Financial Performance and Social Responsibility: Indian Scenario

The form and content of the capitalist world economy is fast evolving and we find capital being increasingly concentrated and centralised as the battle of market competition intensifies. Companies have to keep running just to stay in the same place so intense is the competition. One of the factors that make the critical difference between the companies is the public perception of a business's value systems that are best exhibited by initiatives in discharging its Corporate Social Responsibility (CSR). From a long time several Researchers have reported a positive, negative, and neutral impact of corporate social responsibility (CSR) on financial performance. This inconsistency may be due to flawed empirical analysis. In this paper, we study the relationship between social and financial performance of a company. In present study Top 1000 Indian firms are examined for the financial year 2007-08, which are rated by karmyog (Mumbai base NGO), but for the purpose of research only 37 companies were considered, who spend some amount to fulfil their corporate social responsibilities and then relationship between their financial performance and expenditure on corporate social responsibility is measured by using correlation and regression. The analysis reveals that there is a positive relationship between CSR and financial performance and the descriptive and inferential measures shows that Corporate social expenditure depends upon the financial performance of the Company. But at the same time we also observe that most of the top Indian companies are spending nothing on part of their social responsibilities.