATELLITE TOWN OF GURGAON Deepak Malik1

Dr. Mukesh Saxena2

Dr. Niraj Sharma3

Like many other parts of the world, air pollution from motor vehicles is one of the most serious and rapidly growing problems in urban centers of India. Gurgaon, a satellite town in NCR, is also facing air pollution problem due to rapid urbanization. Significant quantities of air pollutants are emitted from the motor vehicles into the atmosphere causing serious environmental and health impacts. Hence, an effort has been made through this study by establishing a baseline traffic and transport scenario to understand its impact on Ambient Air Quality. Further, prediction of air concentrations of Carbon monoxide was done by using CALINE 4 model and sensitivity analysis was carried out on predicted concentrations with different combination of meteorological and traffic parameters. Based on the outcome of this study an Environmental Management Plan for Satellite town of Gurgaon has been suggested to policy makers for taking appropriate measures to address the problem. Key Words: Urbanization, Air Pollution, CALINE, Environmental Management Plan Transport affects the local and global environment in many ways and for a number of pollutants the road transport sector is one of the most significant contributors to environment externalities. Although, the significance of motor vehicle in overall socio economic development cannot be denied, but recently motor vehicles have been identified with various

Research Scholar, University of Petroleum and Energy Studies, Dehradun â&#x20AC;&#x201C; 248007, India. E-mail: mk24deepak@gmail.com 6 Professor, College of Engineering Studies, University of Petroleum and Energy Studies, Dehradun â&#x20AC;&#x201C; 248007, India. E-mail: msaxena@ddn.upes.ac.in Phone: 9897906297 7 Principal Scientist, Environmental Science Division, CSIR- Central Road Research Institute, New Delhi - 110025, India. E-mail: sharmaniraj1990@rediffmail.com Phone: 01126845943

56 Environmental Management Plan for Satellite Town of Gurgaon ...

environmental pollution problems. The analysis of global motor vehicular registration trends reveal that the global fleet has been growing linearly since 1970â&#x20AC;&#x2122;s and each year, for four decades, an additional 18 million motor vehicles have been added to world fleet. India also has experienced a tremendous increase in the total number of registered motor vehicles. The total number of registered motor vehicles increased from 0.3 million in 1951 to 142 million in 2011(MoRT&H, Year Book 2010-11). The total registered vehicles in the country grew at a Compounded Annual Growth Rate of 9.9% between 2010 and 2011. As most of these motor vehicles are found in urban centers and the trend is towards increasing urbanization specially in developing countries like India, it is expected that the vehicular air pollution related problems will further increase in future in these urban centers. URBANISATION IN SATELLITE TOWN OF GURGAON Due to urbanization activities in the metropolitan cities it is seen that a number of satellite towns start emerging around metropolitan cities. In India, among the States and Union Territories the National Capital Territory of Delhi (NCT) is the most urbanized comprising 93% urban population. The National Capital Region Planning Board (NCRPB) was formulated in 1985 to plan for National Capital Territory (NCT) and the region surrounding NCT i.e. National Capital Region. Due to urbanization activities in and around Delhi, satellite towns such as Gurgaon, Faridabad, Noida, Ghaziabad, Jhajjar and Sonipat emerged as new centers. Among these newly created satellite towns, Gurgaon, due to its proximity to Indira Gandhi International Airport, has become an important commercial hub. Gurgaon is the fastest growing city of Haryana and NCR and has a high attraction for many multinational companies as an ideal investment destination, especially in IT sector and automobile industry and at the same time, a better quality of life. This coupled with its proximity to National Capital and International Airport has added to its attraction. Similar to other large growing cities in India, Gurgaon is confronted with complex urban environmental problems due to its phenomenal growth during the last few decades. Gurgaon is expanding and growing rapidly. The rapid growth of Gurgaon can be attributed to the Government of Haryana which opened the doors for Management & Change, Volume 18, Number 1 (2014)

Deepak Malik, Dr. Mukesh Saxena, Dr. Niraj Sharma 57

the private sectors development and investments attracting people mainly from Delhi to settle here. The growth of the residential colonies, industrial areas, clubs, hotels, shopping malls, golf course, and corporate houses reveal that Gurgaon can be compared to any modern city of today. In-spite of innovative approaches to develop Gurgaon in a systematic and coordinated manner, the seriousness of urban problems due to sudden population rise has been accelerating and threatening the urban-environmental conditions in Gurgaon. Transport facilities in Gurgaon are not adequate and have been deteriorating over the years. The development of public transport has not kept pace with traffic demand both in terms of quality and quantity. As a result, use of personalized vehicle and intermediate public transport is growing at a rapid rate. Public has encroached the parking space and, footpaths, further restricting traffic flow. The quality of road surface in most part of the city is also not very good. In addition, most of the intersections are without traffic rotaries or light signals. VEHICULAR AIR POLLUTION Vehicular traffic has become a major source of air pollution in urban areas. Transport sector contributes around 14% towards the global emissions of greenhouse gases (CPCB, 2010). Carbon dioxide represents the largest proportion of basket of greenhouse gas emissions. With rapid urbanization, road transport related CO2 emissions from urban areas are likely to increase further in coming years mainly due to inadequate public transport system, high vehicle density in urban areas and increasing share of private vehicles vis-Ă -vis public transport vehicles in developing countries (Sharma et al., 2010). In India, 25% of the total energy (of which 98% comes from oil) is consumed by road sector only. Although gasoline vehicles dominate (approximately 85%) the vehicular population, the consumption of diesel is six times more than the consumption of gasoline (petrol). A gradual shift in passenger and freight movement from rail to road-based transportation has also lead to marked increase in fuel consumption by the road sector.

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58 Environmental Management Plan for Satellite Town of Gurgaon ...

Like many other parts of the world, air pollution from motor vehicles is one of the most serious and rapidly growing problems in urban centers of India. The vehicles run on fossil fuels, namely, petrol and diesel. The exhaust from the tail pipe of the vehicles contains pollutants like Suspended Particulate Matter (SPM), Respirable Particulate Matter (RSPM), Sulphur Dioxide (SOx), Nitrogen Oxides (NOx) and Carbon Monoxide (CO). Vehicles in major metropolitan cities in India are estimated to account for 70% of CO, 30%-40% of NOx, 30% of SPM and 10% of SOx of the total pollution load of these cities (Goyal et al., 2006). Although, the improvements in air quality with particular reference to the criteria pollutants (SPM, SOx, NOX) have been reported for some of the metropolitan cities, the air pollution situations in most of the Indian cities is still not known and is a cause of increasing concern. Air pollution levels in urban centers (particularly metropolitan cities) generally exceed the NAAQS (National Ambient Air Quality Standards) specified by the Central Pollution Control Board (CPCB) and the World Health Organization (WHO) guidelines for air pollution levels (CPCB, 2006). Vehicular emissions have been identified as one of the major contributors in deteriorating air quality in these centers. REASEARCH METHODOLOGY The major emphasis regarding the monitoring of air quality is confined to the metropolitan cities. However the satellite towns which also face the population loads are often neglected. The Central Pollution Control Board (CPCB) regularly monitors the air quality of many cities including Delhi. Gurgaon, a fast growing commercial hub in the National Capital Region, has been chosen as the study area because due to increased commercial activities the vehicular traffic has increased many fold. Transport facilities in Gurgaon are not adequate and have been deteriorating over the years. The development of public transport has not kept pace with traffic demand both in terms of quality and quantity. As a result, use of personalized vehicle and intermediate public transport is growing at a rapid rate. In-spite of innovative approaches to develop Gurgaon in a systematic and coordinated manner, the seriousness of urban problems due to sudden population rise has been accelerating and threatening the urbanenvironmental conditions in Gurgaon. The major emphasis regarding the monitoring of air quality is confined to the metropolitan cities or state capitals; Management & Change, Volume 18, Number 1 (2014)

Deepak Malik, Dr. Mukesh Saxena, Dr. Niraj Sharma 59

however the satellite towns which also face the population loads are often neglected. Hence, there is a need to study the impacts of vehicular pollution on ambient air quality for Gurgaon city. ROAD NETWORK IN GURGAON Gurgaon city has four major traffic corridors. The National Highway-8 and the Old Gurgaon road traverse in the north-south direction along the length of the city. The Gurgaon-Sohna road, which takes off from the NH-8, and the Gurgaon-Faridabad road connect the eastern parts of the city. In addition, arterial and sub-arterial roads cover the entire Gurgaon Urban area. Approximately 250 km of roads are present with in urban areas. About 65% of the road lengths have Right of Way more than 20 m i.e. land width available. This width is sufficient to develop six lane roads with kerbs. However, presently only 34% of road length has carriageway widths of less than two lanes and 25% of road length have carriageway of more than four lanes. Medians are present in only 30% of the road length whereas only 18% of the roads have service roads. Ninety nine percent (99%) of the total road length has bitumen surfacing. VEHICULAR GROWTH AND TRAVEL DEMAND IN GURGAON The transport demand forecast survey conducted by Delhi Metro Rail Corporation (DMRC) reveals that Gurgaon city would experience an estimated 39 lakhs trips out of which 15.6 lakh are expected to be within Gurgaon in the year 2021. A total of 23.6 lakh trips are expected to be performed by public transport system (both intra andintercity). Analysis of the modal split of vehicular traffic of Gurgaon city reveals private modes of transport i.e. two-wheelers and cars occupy the major share ( 56%). This can be attributed to the inadequacy of public modes of transport. However, some busses and auto rickshaws operated by private and public operators ply within city limits. THE AREA OF THE PRESENT STUDY National Highway- 8. , Gurgaon- Mehrauli Road and Gurgaon â&#x20AC;&#x201C; Sohna road are three major roads which account for major incoming and Management & Change, Volume 18, Number 1 (2014)

60 Environmental Management Plan for Satellite Town of Gurgaon ...

outgoing traffic movement in the city. All three road corridors are considered as hot spots and have been included in the present study. The other corridors which have been selected represent semi urban and residential areas. Unlike other urban cities, Gurgaon town and its vicinity has been divided into number of spatial zones. In order to study the effect of vehicular pollution on ambient air quality five road corridors passing through different land use were identified. The road corridors selected for the study are as follows: Corridor 1 - National Highway - 8 near IFFCO Chowk, a zone which experiences very high volume of traffic because of inter-city traffic Corridor 2 â&#x20AC;&#x201C; Mehrauli - Gurgaon Road near Sikandpur, a major commercial hub; Corridor 3 - Sohna Road near village Badshahpur, a rural area; Corridor 4 - Pataudi Road, a semi-urban area with commercial and residential mix; and Corridor 5 - PalamVihar Road, a residential area In all the above selected road corridors field measurements were collected for assessing the traffic characteristics and ambient air quality using characteristics given in section 4.4. FIELD SURVEY Traffic generated air pollution is one of the prime environmental concerns. The following field surveys were conducted for the research study: i.

Traffic Volume Count Survey (4-hourly traffic volume, composition: two wheelers, three wheelers, car/jeeps, buses, trucks and tractors during the month of December).

ii.

Ambient Air Quality Monitoring Survey (4-hourly data collection for Particulate Matter10P,Particulate Matter2.5, SOX, NOX& CO during month of December).

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iii.

Fuel Station Survey (Fuel used in vehicle and Age of vehicle)

iv.

Road Geometry Survey (carriageway width, median width)

Apart from above surveys meteorological data was collected from Indian Meteorological Department (IMD) for wind speed, direction, rainfall, stability class and ambient temperature. The mixing height data (for winter month) was also obtained from IMD and was used in the present study. AIR QUALITY PREDICTION AND SENSITIVITY ANALYSIS CALINE 4 is the fourth version simple line source Gaussian plume dispersion model. It employs a mixing zone concept to characterized pollutant dispersion over the roadway due to vehicle plying on the road corridor. The CALINE 4 can predict the pollutant concentrations for receptors located within 500 meters of the roadway under given traffic and meteorological conditions of road/highway. In the present study, CALINE 4 model has been used to predict the CO concentration along corridor 1which is a major highway and has very high traffic volume. The monitoring of CO was carried out as monitoring protocol and method of measured stipulated in National Ambient Air Quality Standards (NAAQS, 2009) by Central Pollution Control Board of India. The CO concentrations were observed on hourly basis for 24 hours during winter season.The sensitivity analysis of the CALINE 4 model was performed to identify the most influential input variable among the various input variables. Sensitivity analysis of CALINE 4 model was done for the following input variables: Wind Angle, Wind Speed, Stability Class and Mixing Height. RESULTS AND DISCUSSION The traffic volume count and its composition (two wheelers, three wheelers, car/jeeps, buses, trucks and tractors) and ambient air pollution levels collected from 5 corridors was tabulated, represented and further analyzed using appropriate graphical representations for understanding baseline traffic scenario. Since the data was collected at different Corridors representing different land-use pattern, hence, it was observed there was a variation in Total Traffic Count (Table 1). Corridor 1, is a major National Highway, recorded highest traffic volume count of over two lakh vehicles in 16 hour period between 6 am Management & Change, Volume 18, Number 1 (2014)

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To study the relationship between air pollutants and total traffic count at all Corridors, histogram and scatter plots were drawn. Further, correlation and regression analysis has been undertaken between these air pollutants and total vehicles for all locations separately. Linear regression models developed in the study have been scrutinized using R2 values. R2 (coefficient of determination) determines the direction and significance level of relation between the variables in the mathematical model and shows how much the dependent variable in mathematical model is affected by the independent variables. The R2 values were found supporting the hypothesis that there is a significant relationship between total traffic volume and level of air pollutants. The R2 values ranged from moderately high to very high with values ranging from 0.6 to 0.99 for various pollutants. To estimate the contribution of vehicular emission to the baseline concentration of pollutants in the atmosphere, CALINE4 model was used to predict the concentration of pollutants emitted from vehicle exhaust under standard meteorological conditions. The model was run for 24-hour period during post-monsoon season. Hourly weighted emission factors were calculated using the hourly traffic data recorded on study corridors. As the Corridor 1 (near IFFCO Chowk on NH-8) recorded the significantly higher traffic volumes in comparison to other corridors, the modeling was performed only for the Corridor 1. Further, as CO is the principal pollutant from the vehicular exhaust, the modeling was performed for CO only. Under standard meteorological condition, the CALINE4 model predicts the pollutant concentration in the prevailing wind direction; hence hourly concentration values at predetermined receptor locations were obtained. The following results were obtained from CALINE4 model: •

During the 24-hour period in which the model was run, two distinct peak concentration levels ware observed during the morning and evening time. However the evening time peak concentration levels were significantly higher than the morning peak concentration level.

•

Morning Time Peak - The morning time peak was recorded between 9 am to 10 am. The total vehicle recorded vehicles were 22060 and emission load was 59725.95 gm/km

•

Evening Time Peak – The evening time peak was recorded between 7 pm to 8 pm. The total vehicle recorded vehicles were 23162 and emission load was 69319.25 gm/km. Management & Change, Volume 18, Number 1 (2014)

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The maximum predicted concentration at 1 m distance from the mixing zone was 3.41 mg/m3 on Left side of the road. The pollutant concentration decreases drastically to 1/3rd within 50m distance from the mixing zone. After 50m distance, the pollutant concentration decreases gradually to baseline concentration levels. The sensitivity analysis on predicted concentrations of CO was carried out with different combination of meteorological parameters (wind speed and wind angle) and traffic parameters (road width and median width). The results of sensitivity analysis of CALINE 4 revealed that wind Angle, Wind Speed and Road width are significant input variables while Median Width was less significant input variable. CONCLUSIONS AND FINDINGS The present study shows that particulate pollutants PM10 and PM2.5 results when compared with National Ambient Air Quality Standards of CPCB were mostly found to be above permissible limits at many sampling sites in Gurgaon. It was also observed that CO concentrations were higher than permissible limits during winter for Corridors 1 and 2. High concentrations were recorded in the winter seasons for PM10 and PM2.5 due to low temperature and generally low wind speed. A comparison of our results for Gurgaon with earlier studies for other cities in India shows that particulate pollutant concentrations arealso high in satellite town of Faridabad in National Capital Region. ENVIRONMENTAL MANAGEMENT PLAN The Gurgaon city area is expanding rapidly; and human and animal populations, vehicular traffic, industrialization, and per-capita energy consumption are increasing. These developments are increasing atmospheric air pollutant concentrations which, in turn, is resulting in substantial ambient air pollution . It is certain that these increases will make adverse effects on climate as well as health, and both personal and social wealth of the people living in Gurgaon and in downwind regions. So, it can be concluded that a strict implementation of adequate abatement measures and environmental regulations is urgently necessary.

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The increasing air pollution from cars, trucks and other motorized vehicles is the leading cause of deterioration of air quality in Gurgaon. Levels of pollution (estimated by concentration of CO) along Corridor 1 are very high. Control of emissions from motor vehicles poses one of the most challenging tasks in a rapidly growing city like Gurgaon. A mixture of engineering solutions and policy measures along with a number of other methods can be used for controlling speeds and traffic flows to reduce congestion and environmental pollutions. Urban air quality, land-use pattern and transportation systems are interlinked. Therefore, planning of air quality management, transportation and land-use should be coordinated to develop a set of integrated strategies to reduce emissions from motor vehicles. While vehicle related measures such as use of clean fuels and fuel efficient, clean vehicles can reduce emissions from vehicles, there is also a need to discourage car use through measures related to land-use and traffic management. Emissions from motor vehicles can be reduced effectively by considering following measures: DEVELOPMENT STRATEGIES TO DEAL URBAN AIR PROBLEMS In the development of strategies to deal with urban air quality issues, local traffic management can be used to reduce vehicle emissions. Traffic management measures include computerized traffic light control, network and junction design, parking controls, reducing the supply of space allocated to car parks, park and ride schemes, speed limits, restricted access for non-essential traffic, bus priority lanes, pedestrian areas and cycling facilities. These measures not only reduce energy use but also provide an environment, which is more people-friendly. Some of the measures, which can be implemented, are discussed below: Public Transport: In cities across the world, the major emphasis has been on controlling vehicular pollution, where strategies to shift from private modes of transport to public modes of transport is practiced. The promotion of rail, buses, and park and ride schemes, walking and cycling can reduce the use of the motor vehicle in the city.

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Mass Transport system in Gurgaon is inadequate. Intra-urban mass transport system is almost negligible. This results in heavy use of personalized mode of transport resulting in congested conditions on roads. The share of mass transport needs to be increased substantially by way of augmenting mass transport infrastructure, not only for intra-urban but also with Delhi. At present only Delhi â&#x20AC;&#x201C; Gurgaon Metro line is operational for last 3 years which runs along Mehrauli - Gurgaon road. This line needs to be extended in second phase to cover new developing areas along Sohna Road and Manesar. The entire phase - I of Rapid Rail Transit system (RRTS) is likely to start soon which is expected to ease traffic congestion problems along DLF cyber city (a major Corporate hub).There is an immediate requirement to plan for new corridors for Light Rail Transit and Bus Rapid Transit. There is also a need to integrate Metro and RRTS system. Bus will play an important role in the mass transport system in Gurgaon. Therefore, various facilities for bus transport such as bus terminals, properly designed bus stops, exclusive busways / bus lanes etc. are the need of the hour. The bus system needs to be properly integrated with other transport systems. Traffic Management: Streamlining traffic flow and reducing speed, banning or restricting traffic or particular types of vehicles from some roads; making use of public transport more attractive; and working with business and public to raise awareness of the implications of transport choices are some of the good practices that are being followed to control air pollution.. Traffic Segregation: Segregation of motorized and nonmotorized vehicles and differentiation of routes have been beneficial in reduction of congestion. The segregation of vehicles moving at different speeds would help improve traffic flow, increase the average speed of traffic and reduce emissions resulting from sub-optimal speeds. Cities like Delhi has witnessed steady decline in non-motorised trips (17% in 1981 to 7% in 1994). This has been primarily attributed to the greater risk of accidents as the non motorized mode share a common right of way with other motorized modes of transport. Management & Change, Volume 18, Number 1 (2014)

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Apart from improving safety by segregation on the basis of vehicular type the National Urban Transport Policy (Ministry of Urban Development) recommends creating facilities like shade giving landscaping, provision of drinking water and resting stations along bicycle corridors to mitigate, to a large extent, adverse weather conditions. Innovatively designed road crossings should be considered for developing the cycle tracks. Traffic Control System: At signals control junctions a traffic control system which responds automatically to changing conditions can give better traffic flow than uncoordinated signals. However, before improving the traffic flow, road authorities should access the road capacity and should consider re-distributing it in favour of buses, cyclists and pedestrians. The intersection between NH-8 and Mehrauli â&#x20AC;&#x201C; Gurgaon road is a very congested junction because of very high traffic volume. This junction should be made signal free by providing clover leafs and underpasses so that traffic can move uninterrupted. Pedestrian/ Vehicle Restricted areas: Restricting access to town centers can improve the local environment. Pedestrian areas can maintain or improve local economic activity. However, people must be able to reach the area by other means. These could include: good public transport, perhaps with park and ride, facilities for cyclists and pedestrians, peripheral car parking; access for people with limited mobility, and access to taxis, where appropriate. Low Emission Zone: These zones might cover areas with particular air quality problems and only vehicles meeting or exceeding stringent emissions standards might be allowed into the zone. Clear Zones: Clear zones aim to improve the quality of life for people living in, working in and visiting an area by reducing traffic congestion, traffic noise and air pollution. Congestion Charging: The scheme has been used in control of traffic in London and Singapore. Singaporeâ&#x20AC;&#x2122;s vehicle control is done through electronic road pricing (Road Transport Authority, Singapore). Since 1998, an electronic cordon has been placed around the most

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congested portion of the city, a 720 hectare â&#x20AC;&#x2DC;restricted zoneâ&#x20AC;&#x2122; (RZ). All vehicles (excluding emergency vehicles) entering the RZ between 7.30 am and 7 pm on weekdays pay a fee. This was used as a model for Londonâ&#x20AC;&#x2122;s congestion charge. Land-use Planning: An integrated land-use and transportation plan can govern the pattern and modal choice of travel by the residents within the city, and thus can reduce reliance on cars. Through appropriate planning, new growth within the urban region can be directed towards designated areas that have high residential and employment density and a good choice of transit service. Land use planning can be used to promote compact communities of mixed uses that would increase accessibility of various amenities to its residents, and thus would reduce the need for single-occupant vehicle trips for daily activities. Also, it is very important to enforce designated land-use as per master plan as traffic infrastructure is developed in accordance with the land-use. In most modern cities including Gurgaon, enforcement of land-use planning has been poor resulting in mixing of different land uses, especially commercial with residential land use. This has resulted in stress on infrastructure. Traffic congestion arising due to such situations is a major reason for deteriorating air quality along transport corridors. In Gurgaon, Sectors 28 and 28A along the Mehrauli Gurgaon Road havebeen designated under residential land-use. However, it is observed that land along this road have been used for commercial development, resulting in high traffic volumes and congestions. Strict enforcement of land-use would, therefore, be essential for controlling vehicular pollution. It is thus recommended to maintain status quo and freeze further commercial development in Sectors 28, and 28A. Commercial development should only be allowed in sectors so designated. There is a need to integrate land-use and transport planning within local air quality management strategies in order to improving air quality and change travel behavior. The provision of infrastructure in the past has shown it exacerbates rather than solves the problem. New roads can generate more new traffic. Management & Change, Volume 18, Number 1 (2014)

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CLEANER VEHICLES a)

New Vehicles Significant advancement in vehicle technology has been made during the past three decades to make vehicles more energy efficient and less polluting. Todayâ&#x20AC;&#x2122;s vehicles emit considerably less air pollutants than those of past years. For example, on a gram per kilometer travel basis, todayâ&#x20AC;&#x2122;s motor vehicles can generate 90 to 98% less carbon monoxide, hydrocarbons and nitrogen oxides than those manufactured in the 1960s. Vehicles are also designed to be more fuel efficient, i.e. less fuel is burned to travel a unit distance and thus generate less air pollution. In Gurgaon, Euro III equivalent emission norms for all new private vehicles, city public service vehicles and city commercial vehicles has been implemented from April 2005. Further to this, as per the Government of India policy, Euro IV equivalent emission standard for all new four wheeled vehicles has been implemented from April 2010. For 2/3 wheelers, Bharat Stage-II norms were applicable from April 2005 and Euro-III norms come in force from April 2010.

Vehicle Emission Inspection and Maintenance Motor vehicles are manufactured to meet certain emission standards during their use over the vehicle warranty period. Proper maintenance of vehicles is necessary to ensure emission levels remain below those standards. However, as a vehicle is used, its emission characteristics gradually deteriorate, even when it is properly maintained. In a typical urban vehicle fleet, older vehicles generate disproportionately more air pollutants than the newer vehicles. A poorly maintained older vehicle can emit one hundred times more pollutants than a properly cared for modern vehicle. Therefore, implementation of an appropriate vehicle emission inspection and maintenance program is an effective measure to ensure efficient operation of vehicles.

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c) Old Vehicle Scrapping In order to reduce the number of old polluting vehicles in the urban fleet, a vehicle-scrapping program could be introduced specifically for the 3-wheelers, taxis and public vehicles. Under such a program, the owners of old vehicles could be given an incentive, either as money or public transit pass, in exchange for giving up the vehicle for scrapping by the agency responsible. The reusable parts from a scrapped vehicle should be recycled, and the rest should be disposed of as waste. d) Cleaner Fuel Petrol and diesel oil have long been the primary transportation fuels, and they will continue to be so throughout India. In recent years, considerable improvement in petroleum refining techniques has been made to produce fuels much cleaner than before. Unleaded and reformulated gasoline of less volatile types with reduced sulphur and toxic constituents are commercially available; and so is low-sulphur diesel fuel. Clean fuels are necessary to operate the new low-emission vehicles properly. The National Urban Transport policy also lays stress on use of clean fuels in urban transport. Successful conversion of public transport to Compressed Natural Gas (CNG) has significantly reduced air pollution problems in Delhi. Presently Gurgaon has only four CNG stations which are not able to fulfill the need of city. There is a huge demand of CNG in Gurgaon city which requires proper demand supply assessment and more CNG stations should be setup. Electric/ Battery operated vehicles can be considered for operation in limited area. REFERENCES CPCB, (2010). Status of the Vehicular Pollution Control Programme in India.Central Pollution Control Board, Ministry of Environment and Forest. New Delhi. Govt. of India. CPCB, (2006). National Ambient Air Quality Monitoring Series NAAQMS/27/2006-2007. Central Pollution Control Board. Ministry of Environment and Forest. New Delhi. Govt. of India. Management & Change, Volume 18, Number 1 (2014)

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National Air Quality Status (2004). National Ambient Air Quality Monitoring Series NAAQMS/27/2006-2007. Central Pollution Control Board. Ministry of Environment and Forest. New Delhi. Govt. of India. Goyal, S.K. et al., (2006).Understanding urban vehicular pollution problem vis-Ă -vis ambient air quality â&#x20AC;&#x201C; Case study of a Megacity (Delhi, India). Environmental Monitoring and Assessment. Vol.119, 557-569. Road Transport Year Book. (2010-11). Ministry of Road Transport and Highways. Govt. of India. Sharma, N., Gangopadhyay, R., and Dhyani, R. (2010). Methodology for Estimation of CO2 Reduction from Mass Rapid Transit System (MRTS) Project. Journal of Scientific & Industrial Research. Vol.69, 586-593.

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KEY DRIVERS OF SUSTAINABILITY REPORTING (A STUDY IN INDIAN PERSPECTIVE) Ranjani Matta8 This paper aims to examine the Non-financial reporting practices with respect to sustainability reporting and business responsibility reporting in India. A comparison was drawn between the reporting practices of companies constituting the BSE Index and companies from BSE Small Cap to identify whether material drivers exist that influence the current practices and trends of non-financial reporting. A sample of 60 listed Indian companies belonging to BSE Index and BSE Small Cap Index was selected for the study. The annual report and other published standalone reports pertaining to the financial year 2012-13 on sustainability and the business responsibility report for all these listed companies were accessed from their respective websites and analyzed. Results from the study indicate that size of a company is a factor that has significant influence on the reporting, suggesting large sized organizations recognize the need to publish non-financial reports as they have understood the competitive advantage of extensive reporting. The study indicates lack of relationship between assurance provider and the level of sustainability reporting. The nature of this study is exploratory in nature and focuses on the evolution of non-financial reporting practices post introduction of clause 55 in the SEBI listing agreement. The findings of the study revealed that Non-financial reporting is still in its inception stage and is evolving in India. Results confirm that keeping aside the global companies that are reporting on a voluntary basis, mandatory reporting rules seem to be the only way forward to turn non-financial reporting into a standard reporting practice for all companies. Keywords: Sustainability Reporting, Business Responsibility Reporting, Non-financial reporting, Assurance provider 1

Associate Professor, IILM Institute for Business & Management, 1 Knowledge Center Golf Course Road, 71, Sector 53, Gurgaon 122003, E.mail: ranjani.matta@iilminstitute.ac.in

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INTRODUCTION Reporting is a structured way of presenting the information about onesâ&#x20AC;&#x2122; performance. Non-financial reporting or sustainability reporting is reporting of the non-financial aspects in relation to the performance of the organization towards the goal of sustainability and inclusive growth. Sustainability reporting provides an opportunity for the companies to communicate with their stakeholders on the environmental and social impact of activities undertaken by them, and is mostly voluntary. The belief that business growth has been at the cost of environment and the society has led to the growing demand for non-financial reporting in India as well as globally. This growing criticism has led to organizations paying more attention to the non-financial reporting aspects, which consist of environmental, social and governance reporting. In relation to this, the definition of stakeholders has also evolved over a period of time. Earlier the shareholders were considered as the only stakeholder of the company, but over a period of time, employees, customers, suppliers were added to the list of stakeholders. Now community or society is considered as a major stakeholder for all businesses and organizations as businesses exist, earn and grow to serve the society and their existence depends on the acceptance from the society. There is ambiguity and variability in the current reporting practices for non-financial information unlike the structured framework that exists for financial reporting. Few countries around the globe have adopted the Global Reporting Initiative (GRI) framework for reporting on the nonfinancial aspect. Indian companies listed in stock exchanges outside India have begun voluntary reporting using the GRI framework. Lack of clear guideline in respect to non-financial reporting is a major challenge for organizations desirous of reporting. From the financial year 2012-13, it has been made mandatory for top 100 listed companies based on market capitalisation at BSE and NSE as on 31st March 2012 to publish Business Responsibility Reports as part of their annual reports. For other listed companies it is on a voluntary basis and would be made mandatory in a phased manner. The purpose of this research is to study the reporting practices of Indian companies, the level of sustainability reporting done and identify Management & Change, Volume 18, Number 1 (2014)

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the drivers of non-financial reporting in India through a comparative study of BSE Index companies with BSE Smallcap Index companies. The possible factors that could act as a lever for sustainability reporting may include the regulatory environment in the country, type of industry/sector, type of assurance provider and the impact of global environment. The study focuses on the current state of sustainability reporting in India. The results will add to the existing knowledge in the field of nonfinancial reporting practices followed by the Indian listed companies. Study relating to BRR has not been done till date in India as publishing of Business Responsibility Report has been made mandatory from financial year 201213 by inclusion of clause 55 in the SEBI listing agreement to enhance the quality of disclosure by listed entities based on market capitalisation at BSE and NSE as on March 31, 2012 to include Business Responsibility Report as part of their Annual Report. Other listed entities may voluntarily disclose the BR Report as part of their Annual Report (SEBI, 2012). The results of the study will present the sustainability reporting practices presently followed by Indian listed companies and may also provide future direction to the standard setting bodies for setting up the reporting framework in India. LITERATURE REVIEW Organizations have been publishing annual reports with only the financial aspects of the performance. The stakeholders demand more than the financial information e.g. on long term strategies and the long lasting positive impact (Azam, Warraich & Awan, 2011).Non-financial reporting has emerged as one of the latest trends for the 21st century in corporate reporting (Azam, Warraich & Awan, 2011). Including non-financial aspects into the annual reports requires a new set of skills. As no guidelines are available, organizations struggle to make the data available to the readers which is relevant and meets their expectations (Azam, Warraich & Awan, 2011). Organizations are now considering incorporating transparency and accountability for economic, environmental and social cause into the annual financial reports (Dutta, 2012). There are many things material like human

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capital, intellectual property and investment in training which go unreported. Reporting on social and environmental issues needs to be taken seriously, hence highlighting the need for non-financial reporting(The Economist, 2004). GRI was inaugurated as an independent organization, whose mission was to provide direction of the guidelines with continuous improvement, to a wide base of firms. Voluntary sustainable reporting has emerged as a tool adopted by large organizations to be transparent in their environmental and social performance. Socially responsible businesses have adopted sustainability reporting and GRI has been adopted as a globally established benchmark on how these reports are prepared and judged (Brown, Jong & Lessidrenska, 2009). Organizations prefer to adopt GRI framework in preparing their sustainability reports (Sawani, Mohamed Zain & Darus, 2010). The stakeholders have become more aware of the ecological and social footprints adopted by multinational companies worldwide and the main agenda in board meetings are accountability, transparency and governance issues. Sustainability reporting assesses the performance of an organization based on three factors, namely, economic, environmental and societal (Dutta, 2012). One most important and influential driver for non-financial reporting is the growing understanding internally. The pressures from suppliers, employees, government, NGOs, customers, competitors are other factors forcing companies to develop sustainable business policies (Azam, Warraich & Awan 2011). The corporations are interested in disclosing non-financial information and the investors are taking the non-financial disclosure into consideration while making investment decisions. However there is no systematic way developed to incorporate these non-financial information into their decision making process (Hoff& Wood 2008). Rankin (2012) in his book, â&#x20AC;&#x153;Contemporary Issues in Accountingâ&#x20AC;? explains the Stakeholder theory that helps us understand the needs of the users of the information, including the stakeholders and the factors that might have influenced the level of disclosure of information on environmental or social performance voluntarily by an organization, explaining the Management & Change, Volume 18, Number 1 (2014)

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relationship between the business and the society. The society, which is a stakeholder, has explicit and implicit expectations about how a business should act. Business receives permission to conduct the business from the society and is accountable to the society (Rankin et al.,2012) Companies are aware of the risk of destroying the brand, financial penalties and this can be mitigated by adopting ethical responsibility and environmental protection (Jianu, Jianu & Gusatu, 2013). The report of non-financial aspects has become a major competitive advantage and as organizations recognise the significance, adoption of CSR practices will increase (Jianu, Jianu & Gusatu, 2013). A growing commitment from within the organization adjusted to the needs of the customers and the community increases the probability that an organization is sustainable for a lasting period of time. SECTOR/INDUSTRY As per a study on the reporting practices of Global 250 companies in 1998 and 2001, reporting continues to be significant in the industrial sectors and less in the financial, communications and media, trade, retail and other services. European countries along with Japan are more active as the government regulations and reporting legislations have increased in the past two years. The largest and most visible multinationals continue to be very active in disclosing information on their environmental, social policies and performance (Kolk, 2003). As per Mock, Strohm& Swartz (2007), out of the 21 countries that publish assured sustainability reports, 67% are from the European Union. Firms which are operating in the mining, utilities and oil i.e. sectors which are environmentally sensitive, provide most assured sustainability reports. Firms operating in sectors with a substantial direct environmental impact (chemicals, pharmaceuticals, oil and motor vehicles and parts) are also found to be reporting. Reporting in sectors with more indirect effects is getting off the ground (Kolk, Walhain& Van de Wateringer, 2001). SIZE OF THE COMPANY The process of reporting and decision making depends on the country of origin, the size of the company and the corporate culture (Adams, 2002).

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Multinational companies and big corporations are issuing the non-financial reports, but the small and medium sized organizations have never learnt this concept (Azam, Warraich & Awan, 2011). Several studies have found a significant positive association between the size of the company and the extent of corporate social and environmental disclosure in the corporate annual report in both developed and developing countries. However, in a study on the non-financial disclosure in practices in Bangladesh, the subsidiaries of the multinational companies in Bangladesh did not disclose social and environmental information adequately (Hossain, Islam & Abdrew, 2006). In a study of large UK companies by Brammer and Pavelin (2006), it was found that larger less indebted firm with large number of shareholders are more likely to make voluntary environmental disclosures and the quality of disclosure is positively associated with the firm size and corporate environmental impact. The results of a study focused on the environmental disclosures made in the annual reports by large firms operating in Portugal during the period 2002â&#x20AC;&#x201C;04 reveal that the level of environmental information disclosed during this period was low, however the extent and the number of companies disclosing environmental information has increased. There was a positive relationship between the firm size and the fact that a company is listed on the stock market to the extent of environmental disclosure (Silva Monteiro and Aibar-Guzman, 2010). Organizations report their sustainability development initiatives due to request from stakeholders. To lessen the ecological scarcity of resources, stakeholders compare the natureâ&#x20AC;&#x2122;s existing capacity and the resources used up by the organization (Sawani, Mohamed Zain & Darus, 2010). However many MNCs have been issuing environmental reports that include only the constructive impact, the negative news is never reported (Azam, Warraich & Awan, 2011). In a research by Lungu, Caraiani and Dascalu (2011) the size characteristics of the firm measured by assets and revenue had a negative correlation with the CSR reports published, suggesting that the value added by the disclosure cannot overcome their already existing high credibility. This is in contrast to the previous studies on this topic which suggests a Management & Change, Volume 18, Number 1 (2014)

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strong relationship between the size of the firm and disclosure of nonfinancial information. This paper evaluates the relationship between the size of the organization and their relationships with the extent of non-financial reporting: sustainability reporting and business responsibility reporting for the 60 listed Indian companies to discuss the future reporting trends and their connection to the financial characteristics of the company. MANDATORY OR VOLUNTARY DISCLOSURE The drivers for non-financial reporting mainly result from government regulations acting in relationship with other drivers like business and society. Business drivers include the essentials identified by the business: reputation, marketing, branding, employee relations and knowledge. Social drivers include demands from consumers, organizations claiming to act on behalf of society and employees (Moon, 2004).Lungu, Caraiani and Dascalu (2011) state that the companies report on a voluntary basis to portray their image in a favourable light, however failure of voluntary reporting has led to pressure from public to have policies which resulted in introduction of different accreditation principles, guidelines and standards for reporting. Allini& Rossi (2007) state that the requirements of the local law could improve the content of the annual report and provide the investors with the non-financial reports to avoid the generic and deliberately biased reports. The standardisation of non-financial disclosure assists investors to properly assess corporate performance and companyâ&#x20AC;&#x2122;s risk in time and space by allowing them to compare investment decisions more easily and by the same criteria (Adams, 2002). The non-financial disclosure has to be a result of companyâ&#x20AC;&#x2122;s voluntary behaviour, if the implementation is based on compliance of law, the core value of the concept of social consciousness will disappear. The legal requirements in respect to non-financial reporting are not meant to limit the companiesâ&#x20AC;&#x2122; own possibilities of reporting as there are companies which disclose on a voluntary basis (Jianu, Jianu & Gusatu, 2013). In a study on the environmental reporting of the Fortune Global 250, legislation played a small role, but national societal pressure seemed to Management & Change, Volume 18, Number 1 (2014)

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play a large role, especially in the UK, the Netherlands and Germany (Kolk, Walhain & Van de Wateringer, 2001). Countries which have stringent regulations and enforcement ensure better quality and quantity of disclosure (Sawani, MohamedZain&Darus,2010). Baums (2002) recommended a law requiring public disclosure on CSR in those countries where the market is inefficient or is characterised by frequent failure. Market failure occurs mainly due to information asymmetry and adequate risk premium would encourage the investor to take investment decisions. In the absence of a regulatory requirement some companies would report on a voluntary basis to reduce the risk premium, however some companies would hide their risk and take the benefit of risk reduction provided by the disclosing company. The risk attached by the market is similar for both the types of companies, this is detrimental to the company bearing the cost of voluntary reporting. ASSURANCE PROVIDER Several studies have examined the relation between the characteristics of the audit firm (size of audit firm or international link of the audit firm) and the extent of social and environmental disclosure and found positive association between the audit firm size and the level of disclosure (Hossain, Islam & Abdrew, 2006). The key factor associated with the level of assurance is the type of assurance provider. Non-Big 4 audit firms are most likely to rely on the AA100 framework, whereas Big 4 audit firms tend to rely on international or local standards. The suggestions provided by the audit firms to the management regarding various matters are reserved information and available for public (Mock, Strohm& Swartz, 2007). Deegan, Cooper & Shelly (2006a) in a study of 100 UK and European triple bottom line assurance statement raised issue about the perceived independence of the assurance providers and also emphasised the ambiguity and variability inherent in the current reporting. In another study Deegan, Cooper & Shelly (2006b) stated that characteristics of assured sustainability reports, such as type of assurance provider and level of assurance provided, are interrelated. The verification of sustainability reports is a very challenging assurance service for the financial auditors (Wallage, 2000). Management & Change, Volume 18, Number 1 (2014)

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Based on the literature review, the drivers influencing the non-financial reporting can be broadly classified into nature of industry, firm size, government regulations and the type of assurance provider. METHODOLOGY A sample of 60 listed Indian companies was selected for the study. The sample consisted of 30 companies belonging to BSE Index and 30 companies belonging to the BSE SmallCap Index. The selected samples were representative of all the sectors and were a mix of small and large sized companies. The data presented below form an examination of the reporting habits of these selected companies. All data was in public domain and was available electronically on the companies’ websites. The annual reports and other published standalone reports pertaining to the financial year 2012-13 on sustainability, and, the business responsibility report for all these listed companies were the data source, accessed from their respective websites. The study concentrated on four main areas of research: (a) the sector and the type of reporting (b) firm size and sustainability reporting (c) firm size and the business responsibility reporting; and (d) the type of assurance provider (Big 4 vis-à-vis non Big 4) and sustainability reporting. The reports produced by the company were reviewed and the data relating to the size of the company, assurance provider, sector, reporting pertaining to sustainability, business responsibility reporting and reporting in GRI was captured. Basic descriptive statistics were used to describe the basic features of the data. The Pearson correlation test was applied to test the relationship between: a)

the size of the firm and sustainability reporting

the size of the firm and the business responsibility reporting

the type of assurance provider (Big 4 vis-à-vis non Big 4) and sustainability reporting

RESULTS AND DISCUSSION Of the BSE 30 companies’ studied, all companies had the mandatory BRR reports. Only 19 companies had a standalone sustainability report, Management & Change, Volume 18, Number 1 (2014)

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prepared on a voluntary basis in contrast to just 1 company from the BSE Smallcap segment having a standalone sustainability report. Fourteen companies have followed the GRI guideline from the BSE Index and none from the BSE SmallCap Index, suggesting big and mature companies have a tendency to provide more information on sustainability in contrast to the smaller companies. The assurance provider varied among the companies and had no relationship with the size of the company or the level of sustainability reporting. SECTOR WISE BRR REPORTING As per Kolk (2003), Mock, Strohm & Swartz (2007) and Kolk, Walhain & Van de Wateringer (2001), reporting continues to be significant in the mining, utilities and oil which are environmentally sensitive. It is expected that industries using more of non-renewable resources should feel the needs to report. On the contrary, the research paper does not indicate any significance in respect to the reporting practices followed by the selected listed Indian companies based on sectors. Companies operating within the same segments have been found either reporting or not reporting. Data collected indicates that five companies in the mining/oil & refining sector are reporting and two are not reporting. Further analysis showed that the size of the company is a factor that has significant influence on the reporting. Most large companies adopted the BRR reporting guideline due to the fact that it has been made mandatory to include BRR reports as part of the annual reports for top 100 listed companies. Relationship between firm size and the level of voluntary sustainability reporting Past research has indicated a strong relationship between the size of the company and level of voluntary sustainability reporting in both developed and developing countries (Adams, 2002; Azam, Warraich & Awan, 2011; Brammer and Pavelin, 2006; Silva Monteiro and AibarGuzman, 2010;Sawani, Mohamed Zain & Darus, 2010). However, Azam, Warraich & Awan (2011) stated that the companies report only the constructive impact, the negative news is never reported. Lungu, Caraiani and Dascalu (2011) suggested that the value added by the disclosure cannot overcome their already existing high credibility of the company. Management & Change, Volume 18, Number 1 (2014)

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The finding from Pearson correlation analysis between voluntary sustainability reporting with size shows a positive association (0.601) between the variables. Probably, the larger companies have understood the benefits derived by issuing sustainability reports, since they are global organizations, they face competition from across the border or are using the sustainability reporting as a way to disseminate information relating to the companyâ&#x20AC;&#x2122;s activities beyond the mandatory requirements. The companies that are listed outside India have to follow the global trend; hence they might be issuing the sustainability reports to meet the need of global markets. Large organizations are more in the public view compared to the smaller organizations and thus have to manage their brand and reputation. There is more pressure on the organization to report on sustainability if the competitors are doing so. Table 1: Correlation between Voluntary Sustainability Reporting& size

Relationship between firm size and the level of Business Responsibility Reporting Past studies have shown that the countries that have government regulations and stringent enforcement ensure better quality and quantity of disclosure, also standardisation of non-financial disclosure assists investors to compare investment decisions more easily by the same criteria (Baums2002; Kolk, 2003;Moon, 2004; Allini & Rossi, 2007; Sawani, Mohamed Zain & Darus, 2010). Government rules forces organization to disclose reporting, as there are penalties for not following the rules. Few researchers state that the reporting should be on a voluntary basis, if the implementation is based on compliance of law, the core value Management & Change, Volume 18, Number 1 (2014)

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of the concept of social consciousness will disappear. However failure of voluntary reporting has led to introduction of guidelines and standards of reporting. (Lungu, Caraiani and Dascalu, 2011), (Jianu, Jianu & Gusatu 2013). The findings from Pearson correlation analysis result between the mandatory Business Responsibility Reports with size shows a strong positive association (.905) between the variables and the correlation is significant at the 0.01 level, indicating compliance of law. However, further research is required to evaluate the quality of the reports. Table 2: Correlation between Business Responsibility Reporting & size of firm

Relationship between the size of audit firm and the level of voluntary sustainability reporting Several studies have examined the relation between the characteristics of the audit firm (size of audit firm or international link of the audit firm) and the extent of social and environmental disclosure and found positive association between the audit firm size and the level of disclosure (Hossain, Islam &Abdrew, 2006; Mock, Strohm& Swartz 2007). As per Deegan, Cooper & Shelly et al., (2006b) the characteristics of assured sustainability reports, such as type of assurance provider and level of assurance provided, are interrelated. Wallage (2000) stated that the verification of sustainability reports is a very challenging assurance service for the financial auditors. Since the Big 4 audit firms have experience and exposure in managing global clients and rely on global reporting standards and the fact the audit Management & Change, Volume 18, Number 1 (2014)

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firms provide suggestions to the management regarding various matters it was expected that the companies have Big 4 firms as auditors would guide their clients on the benefits of issuing sustainability report. However, the findings from Pearson correlation analysis result between the assurance providers (Big 4 & Non Big 4) with voluntary sustainability reporting shows no association between the variables. Few clients of Big 4 assurance providers are issuing sustainability reports and the rest are not. Table 3: Correlation between Sustainability Reporting& Assurance provider

CONCLUSION This study provides preliminary insights on the current non-financial reporting: sustainability reporting and business responsibility reporting practices in India. Findings from the study reveal that sustainability reporting and business responsibility reporting are in an upcoming state in India. Most of the companies incorporated their numerous environmental and social activities in the mandatory annual report and only a few companies prepared a standalone sustainability report. There is a significant positive relationship between firmsâ&#x20AC;&#x2122; size and the voluntary sustainability reporting, as well as firm size and business responsibility reporting amount the listed firms. It was also observed that there exists no relationship between the assurance provider (Big 4/Non-Big 4) and the level of voluntary sustainability reporting. The reporting of non-financial aspects has become major competitive advantage which many large sized companies have understood and are extensively reporting, however small sized firms are yet to begin reporting on sustainability. The paper concludes that non-financial reporting is still in Management & Change, Volume 18, Number 1 (2014)

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the evolutionary stage and the existence of regulations enables the nonfinancial reporting. The paper calls the standard setting bodies to setup the reporting framework to improve the level of reporting by all listed companies, thereby, making the entities more responsive to changes in the natural and social environments. FUTURE RESEARCH The study consists of the published reports for a single year, 2012. The research can be further extended to measure the extent of improvement in the quality of reporting longitudinally. The reporting practices of Midcap companies can be included to the study. In addition, future research may adopt content analysis method to examine the quantity, quality and nature of sustainability reporting to help validate the conclusions of this study. REFERENCES Adams, C., (2002). Internal Organizational Factors Influencing Corporate Social and Ethical Reporting: Beyond Current Theorizing. Accounting, Auditing & Accountability Journal. 15(2), 223-250. Allini, A., and Rossi, F.M., (2007). The Evolution of Non-Financial Disclosure in a Euporean Perspective. Fondazione Eni Enrico Mattei. CSR Paper 14.2007 http://www.feemit/Feem/Pub/Publications/ CSRPapers/default.htm accessed 11 May 2013. Azam, S. M. Z., Warraich, K. M & Awan S. H. (2011). One Report: Bringing Change in Corporate Reporting through Integration of Financial and Non-Financial Performance Disclosure. International Journal of Accounting and Financial Reporting. ISSN 21623082.1(1),50. Baums, T., (2002). Changing Patterns of Corporate Disclosure in Continental Europe: the example of Germany. ECGI Working Paper. 4/2002. Available at SSRN: http://ssrn.com/abstract=345020 Brammer, S., and Pavelin, S., (2006). Voluntary Environmental Disclosures by Large UK Companies. Journal of Business Finance and Accounting. 33(7), 1168-1188 Management & Change, Volume 18, Number 1 (2014)

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Brown, H. Jong, M., and Lessidrenska, T. (2009). The Rise of the Global Reporting Initiative (GRI) as a Case of Institutional Entrepreneurship, Environmental Politics 18:2,182-200 Deegan, C., Cooper, B. J., and Shelly, M.(2006a). An investigation of TBL report assurance statements: UK and European evidence. Managerial Auditing Journal. 21(4),329 – 371. Deegan, C., Cooper, B. J., and Shelly, M. (2006b). An Investigation of TBL Report Assurance Statements: Australian Evidence. Australian Accounting Review. 16(2)–18. Dutta, S. (2012).Triple bottom line reporting: An Indian perspective. Interdisciplinary Journal of Contemporary Research in Business. 3(12). Hoff, B & Wood.D.(2008).The use of non-financial information: What do investors want? White Paper: Report on Project Finding. Boston College Carroll School of Management. Hossain, M.A., Islam, K.S. and Abdrew, J., (2006). Corporate Social and Environmental Disclosure in Developing Countries: Evidence from Bangladesh. Proceedings of the Asian Pacific Conference on International Accounting Issues. Hawaii [online] http://ro.uow.edu.au/ cgi/viewcontent.cgi?article=1194&context=commpapers [assessed on 3 January 2013] Jianu, I., Jianu, I., & Gusatu, I. (2013). The Non-Financial Reporting: Goal and Perspective in the Romanian Society of the Third Millennium. Acta Universitatis Danubius, 9(2), 65-78. Kolk, A. (2003).Trends in Sustainability Reporting by the Fortune Global 250. Business Strategy and the Environment. 12, 5279. Kolk, A., Walhain, S. and van de Wateringen, S. (2001). Environmental reporting by the Fortune Global 250: exploring the influence of nationality and sector. Business Strategy and the Environment. 10 15–28.

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Lungu, C.I., Caraiani, C., and Dascalu, C., (2011). Research on Corporate Social Responsibility Reporting. The Bucharest Academy of Economic Studies, , 13(29)117-131. Mock, T.J., Strohm, C., & Swartz, K M. (2007).An Examination of Worldwide Assured Sustainability Reporting. Australian Accounting Review. 17(1) 67-77. Moon, J. (2004). Government as a Driver of Corporate Social Responsibility: The UK in Comparative Perspective. ICCSR Research Papers Series 20, 1-27. Rankin et al., Contemporary Issues in Accounting (2012). John Wiley & Sons Australia, ISBN 978 0 730 30026 7. Sawani, Y., Mohamed Zain., M. & Darus, F. (2010). Preliminary insights on sustainability reporting and assurance practices in Malaysia. Social Responsibility Journal. 6(4), 627-645. Securities Exchange Board of India (2012). Circular on Business Responsibility Reports, Securities and Exchange Board of India, August 2012. Silva Monteiro, S. M. and Aibar-Guzmán, B. (2010).Determinants of Environmental Disclosure in the Annual Reports of Large Companies Operating in Portugal. Corporate Social Responsibility and Environmental Management. 17, 185–204 The Economist.(2004). Corporate Storytelling, Non-financial accounting is now serious to be left to amateurs. Wallage, P. (2000). Assurance on Sustainability Reporting: An Auditor’s View, Auditing: A Journal of Practice & Theory: Supplement. 2000, 19(1), 53-65.

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Annexure 1: Details of Companies in Study

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MEDIATING ROLE OF INTELLECTUAL CAPITAL AND COMPETITIVE ADVANTAGE ON THE RELATION BETWEEN CSR AND FINANCIAL PERFORMANCE Priyanka Jain1

Vishal Vyas2

Ankur Roy3

Relationship between Corporate Social Responsibility (CSR) and Financial Performance (FP) is a much studied research topic in academic arena. However, the use of intangible assets has a significant impact on the success and survival of the organizations, and has opened up new dimensions for the study of CSR and FP. There are few empirical researches investigating the practical role of competitive advantage on the relationship between CSR, intellectual capital and firm’s performance. A survey of 627 small and medium size firms in Rajasthan state was conducted. A structured questionnaire having 47 variable items was used and data was collected and analyzed. The results showed weak positive relation between the CSR and FP. Specifically it was noticed that with a mediating role of Competitive Advantage and Intellectual Capital, the relationship has a profound impact on the Financial Performance. Key Words: Corporate Social Responsibility, Intellectual Capital, Competitive Advantage, Financial Performance INTRODUCTION The modern base of civilization and deepening of democracy around the globe have substantially changed the basic philosophy of society and its structure. In the face of high levels of insecurity and poverty, everdegrading environment, health hazards and security scams, the backlash 1

Assistant Professor, Faculty of Management Studies, Mody University of Science and Technology, Lakshmangarh, District- Sikar, Rajasthan – 332311. jainpriyanka5@yahoo.co.in 2 Assistant Professor, ABV-Indian Institute of Information Technology, Morena Link Road, Gwalior, Madhya Pradesh – 474015.vishal@iiitm.ac.in 3 Assistant Professor, Faculty of Management Studies, Mody University of Science and Technology,Lakshmangarh, District- Sikar, Rajasthan – 332311. roy.ankur@gmail.com

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against globalization, ozone depletion and mistrust of big business, there is growing pressure on business leaders and their companies to deliver wider societal value (Jenkins, 2006). All these have contributed greatly to the modern concept of social responsibility of business enterprises, to rethink and alter their goal of profit maximization since it is not sufficient to sustain existence by sticking to profit maximization as the sole objective. This new awareness encouraged companies to implement practices compatible with the values of their business and to take into account the expectations of all its stakeholders. A stakeholder is defined as “any individual or group of individuals who can affect or is affected by the achievement of an organization’s objectives” (Freeman, 1984). The modern concept of Corporate Social Responsibility (CSR) states that the business enterprises in their usual process of business decision making should pay due attention to the social interests of the people in the community. Commission of the European Communities (2001) defines CSR as “a concept whereby companies integrate social and environment concerns in their business operations and in their interaction with their stakeholders on a voluntary basis, as they are increasingly aware that responsible behavior leads to sustainable business success”. It creates higher demands on managers to take a positive stance on issues regarding social responsibility and ethical behavior. Porter and Kramer (2006) suggested that if, instead, corporations were to analyze their prospects for social responsibility using the same frameworks that guide their core business choices, they would discover that CSR can be much more than a cost, a constraint, or a charitable deed; it can be a source of opportunity, innovation, and competitive advantage. Business benefits include operational cost savings through environmental efficiency measures; enhanced reputation through positive responses to stakeholder concerns; increased ability to recruit and retain staff; sharper anticipation and management of risk; and improved capacity to learn and innovate (Hall &Vredenburg, 2004). Therefore, CSR has emerged as a powerful way of making sustainable competitive profit and achieving lasting value for the shareholder a well as for stakeholders. Meanwhile, at the end of the 20th Century, authors like Bontis (2002) stated that the current trend is for organizations to focus less on material assets and more on intangible assets when seeking competitive advantages Management & Change, Volume 18, Number 1 (2014)

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and that those firms with adequate intellectual capital have a better chance of survival. Therefore, organization performance and success depends on how well organization manages its knowledge-based assets. However, most CSR research is mainly related to its correlation or linkage with financial performance and is measured by conventional financial ratios and figures. What is usually left out is the inclusion of Intellectual Capital (IC) as a variable, which could be correlated to CSR. According to Barnett (2007) and McWilliams et al. (2006) intangibles play an important role in relation to the effects of corporate social responsibility, and, these aspects interact, create competitive advantage and influence the companyâ&#x20AC;&#x2122;s value in terms of its financial performance. LITERATURE REVIEW CSR is largely understood as a range of voluntary initiatives, beyond legal and contractual requirements, which, if undertaken effectively, should eventually benefit the workforce, their families and the local community, and ultimately improve the overall welfare of the community and contribute to economic development (McWilliams and Siegel, 2001).These efforts have built the CSR paradigm on specific issues. Such as, socially responsible companies had to act voluntarily to maintain the long term symbiotic relationship between business and society (Preston and Post, 1975).As a result, the relationship developed into a kind of indispensable integration in which society interacts with business at large and business becomes responsible for its activities within society. The theoretical framework concluded that where a company has many opportunities to increase its performance, many actors can influence it. Within this context, the importance of stakeholder management increased. Stakeholders, includes employees, customers, suppliers or society. Today, CSR is focused on a stakeholder model, which has become widely accepted among contemporary business organizations. Traditionally, CSR was t seen only in context of big businesses (Kechiche & Soparnot, 2012). The emergence of SMEs into a significant sector worldwide in terms of the economic, environmental and social impact, attention has been turned to discussion and analysis of the principles and practices of CSR in small and medium size businesses. As a result this Management & Change, Volume 18, Number 1 (2014)

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sector no longer finds itself outside the CSR movement (Spence, 1999; Jenkins, 2009). Jenkins (2004) found that the focus of SMEs is often less on society or nations, and more on the individual communities within which they operate. Literature supports that SMEs are mainly oriented towards solving day-to-day problems; informal relations and communication. Interpersonal relationships are very important (Spence and Lozano, 2000); and there is a high degree of interrelation with their environment or communities in which they often act as benefactors or local activists. Due to their particular dependency on the network of interpersonal relationships, they are especially interested in investing in social capital (Spence et al. 2003). In this context, formal engagement, networking within and across sectors, volunteerism and giving to charity provide an extremely fruitful opportunity to invest in social capital, cultivating close relationships within the social and business environment. It is in this way that SMEs are able to establish mutual relationships, functional stability and survival in increasingly competitive market arenas. Common activities of CSR include working free of charge for charities, making charitable donations, recycling initiatives, health and safety programs and contribution to educational institutions. It has been found that SMEs have good links with the community as they are involved in sponsorship deals, charitable events, and back-to-work/employability schemes. The local community therefore would seem to be an important stakeholder for the majority of SMEs studied. Finally, CSR in SMEs means the possibility to pursue employeesâ&#x20AC;&#x2122; health and safety, to improve work climate and productivity, and to provide a source for differentiation and visibility in increasingly complex and dynamic markets Other studies have found that especially training practices and job equity policies have had positive effects on employee commitment and that no lay-off policies, strict equity policies or pleasant work aesthetics, engaging in long term planning, avoiding discrimination in hiring and compensating, supporting employee training and education and work family programs can satisfy employee need (Maignan & Ferrell, 2001). According to Cochran (2007), a firm with good employee relations can lower its employee turnover rate and improve employee motivation. Survey data Management & Change, Volume 18, Number 1 (2014)

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from Denmark moreover suggests reduced costs associated with hiring, retention, and absenteeism among SMEs that offer unusually generous employee benefits. Research also suggests that CSR can contribute to improved customer demand in the case of SMEs. Longo et al., (2005) report that the Italian SMEs surveyed expected consumer loyalty to be a positive result of their CSR engagement. Literature reveals that CSR brings a certain number of competitive advantages for a company. These include, enhanced reputation and corporate image, improvement of working relations with staff, stimulate confidence and loyalty, improvement in production processes and quality attracting and retaining a talented, highly-skilled; quality work force (Greening & Turban, 2000). Similar propositions are proposed by Du et al., (2007)who states that by engaging in corporate social responsibility (CSR) activities, companies can not only generate favorable stakeholder attitudes and better support behaviors (e.g. purchase, seeking employment, investing in the company), but also, over the long run, build corporate image, strengthen stakeholderâ&#x20AC;&#x201C;company relationships, and enhance stakeholdersâ&#x20AC;&#x2122; advocacy behaviors. This in turn may enhance the competitive strengths of the enterprise and make good business sense. However, academic studies of the cost-saving effects of the environmental dimension of CSR give mixed results. Measures to reduce energy consumption and material inputs are frequently cited as an aspect of CSR that can lead to cost savings. According to Miles and Covin (2000), CSR-related environmental expenditures constitute investments that pay off due to cost savings from, for example, continuous improvements, low potential litigation expenditures, lower insurance and lower energy costs and increase revenues. In contrast, Chapple et al. (2005) find significant costs associated with CSR-related waste reduction practices when applying a cost function approach to UK manufacturing at county level. Little evidence is available for CSR impacts on the cost structure of SMEs, although few of the SMEs interviewed by Jenkins (2006) reported CSR-induced cost savings. The dominance of stakeholder theory and instrumentality in CSR theory have led to ambitious conclusions that effective Corporate Social Responsibility is a legitimate antecedent to a firmâ&#x20AC;&#x2122;s competitive advantage(Greening & Turban, 2000). Accordingly, a variety of CSR Management & Change, Volume 18, Number 1 (2014)

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strategies have been introduced, including significant investments in innovative activities regarding products and management, investments in human and ecological capability, policies with integration of economic, natural, and social capital to provide competitive enhancement which ultimately leads to the improvement of financial performance. This assessment of cost benefit analysis motivates the academicians to research on the link between social responsibility and financial performance. Freeman (1984) argued that social performance is needed to attain business legitimacy. Managers have a fiduciary responsibility to all stakeholders and not just to shareholders and suggested a positive correlation between the CSR and financial performance in the long run. McWilliams and Siegel (2000) suggested that CSR is a viable antecedent to sustainable superior firm performance. They argued that it is a debatable issue as studies have shown mixed and confounded results related to the impact of CSR on financial performance, such as a positive impact (Orlitzky et al.,2003), a negative impact (Wright and Ferris, 1997), and a neutral impact (Schroder, 2007). Jawahar and McLaughlin (2001) found that in most studies “the reasons for expecting a relationship between CSR and financial performance are not clearly articulated”. Hillman and Keim (2001) suggested that a more detailed approach to studying the relationship between CSR and financial performance is necessary and this can be attained by focusing on the relationship between stakeholder management and financial performance. Cornell and Shapiro (1987) argued that the theory of stakeholder could explain the relationship between CSR and corporate financial performance (FP). According to the stakeholder theory, the value of a company is related to the cost of both “explicit claims” and “implicit claims” on a company’s resources. Stakeholders have an explicit claim on a company including owner-lenders, employees, and the government. There are numerous claims on the management of the company from the external stakeholders, which are referred to as implicit claims that consist of the continuity of supplies, on-time delivery, and the increase in the quality of products, work safety, as well as involvement in social and environmental activities. The stakeholder theory is more acceptable and relevant in explaining the relationship between CSR and Management & Change, Volume 18, Number 1 (2014)

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FP. Some have argued for a positive relationship between CSR and FP, because CSR can improve firm-stakeholder relationships and enhance the organizational reputation among customers, employees, regulators and suppliers (Waddock & Graves, 1997). Clarkson (1995) argued that managers deal with their company stakeholders and not with the public as whole. Second, the stakeholder theory is considered to be more appropriate to develop a testable hypothesis. Hence, this theory is considered useful and applicable for the interpretation of the analysis in this study as the stakeholder theory can be utilized as a framework to test empirically the association between CSR and FP. Zhiet al. (2011) concluded that when a firm engages in multiple CSR dimensions, the more related these dimensions are, the stronger the relationship between CSR and the short-term performance. Mustaruddin et al., (2011) examined the relationship between CSR and FP with respect to four CSR dimensions, namely employee relations, community involvement, product dimension, and environmental dimension. Two of the CSR dimensions, namely employee relations and community involvement, were found to be positively related to financial performance. This proves that CSR practices can be considered as effort to enhance the financial performance. Hammann et al., (2009) suggested that in case of SMEs, CSR is derived from informal positive relationships that engender trust and reciprocity in network interactions between SMEs and their employees and local communities which pay them in the long run in the form of enhancement in the scale of their business. Contrary to this, the trade-off hypothesis introduced by Friedman (1970) argues that the only social responsibility of a company is to enhance its profits. Furthermore, when companies become involved in social and environmental activities, it incurs extra expenses and decreases the earnings of the companies. Hence, according to this theory, the higher a companyâ&#x20AC;&#x2122;s CSR level, the lower the FP. Consequently, increasing the involvement of companies in social activities could increase the amount of resources spent by the company, and, as a result, reduces the profitability of the company. Thus, this places the company in a disadvantageous position compared to a company which is not involved in CSR activities. In this regard, CSR has a negative impact on -FP (Moore, 2001). Management & Change, Volume 18, Number 1 (2014)

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According to supply and demand theory which was introduced by McWilliams and Siegel (2001) the demand for the involvement of a company in CSR activities maximizes a company’s profits. Steger et al. (2007) state that in an equilibrium condition, the level of CSR may be different; however, profit may be maximized or not changed. Hence, there is no relationship between CSR and -FP. The relationship between CSR and financial performance is still debatable as the nature of the causal link is not clear. In lieu of this, contemporary academics choose to explore the benefits that CSR can offer a firm in the form of its effect on revenue and/or profitability. The Resource Based View (RBV) proposes that in order for a firm to achieve a competitive advantage it must acquire or create valuable and rare resources (Barney, 1991). Further, in order to preserve superior performance and achieve a sustainable competitive advantage, firms must find ways of protecting their resources, capabilities and distinctive competencies from competitor imitation and/or substitution (Barney, 1991).Stead and Stead, (1995) stated that Competitive advantage will be rooted in capabilities of facilitating environmentally sustainable economic activity. According to them the first capability is pollution prevention, which refers to efforts to reduce, change, or prevent emissions and effluent discharges through better housekeeping, materials substitution, recycling, or changes in the production process. The key resource for this capability is continuous improvement, which is people intensive, and it depends upon tacit skill development through employee involvement and work in “green” teams. The second capability refers as the product-oriented environmental practices of firms where environmental issues are taken into account in such product-related aspects as product design, materials used, and product packing (Christina et al., 2009). This approach thus affords a firm the opportunity for sustained competitive advantage through accumulation of socially complex resources, involving communication across functions, departments, and organizational boundaries (Hart, 1995). The key resource for this capability is stakeholder integration which has an associated involvement of key external stakeholders (e.g., environmentalists, regulators). The third capability is Sustainable Development, described as “a sustainable development strategy meaning that firms must build markets, while reducing the environmental burden created by this new economic activity.” Sustainable development should Management & Change, Volume 18, Number 1 (2014)

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thus afford opportunities for sustained competitive advantage through accumulation of rare and firm-specific resources, involving key resources of shared vision of the future and focus on new technology and competency development. According to Meso and Smith (2000), sustained competitive advantage results from strategic assets; which Barney (1991) regards as those that are internally controlled and permit the firm to formulate and implement strategies that expand its efficiency and effectiveness. Competitive advantage is thus dependent not, as traditionally assumed, on such bases as natural resources, technology or economies of scale, since these are increasingly easy to imitate. Rather, competitive advantage is, according to the resource base view, dependent on the valuable, rare, and hard-to-imitate resources that reside within an organization. They are indeed the assets which Stewart (1997) referred to “invisible assets” which in real sense is intellectual capital. It seems that the process of value creation is changing (Edvinsson, 2002). The fact is that the nature of competitive advantage has shifted from the physical to the intangible; the changing nature of competitive advantage is based on the knowledge of the firm and its activities. Hidden or intangible assets have become more important to competitiveness than physical and financial assets (Bontis, 2002).There are many synonyms for intellectual capital, such as invisible assets, hidden assets (Edvinsson and Malone, 1997) or intangible assets (Sveiby, 1997). Intellectual capital refers to the total stock of all the intangible assets, knowledge, and capabilities of a company that could create values or competitive advantages, so as to achieve its goals (Edvinsson and Malone, 1997). The notion of intellectual capital is linked to the ability to create and apply the organization’s knowledge. The knowledge economy is based on the idea that an organization’s survival depends on its ability to manage these intangible assets or intellectual resources and turn knowledge into value. These resources can be viable sources of sustained competitive advantage as these can be located in its people, its structures and its customers. Most scholars have agreed on the identification of three main components: (a) human capital, (b) structural or organizational capital, and (c) customer or relational capital. The employees in the organization made up the human capital of the organization (Bontis et al., 2000). It

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includes employees’ capabilities, skills, knowledge, technical expertise, etc. that are currently used in order to create value for the firm. Structural capital can be described as “what remains in the company when employees go home for the night” (Roos et al., 1997) such as the stocks of patents, trademarks, hardware, software, databases, organizational culture, and organizational capabilities (Edvinsson and Malone, 1997). Embedded in organizations, structural capital is the supportive infrastructure of human capital. It is central to the firm’s resources and supportive infrastructure because it enables employees to work together for the benefit of the firm. Relational capital is defined as the summation of all the relations the firm has established with its stakeholder groups such as customers, suppliers, community, and government (Bontis, 1998).Relational capital reflects the organizational value that emerges not only from a company’s relations and connections with customers, but also with current and potential suppliers, shareholders, other agents, and the society in general. Relational capital, on its part, is a reflection of a firm’s ability to interact positively with the business community. The aims of the companies that adopt social responsibility behaviors vary from the maximization of the value of their shareholders to the capabilities to interact and to respond to the needs and requests of numerous and different categories of stakeholders that are capable to influence the companies’ value creation. The investments in corporate social responsibility activities (CSRA) generate both external and internal benefits. The external benefits are related to the improvement of stakeholder relations and company reputation while internal benefits are associated with the development of new resource and capabilities related to know-how and company culture which are often intangible in nature. These internal resources and capabilities are valuable, rare, inimitable and nonsubstitutable and are termed as intellectual capital or intangible assets (Bontis, 1996). All these CSR activities reinforce the trust between company and stakeholders and improve management operations. A social responsible company follows a path that allows generating and attracting new resources and capabilities that are related to the network of relationship to which the company belongs. Consequently CSR activities can contribute to the increase of company’s intangibles and intellectual capital. Management & Change, Volume 18, Number 1 (2014)

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Deniz and Perez (2003) empirically show that companies having the strategic capabilities to respond to human resource expectations based on CSR principles distinguish themselves from other organizations and enhance their level of profitability. Passetti et al., (2009) explained that the positive effects of CSRA on organizational capital are related principally with company culture by improving the level of organizational commitment. With regard to CSRA effects on relation capital, Branco and Rodriguez (2006) suggest that company with high CSRA profile may establish and improve useful relationships with customers, supplier, and investors and consequently enhance its level of reputation. All these CSRA activities reinforce the trust between company and stakeholders and improve management operations. In doing so a social responsible company follows a path that allows generating and attracting new resources and capabilities that are related to the network of relationship to which the company belongs. A firm’s competitive capability depends upon its capacity for the deployment of its resources which is usually in combination with its organizational processes to attain the strategic objectives. In existing literature it has been established that such capabilities are critical to the pursuit of competitive advantage. The capacity of a firm to deploy its resources rests on its human capital, structural capital and relational capital, because “capabilities are information based, tangible or intangible processes that are firm specific and are developed over time through complex interactions among the firm’s resources”. These resources include tradable know-how, human capital, and physical or financial assets among other things. This makes such knowledge theoretically more interesting in pursuit of a competitive advantage for the firm. Human capital has been accepted in the RBV literature as a critical resource of the firm and considered to be the most important source of sustainable competitive advantage (Barney, 1991).Competitive advantage is based on people not on its products. The employees’ competence generates value through knowledge, skills, abilities, talent, and know-how. A good structural capital will provide a good environment for rapid knowledge sharing, collective knowledge growth, shortened lead times , more productive people (Stewart, 2000) and has a positive effect on the competitive advantage. Management & Change, Volume 18, Number 1 (2014)

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The firm’s networks of ties constitute a good source of competitive advantage as McEvily and Zaheer (1999) found that “firm actions and outcomes are substantially based on developing, maintaining and nurturing high- quality relationships with any organization, individuals or group that influences or impacts business. The concept of intellectual capital has been identified as a key resource and driver of organizational performance and value creation. In this competitive era success is based on hidden or intangible assets and it is found that these intangible assets (IC) have positive and significant impact on financial performance, customer, business processes, and learning and growth. Resources and capabilities that are unique and difficult to imitate are the foundational stones on which a firm’s competitive advantage is built (Barney, 1991). The competitive advantages thus gained, in turn, result in positive returns, as reported by most of the literature. Abdulai et al., (2012)show significant relationship between the elements of intellectual capital and competitive capabilities of firms and between competitive capabilities and firm performance. In the globalized and knowledge-based economy, the importance of hidden or intangible assets is not merely restricted to high-tech industries (Sveiby, 1997), whereas it is identified as the key resource to the growth and survival of small and medium enterprises. Tovstiga & Tulugurova (2009) further affirmed that the firm’s internal resource base and its intellectual capital is a determining factor of competitive performance in small and medium firms. Therefore, it is concluded that SMEs need to develop, manage and monitor their soft assets or intellectual capital (IC) to enhance their growth and competitiveness. SMEs should thus be able to enhance their performance and competitive advantage by a more conscious and systematic approach to knowledge management which is crucial for their survival and growth in the long run. Nixon et al., (2011) examine the mediating effect of competitive advantage in the relationship between intellectual capital and financial performance in Uganda’s microfinance institutions. Results confirmed that competitive advantage is a significant mediator in the association between intellectual capital and financial performance and boosts the relationship between the two. Further findings confirmed a partial type of mediation between the intellectual capital, competitive advantage and financial performance. Management & Change, Volume 18, Number 1 (2014)

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In the context of Greek knowledge-intensive SMEs empirical data provides supportive evidence that certain categories of intellectual capital positively contribute to corporate performance (Cohen and Kaimenakis, 2007). These findings are also supported by Fatoki (2011) who investigate the impact of human, social and financial capital on the performance of SMEs in South Africa and have shown that there is a significant positive relationship between human, social and financial capital on the performance of SMEs. In the smaller business units employees are recognized for their contribution and this is impacting positively on their attitude to work. Employees are more accountable and taking ownership and responsibility for their actions and sharing informal relationships between the owner/ manager that is crucial for the success of many SMEs. Moreover, small size gives SMEs an advantage to create a friendly atmosphere and have a close network to nurture cooperation of the employees which leads to low employee turnover and it represents an important element in the firm’s value creating process in that secures the firm from losing key skills, knowledge, and expertise. In SMEs, frequent and informal communication among the internal community should help to generate the social and intellectual capital of the employees, which is the basis of these firms’ competitiveness. Increasing the employees’ capabilities has a direct effect on the financial results of the company (Becker et al., 2001). For these reasons, it can be claimed that, training and mentoring the employees have a direct relationship with the performance of the company. Schultz (1961) argues that investment in human capital leads to an increase in human productivity, which in turn leads to a positive rate of return. Hence, human capital has been identified as the most important intangible resource for explaining firm performance variance. The other component of IC i.e. Structural capital is central to the firm’s resources because it enables employees to work together for the benefit of the firm. It also encompasses the organizational capacity, including the physical systems used to transmit and store intellectual material (Edvinsson and Malone, 1997). A good structural capital will provide a good environment for rapid knowledge sharing, collective knowledge growth, shortened lead times , more productive people and has a positive effect on the competitive. Even though, SMEs are said to be poor at Management & Change, Volume 18, Number 1 (2014)

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storing knowledge but they do keep records of good practice in handling issues for the future. Wang (2011) found that the relationship between structure capital and firm performance is insignificant. Organizational capital is composed not only of the knowledge created by and stored in a firm’s information technology system, such as structure and operating procedures, but also in intangible elements like cultural and informal routines (Reed et al., 2006). These structural characteristics or cultural elements facilitate knowledge shared, stored, and created among employees, and encourage employees to perceive their company as relatively supportive of their needs. From the perspective of relational capital, SMEs acquire more knowledge from their customers because of the close proximity and are able to develop their relational capital with greater ease, as well as using the available knowledge from their associations or membership more readily in order to achieve higher performance. RESEARCH OBJECTIVE To test the mediating role of Intellectual capital and Competitive advantage in linking CSR activities of SMEs to firm’s financial performance. RESEARCH METHODOLOGY Sample and data collection 627 small and medium size firms of different sectors distributed all over the Rajasthan state were approached to take part in the study. In order to minimize variability due to size, firms were selected within a middle range of 25–100 employees. A structured questionnaire was used for the survey, and data was collected through field investigators. They were trained to interview the owner–managers of the companies. The questionnaires were completed in all respect and hence included for the purpose of the analysis. Measures A conceptual model is developed to study the relationship between CSR and financial performance of SMEs. Two variables i.e. Intellectual Management & Change, Volume 18, Number 1 (2014)

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Capital and Competitive advantage have been proposed to mediate the relationship. For this purpose CSR is viewed to be implemented through the lens of multi stakeholderâ&#x20AC;&#x2122;s framework. Four stakeholder groups are identified and selected as supported by the literature (Brammer et al. 2006) i.e. environment, customers, employees and community or society. Different categories of intellectual capital or intangible assets i.e. human capital, structural capital and relational capital are extracted from existing literature (Sveiby, 2001).The survey instrument is developed with measurement items adapted from previous researches (Bontis, 2001). RESULTS OF DATA ANALYSIS AND FINDINGS Measurement Model IBM AMOS 19 software was used to perform CFA. The analysis was focused on two second order latent variables i.e. Corporate Social Responsibility (CSR), Intellectual Capital (IC) and nine first order latent variables viz. Environment (Env), Customers (Cus), Employees (Emp), Community (Com), Financial Performance (FP), Human capital (HC), Structural capital (SC), Relational capital (RC) and Competitive advantage (CA)with47observed variables.CFA provides an assessment of the reliability and validity of the observed variables for each latent (first and second-order) variable (Joreskog and Sorbom, 1989). Under the assumptions of multivariate normality, MLE is considered most appropriate with large samples (Joreskog and Sorbom, 1982). As the data satisfied the assumptions of univariate and multivariate normality, MLE was used. The constructs under consideration (CSR, IC, CA and FP) were jointly analyzed in a measurement model. In the measurement model, degree of variance (of construct) is measured by squared factor loadings. Observed variables are considered to have higher explanatory power when the squared factor loading for each one is more than 0.50, moderate if between 0.30 and 0.50 and poor if below 0.30 (Holme, 2001). The model fit was assessed using CMIN/DF, goodness-of-fit index (GFI; Joreskog and Sorbom, 1989), the comparative fit index (CFI; Bentler, 1990), root mean square error of approximation (RMSEA; Browne and

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Cudeck, 1993), Tucker-Lewis coefficient (TLI; Bollen, 1989), adjusted goodness of fit index (AGFI) and root mean square residual (RMR). The threshold for CMIN/DF should be less than 3.0 (Hu and Bentler, 1999) or less than 2.0 in a more restrictive sense (Byrne, 1989). However, CMIN is affected by sample size and normality of the data (Schumacker and Lomax, 2004). Therefore, the CMIN test should be used in combination with other indices. Values of GFI, AGFI, TLI and CFI should be over 0.90. Moreover RMSEA should be lower than 0.05 to indicate a close fit of the model in relation to the degree of freedom. These fit statistics are evaluated to determine whether the predetermined model best explain the relationships between the observed and latent variables or not. The proposed measurement model showed that all regression weights were significant. The absolute fit statistics showed a chi-square of 1324.556 with 976 (df) is significant (p = .000) [CMIN/DF = 1.357] with RMSEA = .035, RMR = .075, CFI = .938, and TLI = .944. This suggested that in the model absolute fit statistics are satisfactory, however other fit indices viz. GFI = .872, and AGFI = 0.863, were also not supportive. Some of the factor loadings for observed variables were having a value of less than 0.30.Covariance among the factors (CSR, IC, CA and FP) were significant (p <0.001). Given that the model is not fitting the data adequately, re specification was required. Therefore, authors decided to drop those observed variables whose factor loadings were below the acceptable level. By looking into the modification indices six variables were dropped in the following order:EMP5, CUS2, COM2, ENV2, ENV5 and EMP4. According to SMEs these parameters are not so important in relating CSR to firm performance. As a result the improved model is composed of two second order latent variables, nine first order latent variables and 41 observed variables. Each of the constructs had more than two variables and also none of the constructs were dropped during the model respecification. The measurement model showed the modified results. The absolute fit statistics showed a chi-square of 970.409 with 727 (df) was significant (p = .000) [CMIN/DF = 1.334] with RMSEA = .031, RMR = .070, CFI = .968, and TLI = .964. Moreover other fit indices viz. GFI = .902, and AGFI = .893, were also supportive. The results suggested that the model fitted adequately to the data. All factor loadings for remaining items Management & Change, Volume 18, Number 1 (2014)

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measuring the same constructs were statistically significant and are greater than 0.50, which confirmed the convergent validity of the model. Moreover, covariance among the factors (CSR, IC, CA and FP) were significant (p <0.001). Moreover, there were no cross-loading, which confirmed the unidimensionality of the constructs. According to Hair et al. (1995), the convergent validity has to be checked before proceeding with structural modelling. For testing convergent validity, composite reliability (CR)of the model along with the average variance extracted (AVE) needs to be checked. CR and AVE was tested using the methodology suggested by Fornell and Larcker(1981). The result of the CFA is shown in Table 1. Bagozzi and Yi (1988) recommended that CR should be equal to or greater than .60 and AVE should be equal to or greater than .50. However in the study, in many cases the above was not achieved (Table 1). This could be explained by the existence of several observed variables with lower factor loadings. Although it might be an indicator of weak convergent reliability, previous researchers argued that it is possible to have a poor variance extracted, yet have high construct validity (Hair et al., 2006).Hence it could be concluded that the measures used within this research were within the acceptable levels supporting the reliability of the constructs. Additionally, all factor loadings for items measuring the same constructs were statistically significant. Hence convergent validity of the constructs was established. Having analyzed the measurement models for unidimensionality and convergent validity the next stage was to perform the analysis of the structural model. Table 1: Summary of Confirmatory Factor Analysis Variable Items CUS1 CUS3 CUS4 CUS5 EMP1 EMP2 EMP3 EMP4 ENV1

Final Standardised Loadings 0.65 0.68 0.64 0.62 0.65 0.65 0.63 0.60 0.50

Average Variance Extracted (AVE)

Construct Reliability (CR)

0.41

0.74

0.40

0.72

0.28

0.61

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Variable Items

Final Average Variance Construct Standardised Extracted (AVE) Reliability (CR) Loadings ENV3 0.54 ENV4 0.57 ENV6 0.53 COM1 0.50 0.33 0.67 COM3 0.62 COM4 0.55 COM5 0.65 HC1 0.58 0.36 0.77 HC2 0.60 HC3 0.66 HC4 0.64 HC5 0.61 HC6 0.55 RC1 0.58 0.36 0.73 RC2 0.62 RC3 0.65 RC4 0.53 RC5 0.62 SC1 0.67 0.37 0.74 SC2 0.62 SC3 0.57 SC4 0.59 SC5 0.61 CA1 0.62 0.34 0.67 CA2 0.59 CA3 0.60 CA4 0.54 FP1 0.66 0.37 0.74 FP2 0.62 FP3 0.57 FP4 0.59 FP5 0.61 Chi-square = 970.409,(df = 727) (p = .000); CMIN/DF = 1.334; RMSEA = .031; RMR = .070; CFI = .968; TLI = .964; GFI = .902; AGFI = .893 Management & Change, Volume 18, Number 1 (2014)

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Structural Model Structural Equation Modelling (SEM), a multivariate technique which allows for the examination of a set of relationships between multiple independent and multiple dependent variables (Smith, 2004), was employed in this research to test the relationship between CSR and financial performance with the mediating role of IC and CA. To evaluate the structural model, goodness-of-fit indices were examined to assess if the hypothesized structural model fitted the data. Because the assumptions underlying structural equation modeling are met, the coefficient parameter estimates are examined along with the overall model fit indices to test the relationship between the four constructs (CSR, IC, CA and FP).The indices for goodness-of-fit demonstrate that this model fits the data adequately (Chi-square = 978.53, df = 766, p = .000). The GFI = .912, AGFI = .896, RMSEA = .030, CFI = .969, TLI = .971, RMR = .069 and CMIN/ DF = 1.277. The R2 for the model came to 0.83. The structural model is depicted in figure 1. The model â&#x20AC;&#x153;fitsâ&#x20AC;? well in line with current literature on the topic and previous research undertaken in this area. The model explained 66% of the variance in Customers (Cus), 64% of the variance in Employees (Emp), 58% of the variance in Community (Com), 50% of the variance in Environment (Env), 68% of the variance in Human capital (HC), 51% of the variance in Structural capital (SC), 60% of the variance in Relational capital (RC), 78% of the variance in Competitive advantage (CA), 83% of the variance in Financial performance (FP). The competitive advantage construct showed a high loading (62%) to the accessibility of resources to firms at competitive rates. Moreover, the firms have been able to project their good image to the customer, which has been reflected in its increased sales volume in the last few years. SME entrepreneurs were satisfied with the financial performance of the firm in terms of increase in profit margin and increase in sales revenue. Deeper analysis of the perception of firms operating in Rajasthan in relation to the nature of CSR and financial relationship indicates that the majority of respondents felt the financial implications of CSR are experienced in the long term. Thus, CSR can be viewed as a long term investment. Management & Change, Volume 18, Number 1 (2014)

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Figure 1: The Structural Model

Hypothesis testing result of direct effect between the variables CSR, IC, CA and financial performance has been done. Six direct effects tested are shown in table 2, and three indirect effects (mediating) are shown in table 3.

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Table 2: The Direct Effect Analysis Results Path from to CSR FP CSR CA CSR IC IC CA IC FP CA FP

Standardised Estimates 0.217 0.641 0.729 0.753 0.588 0.787

z-value 3.129** 5.636* 6.940* 7.673* 5.136* 8.540*

Table 3: The Indirect Effect Analysis Results Path from to CSR IC FP CSR CA FP CSR IC CA FP

Standardised Estimates 0.428 0.504 0.432

DISCUSSION The result of the study reveals that SMEs are discharging their social responsibilities towards various stakeholders and these CSR activities have positive effects on all the three IC categories. It has been found that employees and customers are the most important stakeholders to firms. Most of the SMEs believed that employees are critical for the success and failure of any company; they are an important firm resource and source of competitive advantage for firms. To promote congenial relationship with the employees firms are providing employees with healthy and safe work environment. The results suggest that the SMEs in the state are providing support to their staff to attain a balance in their work and personal life. The employees are able to carry out their duties and responsibilities in the most committed manner. Moreover the employees are able to align personal interest with that of firm objectives which has led to growth and prosperity of the SMEs in Rajasthan. Employees are bringing in new ideas and innovative techniques in the work place as a result of such policy initiatives. By improving the quality of products and processes in collaboration with external stakeholders the SMEs have been able to increase market share using existing and new products in the last few years.

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Results reveal that SMEs were quite aware about the environmental protection and resource conservation. The most common activities include environmental friendly packaging, recycling initiatives, ISO certification. To a lesser extent; reduction in water consumption, air pollution is carried out by firms. The most common activity towards customers was to provide them quality product i.e. assuring them about the quality criteria and supplying clear and accurate information to customers regarding labelling about products and services, including its after-sales obligations. SMEs also showed a commitment to providing value to customers by ensuring honesty and quality in all its contracts, dealings and advertising. Responding to customer complaints in a timely manner was also quite popular. The most common activities in relation to employees were commitment to their health and safety and maintaining their work/life balance. SMEs were also encouraging employees to develop skills and long term career paths. Results suggested that firms were taking care of their most valuable resource (employees) by undertaking activities for their benefit. In relation to the community, firms were actively donating funds towards charitable purposes involved with the local community through sponsorship and supporting the socio-economic projects. It has been found that employees are also volunteering on behalf of the firm. Results showed that SMEs were having recruitment policies which gave preference to local community. In the human capital construct, it was witnessed that staff were aligning their interest with the objectives of the firm. They were showing high sense of responsibility and commitment towards their assigned duties. Employeeâ&#x20AC;&#x2122;s attachment to firms was the prime mover for the enrichment of knowledge and innovative idea within the enterprise. Results indicated that the staff was skilled and competent in their work domain. Under structural capital construct, the most dominant indicator was organizational philosophy which is defined as a common system of values and beliefs embedded in the firmâ&#x20AC;&#x2122;s culture. Use of information technology for communication, coordination and information dissemination was been given much importance by firms. Moreover firms were having patents and other intellectual properties which were being viewed highly by SMEs. Within the relationship capital construct, it was observed that firms were actively collaborating with suppliers to develop and improve their products and processes, which was helping SMES to improve the quality of product and its image in the minds of the consumers. SMEs were also engaged in Management & Change, Volume 18, Number 1 (2014)

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social welfare activities in collaboration with outside agencies on a regular basis. The research suggests that there is weak direct relationship between CSR and FP. The standardized regression weight is 0.217 which is significant at 0.01 probability level. The results indicate that the SMEs are able to provide customer value through quality products at fair prices. Overall the firms have maintained transparency in dealing with customer affairs. This has helped the SMEs in increasing sales turnover over a period of time. Through formulation of humane oriented HR policies the firms have been able to retain employees which have led to the long term success of the firms. The firms have been sincere in delegating its duty towards the larger community by taking up community project and engaging in charitable activities. These initiatives have started showing positive effect on the firms in the short run and the research suggests that the real impact of CSR will be felt in the long run only. This section interprets the relationship between IC and CA. The research suggests that there is moderate to strong relationship between the two constructs. The standardized regression weight is 0.753 which is significant at 0.001 probability level. Careful examination of results reveals that SMEs are strong in human capital domain. Employees of the firms are able to align their interest with broad goals and objectives of the organization. Moreover, their innovation and creativity is helping the firm in developing knowledge base which is attracting more talented workforce in the SMEs. As most of the industrial sectors in Rajasthan state are labour intensive, this helps the firm in sustaining a competitive position in the long run. Results indicate that firms are having a good reputation in the community with respect to product quality and creativity. This has been possible to a great extent by incorporating formal knowledge management mechanism and at least a few of the firms are having intellectual properties (IPRs) in their respective domains. Due to increased involvement of the firm in the socioeconomic activities and its wider acceptance to the local community, the firms have been able to procure the necessary resources from the local businesses and other resource vendors at favourable conditions. This section interprets the relationship between IC and FP. The research suggests that there is moderate relationship between the two Management & Change, Volume 18, Number 1 (2014)

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constructs. The standardized regression weight is 0.588 which is significant at 0.001 probability level. The results indicate that the SMEs were well bestowed with human capital which is also critical for their success and sustenance. The competence level of the employees was satisfactory which is reinforced by a high sense of responsibility and commitment they show towards their organization. High commitment, responsibility and creativity of the employees have been instrumental in delivering higher sales and profit margins by the firms even during tough economic conditions. The findings are supporting previous research which states that companies which having the strategic capabilities to respond to human resource expectations based on CSR principles distinguish themselves from other organizations and enhance their level of profitability. It has been proved in past researchers that sustainable competitive advantage leads to significant positive impact on financial performance of firms. This research also shows a strong relationship between CA and FP constructs. The standardized regression weight is 0.787 which is significant at 0.001 probability level. Firmâ&#x20AC;&#x2122;s visibility and credibility increases as a result of community involvement. This leads to positive word of mouth publicity and advertisement of firmâ&#x20AC;&#x2122;s products and services indirectly. This opens up more business prospects for the SMEs in terms of partnering with larger firms and international coverage. Moreover individuals and enterprises are keen to establish long term associations with such business entities which have a good image in the society. This has a direct effect on the short run and long run performance of SMEs. Table 3 depicts the mediating role of IC and CA on the relation between CSR and FP. The results show that CA mediates the relationship in a profound way as compared to a direct relation between the constructs. The impact on FP is also significant when both IC and CA mediate the relationship. CONCLUSION The paper studied the effect of CSR on financial performance of the SMEs in the state of Rajasthan. Past researches have shown that a direct relationship between CSR and PF is weak which has been established in the present study as well. The effect of CSR on organizational performance Management & Change, Volume 18, Number 1 (2014)

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increases when it is mediated by intellectual capital and/or competitive advantage. Past studies have shown that IC has a strong effect on the performance of the firms if it is mediated by CA. This study also confirms the findings of those studies. The research brings out the fact that Rajasthan SMEs are focusing on customers, employees and human capital the most among all the other dimensions. This is leading to sustainable competitive advantage for the firms in the state, which is ultimately giving them superior financial performance. REFERENCES Abdulai, M.S., Youngsun, K., & Junghoon, M. (2012). Intellectual Capital and Firm Performance: An Empirical Study of Software Firms in West Africa. The African Journal of Information Systems, 4(1). Bagozzi, R. P., & Yi, Y. (1988). On the evaluation of structural equation models. Journal of the Academy of Marketing Science. 16(1), 74-94. Barnett, M. (2007). Stakeholder influence capacity and the variability of financial returns to corporate social responsibility. Academy of Management Reviews, 32(3), 794-816. Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management Studies. 17(1), 99-120. Becker, B. E., Huselid, M. A., & Ulrich, D. (2001). The HR scorecard. Boston, MA: Harvard Business School Press. Bentler, P. M. (1990). Comparitive Fit Indexes in Structural Models. Psychological Bulletin, 107(2), 238-246. Bollen, K. A. (1989). Structural Equations with Latent Variables. New York: Wiley. Bontis, N. (1996). Thereâ&#x20AC;&#x2122;s a price on your head: Managing intellectual capital strategically. Ivey Business Journal. Formerly Business Quarterly (Summer), 40-47.

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Bontis, N. (1998). Intellectual capital: An exploratory study that develops measures and models. Management Decision, 36, 63-76. Bontis, N. (2001). Assessing knowledge assets: a review of the models used to measure intellectual capital. International Journal of Management Review. 3(1), 41-58. Bontis, N. (2002). World Congress on Intellectual Capital Readings. Boston,MA: KMCI Butterworth- Heinemann Press. Bontis, N., Keow, W., & Richardson, S. (2000). Intellectual capital and the nature of business in Malaysia. Journal of Intellectual Capital. 1(1), 85-100. Brammer, S., Millington, A., & Rayton, B. (2006). Do CSR policies affect employeesâ&#x20AC;&#x2122; commitment to their organization. University of Bath. Branco, M., &Rodriguez, L. (2006).Corporate social responsibility and resource-based perspectives. Journal of Business Ethics. 69(2), 111-132. Browne, M. W.&Cudeck, R. (1993).Alternative Ways of Assessing Model Fit. Newbury Park: Sage. Byrne, B. M. (1989). A primer of LISREL: Basic applications and programming for confirmatory factor analytic models. New York: Springer-Verlag. Chapple, W., Morrison, P. C. J., & Harris, R. (2005). Manufacturing and Corporate Environmental Responsibilty:Cost Implications of Voluntary Waste Minimisation. Structural Change and Economic Dynamics.16, 347-373. Christina, I., Cristina, A., Lorea, N., & Asuncion, I. (2009). Social Responsibility in SMEs: A Source of Business Value. Social Responsibility Journal. 5(3), 423-434. Clarkson, M. B. E. (1995). A stakeholder framework for analyzing and evaluating corporate social performance. Academy of Management Reviews. 20(1), 92-117. Management & Change, Volume 18, Number 1 (2014)

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Cochran, P. L. (2007). The Evolution of Corporate Social Responsibility. Business Horizons, 50, 449-454. Cohen,S., &Kaimenakis,N.(2007).Intellectual capital and corporate performance in knowledge-intensive SMEs. The Learning Organization, 14(3), 241-262. Cornell, B., & Shapiro, A. C. (1987).Corporate Stakeholders and Corporate Finance. Financial Management. 16 (Spring), 5-14. Deniz, C., & Perez, S. (2003). A resource-based view of corporate responsiveness toward employees. Organization Studies, 24(2), 299319. Du, S., Bhattacharya, C. B., &Sen, S. (2007). Reaping relational rewards from corporate social responsibility: the role of competitive positioning. International Journal of Research in Marketing. 24, 224-241. Edvinsson, L. (2002). Corporate Longitude-Navigating the Knowledge Economy. Sweden: Book House Publishing. Edvinsson, L.& Malone, M. (1997). Intellectual capital: realizing your companyâ&#x20AC;&#x2122;s true value by finding its hidden brainpower. New York, Harper Business. European Commission (2001), Green Paper and COM 366, Brussels.Promoting a European Framework for Corporate Social Responsibility. Fatoki, O. O. (2011). The Impact of Human, Social and Financial Capital on the Performance of Small and Medium-Sized Enterprises (SMEs) in South Africa. Journal of Social Sciences. 29(3), 193-204. Fornell, C., &Larcker, D. F. (1981).Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research. 18(1), 39-50. Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Boston: Pitman. Management & Change, Volume 18, Number 1 (2014)

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Friedman, M. (1970). The social responsibility of business is to increase its profits. New York Times, 33. Greening, D. W., & Turban, D. B. (2000).Corporate social performance as a competitive advantage in attracting a quality workforce. Business & Society, 39(3), 254-280. Hair, J. F., Anderson, R. E., Tatham, R. L., & Black, W. C. (1995).Multivariate Data Analysis. New Jersey: Prentice Hall. Hair, J. F., William, C. B., Barry, J. B., & Rolph, E. A. (2006).Assessing structural equation modeling model validity. Hall, J.., & Vredenburg, H. (2004). Sustainable Development Innovation and Competitive Advantage: Implications for Business, Policy and Management Education. Innovation: Management, Policy & Practice, 6(2). Hammann,M., Andre, H., & Harald, P. (2009 ). Values that Create Value: Socially Responsible Business Practices in SMEs. Empirical Evidence from German Business Ethics: A European Review companies. 18(1), 37-51. Hart, S. L. (1995). A Natural-Resource-based View of the Firm.Academy of Management Review, 20(4), 986-1014. Hillman, A., & Keim, G. D. (2001). Shareholder value, stakeholder management, and social issues: whatâ&#x20AC;&#x2122;s the bottom line. Strategic Management Journal. 22(2), 125-139. Holmes, S. P. (2001). Introduction to Structural Equation Modelling using LISREAL. Perth. Hu, L., & Bentler, P. (1999). Cutoff Criteria for Fit Indices in Covariance Structure Analysis: Conventional Criteria versus New Alternatives. Structural Equation Modelling, 6(1), 1-55. Jawahar, I., & McLaughlin, G. (2001). Toward a Descriptive Stakeholder Theory: An Organizational Life Approach. Academy of Management Review, 26(3), 397-414. Management & Change, Volume 18, Number 1 (2014)

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Jenkins, H. (2004). A critique of conventional CSR theory: an SME perspective. Journal of General Management 29(4), 37-57. Jenkins, H. (2006). Small Business Champions for Corporate Social Responsibility. Journal of Business Ethics. 67(3), 241-256. Jenkins, H. (2009). A ‘business opportunity’ model of corporate social responsibility for small- and medium-sized enterprises. Business Ethics: A European Review. 18(1), 21-36. Jöreskog, K. G., & Sörbom, D. (1989). LISREL7. A Guide to the Program and Applications SPSS Publications. Joreskog, K., & Sörbom, D. (1982).Recent Developments in Structural Equation Modelling. Journal of Marketing Research. 404-416. Kechiche, A., & Soparnot, R.(2012). CSR within SMEs: Literature Review. International Business Research, 5(7), 97-104. Maignan, I., & Ferrell, O. C. (2001).Corporate Citizen as a Marketing Instrument - Concepts, Evidence and Research Direction. European Journal of Marketing. 35, 457- 484. Mc Evily, B., & Zaheer, A. (1999).Bridging ties: A source of firm heterogeneity in competitive capabilities. Strategic Management Journal. 20, 1133-1156. Mc Williams, A., & Siegel, D. (2001). Corporate social responsibility: a theory of the firm perspective. Academy of Management Review, 26(1), 117-127. Mc Williams, A., & Siegel, D. S. (2000). Corporate social responsibility and financial performance: correlation or misspecification. Strategic Management Journal. 21, 603-609. McWilliams, A., Siegel, D. S., & Wright, P. M. (2006). Corporate social responsibility: strategic implications. Journal of Management Studies. 43(1), 1-18.

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Meso, P., & Smith, R. (2000).A resource-based view of organizational knowledge management systems. Journal of Knowledge Management. 4 (3), 224-231. Miles, M. P., & Covin, J. G. (2000). Environmental marketing: A source of reputational, competitive and financial advantage. Journal of Business Ethics. 23, 299-311. Moore, G. (2001). Corporate Social and Financial Performance: An Investigation in the UK Supermarket Industry. Journal of Business Ethics. 34(3/4), 299-315. Mura, M., & Bonoli, A. (2005). Corporate social responsibility and corporate performance: the case of Italian SMEs. Corporate Governance, 5(4), 28-42. Mustaruddin, S., Norhayah, Z., & Rusnah, M. (2011).Looking for Evidence of the Relationship between Corporate Social Responsibility and Corporate Financial Performance in an Emerging Market. AsiaPacific Journal of Business Administration. 3 (2), 165 - 190. Nixon, K., Augustine, A., & Joseph, M. N. (2011). Competitive Advantage: Mediator of Intellectual Capital and Performance. Journal of Intellectual Capital. 12(1), 152-164. Orlitzky, M., Schmidt, F., & Rynes, S. (2003). Corporate social and financial performance: A meta analysis. Organization Studies, 24, 403-441. Passetti, E., Tenucci, A., Cinquini, L., & Frey, M. (2009). Intellectual capital communication: evidence from social and sustainability reporting. University Library of Munich, Germany. Porter, M., & Kramer, M. (2006). Strategy and society: the link between competitive advantage and corporate social responsibility. Harvard Business Review. 84(12), 78-92. Preston, L. E., & Post, J. E. (1975).Private Management and Public Policy. Englewood Cliffs-New Jersy: Prentice Hall. Management & Change, Volume 18, Number 1 (2014)

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Reed, K. K., Lubatkin, M., & Srinivasan, N. (2006). Proposing and testing an intellectual capital-based view of the firm. Journal of Management Studies. 43(4), 867-893. Roos, G., Roos, J., Dragonetti, N., & Edvinsson, L. (1997). Intellectual capital: navigating in the new business landscape. New York: New York University Press. Schroder,M. (2007). Is there a Difference? The Performance Characteristics of SRI Equity Indices. Journal of Business Finance & Accounting. 34, 331-348. Schultz, T. W. (1961). Investment in human capital. American Economic Review, 51(March), 1-17. Schumacker, R., & Lomax, R. (2004).A Beginners Guide to Structural Equation Modelling. New York: Lawrence Erlbaum. Smith, D. (2004). Structural Equation Modelling in Management Accounting Research: Critical Analysis and Opportunities. Journal of Accounting Research. 23, 49-86. Spence, L. (1999). Does size matter? The state of the art in small business ethics. Business Ethics: A European Review. 8(3), 163-174. Spence, L. J., & Lozano, J. F. (2000).Communicating about ethics with small firms: experiences from the UK and Spain. Journal of Business Ethics. 27, 43-53. Spence, L. J., Schmidpeter, R., & Habisch, A. (2003).Assessing social capital: small and medium sized enterprises in the UK and Germany. Journal of Business Ethics. 47(1), 17-29. Stead, W. E., & Stead, J. G. (1995).An empirical investigation of sustainability strategy implementation in industrial organizations. Greenwich, CT: JAI Press. Steger, U., Ionescu-Somers, A., & Salzmann, O. (2007).The economic foundations of corporate sustainability Corporate Governance, 7(2), 162-177. Management & Change, Volume 18, Number 1 (2014)

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INCULCATING SOCIAL RESPONSIBILITY AT GOA INSTITUTE OF MANAGEMENT (GIM) Prof. Ranjini Swamy1 Following wider consensus about the need for business to play a more responsible role in society, Goa Institute of Management (GIM) introduced a compulsory course on Social Responsibility in 2011. The course aimed at inculcating an attitude of Social Responsibility among students of its post-graduate diploma in Management (PGDM) program, through service to the underprivileged sections of society. This paper details the course design and the rationale for the design. It also shares the results of surveys conducted to assess students’ perception of learnings from the course. Further integration of the course into the curriculum requires establishing its relevance among the faculty members and students. The paper details the challenge faced in legitimizing the course and explores some reasons for the same. Perceived relevance of the course appears to be a function of its fit with shared assumptions about (a) the purpose of MBA education, (b) the desired learning outcomes and learning processes. Key words: Corporate responsibility; responsible management; management education; experiential learning; inculcating attitudes BACKGROUND The last two decades have witnessed increased attention to the role of business in society. Earlier, the role of business was to generate profit within the framework of the local regulations/ conventions. Business met this responsibility by focusing narrowly on shareholder interests2.In the process, they contributed to “externalities” i.e., social or environmental problems whose costs were borne by civil society. Unsustainable consumption of natural resources, corruption, pollution and displacement of people from their natural habitats were just some of the consequent ills. 1

Professor, Goa Institute of Management, Sanquelim Campus, Goa – 403505, India. E-mail: ranjini@gim.ac.in Phone: 0832-2366739

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Inequality rose steeply in many societies. Presently, these challenges are so large-scale and complex that governments are unable to address them on their own. Business and civil society need to join hands with government to solve these problems. This requires a review of the responsibility of business towards society. To address social and environmental concerns, business has to review strategies and business practices in the entire value chain. Further, the ecosystem of industry has to support such responsible business practices. This means all stakeholders of industry have to recognize the importance of responsible management practices. Indian Industry initially did not respond to these expectations. Their local and non-institutional investors focused only on short-term financial returns3. As global and institutional investors increased, business began to see the importance of socially responsible behavior. A series of high-profile business scandals (e.g., Satyam’s fraudulent books-of-accounts and Vedanta Group’s alleged environmental abuses in Orissa) strongly signaled the need for more responsible business. The government introduced new laws to ensure that business became responsible for their impact on society. Being part of the ecosystem of business, B-schools across the world have to review their offerings in the light of new expectations. Some believe that they are supplying firms with the “tools of their destruction”, viz. “unethical managers” who help ruin firms and the lives of many stakeholders4. They suggest that B-Schools need to go beyond meeting industry’s immediate need for functionally competent graduates. Accrediting bodies like AACSB have evolved new metrics giving importance to inculcation of responsible management5. B-Schools are struggling to meet industry’s immediate “needs” and the emerging societal expectations. This paper details how GIM responded to the situation. The first section shares the design of the course on Social Responsibility. The second section shares the perceptions of the students about their learnings from the course. The last section shares the challenge of establishing relevance to the curriculum. GIM’S RESPONSE In 2009, GIM renewed its commitment to develop more creative, socially responsible and humane managers with a global outlook. Inculcating social Management & Change, Volume 18, Number 1 (2014)

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responsibility (through curricular and extra-curricular interventions) was one way to distinguish the Post Graduate Diploma in Management (PGDM) program and legitimize it in the context of the new societal expectations. In 2011, it piloted a course on Social Responsibility, as part of the first year of the program. Social Responsibility was defined as the commitment of an individual to willingly act in the interests of those within the society of which he is part, so that the society becomes fair and inclusive6. COURSE DESIGN Objective At the end of the course, students were expected to become more socially responsible, i.e., (a) more aware about some of the circumstances and problems facing society, especially the underprivileged;(b) more concerned about their plight and (c) willing to act in their interests. We also hoped that in the longer term, students developed a vision of how they could use their knowledge within and outside their work organizations, to restore the balance between business and society. Method The institute chose to make the course compulsory7for two reasons: (a) inculcating social responsibility was a way of differentiating GIM’s graduates from others. Therefore, all students had to develop the competencies required to be more socially responsible. (b) Students’ motivation to be socially responsible would be a function of the institute’s commitment. If the institute signaled (through word and deed) the importance of socially responsible behavior, students’ enthusiasm to be socially responsible could increase. We chose to promote social responsibility through service to the underprivileged communities. We believed that the experience of taking responsibility for less privileged others and reflecting on the experience would help inculcate socially responsible behavior. •

Why focus on experience-based learning? Advocates of “experiential learning” argue that learning occurs through a transformation of experiences. However, not all experiences were educative. Only Management & Change, Volume 18, Number 1 (2014)

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those experiences that related to the learner’s past or future experiences and included all four phases of the “learning cycle8”would be educative. Serving the underprivileged communities would count as experiential learning if it(a) connected to the students’ future managerial experiences;(b) promoted reflection about the experience using multiple perspectives;(c) integrated prior learning to form hypotheses and(d) provided an opportunity to test the hypotheses in the “real world.” Intuitively, we strove to realize these principles in formulating projects9. •

Why serve the underprivileged community? The underprivileged sections bear the bulk of the costs of business decisions but lack the power to protect their interests. Working for the underprivileged would help students get to know their circumstances and build personal relations with them. They would appreciate the consequences of business decisions for the underprivileged. This we hoped would strengthen the students’ desire and ability to address community concerns also while making business decisions.

The course had two components: a 3-credit (150 hours) experiential project component (known as the Give Goa initiative) and 1-credit classroom-learning component. In the project, students get to know the circumstances and needs of the weak group of society, and implement solutions to address some of the needs. They were expected to develop a realistic sense of the circumstances of the under-privileged and appreciate what individuals and organizations could do to help them. The classroomcomponent explored the notion of responsibility,10how organizations conceive and practice it and the implications thereof. It helps sensitize students to the individual, organizational and societal factors that support or inhibit responsible behavior. Organization of the course Conceiving experiential-learning projects: We worked with a variety of NGOs, public sector departments/ firms to get to know how they were trying to help weaker sections of society and what challenges they faced in doing so. These organizations were treated as our clients. We jointly evolved projects that met the following criteria: (a) addressed Management & Change, Volume 18, Number 1 (2014)

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some critical challenges faced by the client (b) offered students an opportunity to work with and contribute to some under-privileged sections, and (c) prepared students for the managerial role. We generated about 50 projects. Orienting students: We conducted a formal orientation program to prepare students for the course. We informed them about the course structure and its rationale, prepared them for the projectâ&#x20AC;&#x2122;s requirements and motivated them to put in their best efforts. A few sessions on project management and stakeholder management helped prepare them for the project. We tried to motivate the students in many ways. For instance, we shared videos wherein the community had appreciated the contributions of their senior batch. The senior students described the benefits they got out of the project (e.g., improved soft skills, and application of concepts learnt during the program). Creating project units: Client representatives presented the projectbriefs to the students. Students then formed six-member groups11and specified their top three project-preferences with the Coordination team. Groups received projects based on their stated preferences. The groups worked on the project for 20 Thursdays under the guidance of a faculty member from GIM and a mentor from the client. The commitment of both of these people was critical for success. A steering-team comprising three faculty-members coordinated the projects. Operational support came from Samarthan, a group of volunteer-students of the first and second year. Monitoring Progress. The faculty-guides and client-mentors monitored progress throughout the life of the project. They reviewed progress in weekly meetings and through weekly reports. In the weekly reports, students shared their observations of the client and the community, described what they did and what support they needed. Weekly meetings helped groups review what they did and plan for the next visit. Besides these, an independent panel of faculty members helped review the progress at the middle of the project and provided critical feedback. Evaluation. As the course was part of the curriculum and carried significant credits, students were concerned about the fairness of evaluation, especially with regard to the projects. Over time, we sought to enhance fairness in project-evaluation in the following manner: Management & Change, Volume 18, Number 1 (2014)

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•

Who will evaluate: We decided to involve multiple stakeholders in the project evaluation, to ensure fairness. (See Annexure 1 for details.) Each stakeholder however, evaluated what he/she could observe of the group’s performance12.

•

What to evaluate. Project performance was a function of several factors, some of which were beyond the control of the group members (eg., client support). We therefore felt the need to evaluate inputssuch as effort, discipline and commitment – besides project outcomes.

•

How to evaluate: Given the use of multiple stakeholders, standardized assessment was necessary to enhance objectivity. We developed a standardized scale for each performance measure, with guidelines about how to award marks.

•

Enabling a shared understanding among stakeholders. The guidelines for awarding marks often required qualitative judgments. Therefore, a shared understanding was critical for ensuring fair assessments. We attempted to achieve this by briefing the stakeholders about how to use the standardized scales. We are still evolving such a shared understanding.

We conducted the classroom sessions on Responsibility after the conclusion of the projects. During the course, students explored the notion of responsibility in a corporate setting. Through films and discussions with executives, they saw why corporations and executives within needed to behave more responsibly. STUDENT PERCEPTIONS AND BEHAVIOR In mid-2012 and 2013, we conducted surveys to assess the students’ perceptions about their experience during the projects and the learnings there from. The survey- questionnaire evolved from focus-group discussions. We obtained responses from at least two students from each project to ensure representativeness. Altogether 132 students responded to the 2012 survey and 82 students responded to the 2013 survey. The responses indicate improvements in the students’ reactions to the course and perception of benefits:

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Table 1: Student responses to survey about perceptions of learning 2011-12 2012-13 (n=132, represent (n=82, represent all groups) all groups) Got a better insight into the lives of community

90%

94%

Felt more concerned about the community

75%

93%

Would like to take up the concerns of the community in the future

60%

96%

Got a better understanding of the functioning of organizations

45%

82%

Learnt to manage other better

60%

93%

Felt the project was a publicity gimmick

38%

20%

Table 1 indicates that a large proportion of respondents reported more concern about the underprivileged community and willingness to address the concerns of the community in the future. A high proportion maintained that the course gave them a better insight into the lives of the community. Additionally, a greater proportion of respondents reported other benefits such as a better understanding of the functioning of organizations. A preliminary analysis of the Reflection Reports (2013) suggested that students were better able to identify needs of the community, influence others to support the community and build trustful relationships with the clients & community. We also tracked the voluntary initiatives by senior (PGP 2) students to connect with the community. In 2012, students formed a “club” called Samarthan to help manage the logistics of the projects and reach out to the community. Through Samarthan, about 15% of the students voluntarily participated in various community-initiatives such as (a) organizing a flashmob- cum- street play as part of the International initiative called “One Billion Rising,” to highlight the need for women’s empowerment; (b) participating as volunteers in marathons and fetes organized to raise funds Management & Change, Volume 18, Number 1 (2014)

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for NGOs; (c) organizing events to create awareness among neighbourhood children about career options/ health & hygiene;(d) donating a waterpurifier to a neighbouring school and some kitchen utilities to a home for destitute women and(e) persuading on-campus retailers to sell sweets made by some self-help groups; ordering sweets from self-help groups on festivals. These voluntary initiatives could indicate the beginnings of a positive attitude towards the community’s welfare among a small proportion of students. However, it is not clear that such concern would translate into responsible business decisions. ESTABLISHING LEARNINGS

RELEVANCE:

CHALLENGES

The course is distinct in the following ways: First, the focus is on building attitudes, not on developing functional knowledge or skills. Second, learning primarily occurs through serving the community and reflecting on that experience. Third, it requires students to solve real-time problems of the community using an integrated (not functional) problem-solving approach. We ran the course for three years based on the unstinting support of the top management of GIM. Greater ownership from faculty members and students is required to integrate it into the curriculum and promote other offshoots. A shared understanding about the course and its relevance to the curriculum is essential to promote this ownership. What factors determine the perception of its relevance to the curriculum? The relevance of a course depends on its fit with existing conceptions of the purpose of MBA education, and with the assumptions underlying the program design. We discuss some of these issues below and hypothesize about how each of these could affect perceptions of the course’s relevance: Purpose of MBA education: For some, the purpose of the MBA is short-term: to enable the student to get a well-paying corporate job as soon as he/she graduates. The increasing fees and the students’ increased dependence on bank-loans to fund the fee justify such a focus. A recent survey of 16000 prospective MBA students from across the world Management & Change, Volume 18, Number 1 (2014)

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reinforces this perception: about 60% of the respondents said they pursued an MBA to improve job opportunities, accelerate career progression and enhance salary potential13. For others, the purpose is longer-term: to prepare students for careers in management. The purpose affects stakeholder expectations from and behavior during the program. B-Schools aimed at providing well-paying jobs attract students who seek higher salaries as soon as they graduate. They target recruiters who offer better salaries while recruiting graduates. The curriculum focuses on developing the knowledge and skills relevant to obtaining well-paying jobs. Courses that have “bio-data value”, i.e., that appeal to recruiters and hence enhance immediate job prospects, are preferred over those with no immediate relevance. In such a context, the relevance of a course on Social Responsibility depends on its “bio-data value” and utility for obtaining well-paying jobs. The course needs to be designed and marketed accordingly to improve perceived job-relevance. B-Schools aimed at preparing students for a managerial career (a longer-term view) behave differently. They prefer recruiters who offered suitable career options to those who merely offered higher salaries on joining. The curriculum prepares students for a career (rather than for the immediate job). It focuses on developing competencies required for a managerial career. Course materials expose students to managerial responsibilities across levels. In this context, the relevance of a course on Social Responsibility depends on whether it prepares students for a managerial career, i.e., provide students with knowledge and skills that enable effective performance. The course needs to be designed and marketed accordingly to improve perceived career-relevance. Assumptions underlying the program design: The perceived relevance of a course is also a function of what are considered legitimate learning outcomes and learning processes of the program.

Legitimate learning outcomes: An MBA program may promote several learning outcomes: knowledge of managerial concepts (know-what), application of concepts & techniques in a variety of circumstances (know-how), and appropriate values & attitudes (know-why).

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Some of these learning outcomes are perceived as more legitimate. For instance, some MBA programs emphasize functional knowledge and skills (know-what and know-how which are rooted in “business” or “wealth-maximization” values), over “other” attitudes & values such as fairness, compassion and integrity. Underlying this discomfort with inculcating “other” attitudes & values are the following arguments: (a) these values and attitudes should not be taught through the curriculum as these are personal choices and any “imposition” was non-legitimate; (b) these values and attitudes cannot be taught to adults (though “business” values can). Thus inculcating “other” values & attitudes is less legitimate than inculcation of functional knowledge and skills. The focus of the course on Social Responsibility at GIM is on building these “other” attitudes through service to the community. MBA programs that legitimized the development of appropriate “other” attitudes (know-why) would perceive the course on Social Responsibility as “in line”.

Legitimate learning processes: Stakeholders differ on how to inculcate the desired learning outcomes: What roles and responsibilities should the teacher and student adopt? What instructional methods would ensure learning? What control mechanisms will motivate students to learn? What environments within the classroom promote learning? Answers to these questions reflect assumptions about when and how students learn. Educational institutions in societies like the US assume that students learn when they actively participate in the learning process and take charge of learning. Hence, they foster independent thinking (including questioning) and self-directed learning. In Asian educational institutions, on the other hand, questioning seniors or assuming responsibility for learning may not be legitimate . Faculty members direct the learning and impart concepts through lectures and presentations. Students listen, recall and faithfully reproduce the concepts taught.

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The course on Social Responsibility requires students to learn experientially. For this, students have to (a) think independently, based on the evolving context; (b) direct their efforts in an ambiguous and constantly changing context; and (c) review applicability of past learning in the light of the emerging context. Faculty members have to act as facilitators of learning in weekly discussions. MBA programs that legitimize independent-thinking & self-directed learning among students are more likely to view the course on Social Responsibility as relevant. SUMMARY The single-minded pursuit of shareholder interest by business leads to "externalities". As these externalities become too large and complex, governments find themselves unable to address them on their own. Business and civil society therefore need to join hands with government to solve these problems. Managers of business enterprises hence require new competencies to deal with new roles. An important element in this competency is an attitude of social responsibility. This paper described an experiment conducted at GIM to inculcate social responsibility. It detailed the course design, the rationale that governed the design and the outcomes thereof. While awareness of the social context of business has improved among the students, whether this awareness will translate into socially responsible business decisions remains unexplored. Only time will tell. The course received the unstinting support from the top management. However, further integration of the course into the curriculum requires establishing its relevance to the faculty members and students. The paper detailed the challenge faced in legitimizing the course and explored some reasons for the same. Perceived relevance of the course appears to be a function of its fit with shared assumptions about (a) the purpose of MBA education, (b) the desired learning outcomes and learning processes.

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Annexure 1:Evaluation scheme for the experiential projects in the course on Social Responsibility

REFERENCES Alcaraz, J.M., and Thiruvattal, E. (2010). An interview with Manuel Escudero, The United Nationsâ&#x20AC;&#x2122; Principles of Responsible Management Education: A global call for sustainability. Academy of Management Learning and Education. Vol. 9(3), 542-550. Globerman, S. (2011). The social responsibility of managers: Reassessing and integrating diverse perspectives. Business and Society Review. Vol.116 (4), 509-532. Giacalone, R.A. (2007). Taking a red pill to disempower unethical students: creating ethical sentinels in business schools. Academy of learning and Education. Vol.6 (4), 534-42. Gardner, H. (Ed.). (2007). Responsibility at Work: How leading professionals act (or donâ&#x20AC;&#x2122;t act) responsibly. San Francisco: Jossey Bass. Kolb, D. (1976). Management and the learning process. California Management Review. Vol.18 (3), 21-31.

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Speece, M. (2002). Experiential learning methods in Asian cultures: a Singapore case study. Business Communication Quarterly. Vol.65 (3), 106-121. Young, M.R.., Caudill, E.M., and Murphy, J.W. (2008). Evaluating experiential learning activities. Journal for Advancement of Marketing Education. Vol.13, 28-40.

END NOTES 1

See for instance Globerman, S (2011) The social responsibility of managers: Reassessing and integrating diverse perspectives. Business and Society Review. 116(4):509-532. 2

Source: http://www.theguardian.com/global-development/povertymatters/2011/feb/01/india-companies-corporate-social-responsibility 3

See for instance Giacalone, R.A (2007). Taking a red pill to disempower unethical students: creating ethical sentinels in business schools. Academy of learning and Education, 6(4): 534-42 4

See for instance Alcaraz, J.M. &Thiruvattal, E.(2010). An interview with Manuel Escudero The United Nations’ Principles of Responsible Management Education: A global call for sustainability. Academy of Management Learning and Education, 9(3):542-550 5

See for instance Howard Gardner (2007) (Ed.) Responsibility at Work: How leading professionals act (or don’t act) responsibly. San Francisco: Jossey Bass 6

It was offered as a 4-credit course.

According to David Kolb, learning is a four-stage cycle: an immediate concrete experience triggers observation and reflection. The observations form the basis of a theory (a set of hypotheses) which serves as a guide in acting to create new (concrete) experiences. Source: Kolb, D (1976 ) “Management and the learning process”. California Management Review, XVIII(3): 21-31

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Young, M.R., Caudill, E.M, Murphy, J.W. (2008). Evaluating experiential learning activities. Journal for Advancement of Marketing Education, 13:28-40 9

Howard Gardner (2007) (Ed.) Responsibility at Work: How leading professionals act (or don’t act) responsibly. San Francisco: Jossey Bass 10

Students formed groups such that there was at least one girl and one Konkani/ Marathi speaking member. This helps to gain acceptance by the community and in communication with it. 11

Clients evaluated the contribution of students to the community/ client and the discipline demonstrated by each group at the project site. Faculty guides examined each group’s inputs during meetings and the group’s weekly submissions. Student-peers assessed the relative effort and quality of contribution of each member within their group. Panels of faculty members assessed the quality of presentations made. 12

Source:http://www.gmac.com/~/media/Files/gmac/Research/ prospective-student-data/2012prospectivestudentssr.pdf 1314

See for instance Speece, M. (2002). Experiential learning methods in Asian cultures: a Singapore case study. Business Communication Quarterly. 65(3): 106-121

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Guidelines for Contributors 1.

Manuscripts and all editorial correspondence should be addressed to: The Editor, Management & Change, IILM Institute for Higher Education, 3, Lodhi Institutional Area, Lodhi Road, New Delhi-110003. E-mail: management.change@iilm.edu

Articles should be written in MS Word, Times New Roman font, font size 12 and should be submitted in soft copy, typed single spaced with one inch margin on all sides. Manuscripts should not exceed 15 pages including annexure and should be submitted with the cover page bearing only the title of the article, author/s’ names, designations, official addresses, phone/fax numbers, and email addresses. Author/ s’ name should not appear on any other page.

All articles must be accompanied by an abstract of 150–200 words and 4–6 keywords. Keywords should be in running separated by a comma (,) and only the first letter of all the keywords should be capitalized.

Use British spellings in all cases rather than American spellings (hence, ‘programme’ not ‘program’, ‘labour’ not ‘labor’, and ‘centre’ and not ‘center’).

Use ‘z’ spellings instead of ‘s’ spellings. This means that words ending with ‘-ise’, ‘isation’, etc., will be spelt with ‘z’ (e.g., ‘recognize’, ‘organize’, ‘civilize’).

Use single quotes throughout. Double quotes only to be used within single quotes. Spellings of words in quotations should not be changed. Quotations of 45 words or more should be separated from the text and indented with one space with a line space above and below. Notes should be numbered serially and presented at the end of the article. Notes must contain more than a mere reference.

Use ‘twentieth century’, ‘1980s’. Spell out numbers from one to nine, 10 and above to remain in figures. However, for exact

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138 Guidelines for Contributors

measurements, use only figures (3 km, 9 per cent, not %). Use thousands and millions, not lakhs and crores. 8.

Use of italics and diacriticals should be minimised, but used consistently.

Tables and figures to be indicated by numbers separately (see Table 1), not by placement (see Table below). Present each table and figure on a separate sheet of paper, gathering them together at the end of the article. All Figures and Tables should be cited in the text. Sources for figures and tables should be mentioned irrespective of whether or not they require permissions.

10. A consolidated listing of all books, articles, essays, theses and documents referred to (including any referred to in the tables, graphs and maps) should be provided at the end of the article. Guidelines specified in the Publication Manual of the American Psychological Association (5th edition) must be followed. Inverted names: In each reference, authorsâ&#x20AC;&#x2122; names are inverted (last name first) for all authors (first, second or subsequent ones); give the last name and initials for all authors of a particular work unless the work has more than six authors. If the work has more than six authors, list the first six authors and then use et al. after the sixth authorâ&#x20AC;&#x2122;s name. Arrangement of references: Reference list entries should be alphabetized by the last name of the first author of each work. Chronological listing: If you have more than one work by the same author(s), list them in order by the year of publication, starting with the earliest. Sentence case: In references, follow sentence case for the titles of papers, books, articles, etc. Title case: In references, Journal titles are put in title case. Management & Change, Volume 18, Number 1 (2014)

Guidelines for Contributors 139

Reference styles: Book Hochschild, A.R. (1983). The Managed heart: Commercialization of human feeling. Berkeley, CA: University of California Press. Article in an edited book Van Maanen, J., & Kunda, G. (1989). Real feelings: Emotional expression and organizational culture. In L.L. Cummings, & B.M. Staw (Eds), Research in Organizational Behavior (pp. 43–103). Greenwich CT: AI Press. Conference Proceedings Akaike, H. (1973). Information theory and an extension of the maximum likelihood principle. Proceedings of the 2nd International Symposium on Information Theory (pp. 267–281). Budapest, Hungary: Akademiai Kiado. Article from the web Hort, L., Barrett, M., & Fullop, L. (2001). Doing hard labor: Gendered emotional labor in academic management. Retrieved from www.mngt.waikato.ac.nz/ejrot/cms conference/2001/Papers/ Gender/Hort Journal Article Harris, L.C. (2002). The emotional labor of barristers: An exploration of emotional labor by status professionals. Journal of Management Studies, 39(4), 553–584. 11. The reference to other works should be provided in the text using citations written in the author-datemethod. Author-date method: Follow the author-date method of in-text citation, e.g., (Morris, 2000). Quotes: When directly quoting from a work, include the page number in the citation. Management & Change, Volume 18, Number 1 (2014)

140 Guidelines for Contributors

Citation Styles: One Work by One Author: (Morris, 2000) One Work by Multiple Authors: (Morris and Feldman, 2000) One Work by Three or More Authors: (Morris et al., 2000) Works with No Author: Cite the first few words of the reference list entry (usually the title) and the year, for example, (‘Study Finds’, 1982). Two or More Works by Different authors in One Citation: (Morris, 1980; Rafaeli, 1988; Sachs and Blackmore, 1998) Two or More Works by the Same Author(s) in One Citation: (Sachs and Blackmore, 1998, 1999) Two or More Works Published in the Same Year by the Same Author(s): (Morris, 1980a, 1980b, 1980c) Authors with the Same Last Name: To prevent confusion, use first initials with the last names: (T.V. Rao, 2001; M.K. Rao, 1998). Work discussed in secondary source: In the text, name the original work, and give a citation for the secondary source. For example, if Seidenberg and McClelland’s work is cited in Coltheart et al. and you did not read the original work, list the Coltheart et al. reference in the References. In the text, use the following citation: In Seidenberg and McClelland’s study (as cited in Coltheart, Curtis, Atkins, and Haller, 1993).... 12. Book reviews must have details like name of author/editor and book reviewed, place of publication and publisher, year of publication, number of pages and price.

Management & Change, Volume 18, Number 1 (2014)