The predators assuage to the prey – The effectiveness of CSR initiatives of companies in Kerala

The dimensions of the triangular relationship between companies, the state and the society has been rapidly transforming ever since the dawn of the present millennium and firms can no longer continue to act as independent entities regardless of the interest of the general public. The relationship between companies and society has been evolving from that of philanthropic coexistence to that where the mutual interest of all the stakeholders is given paramount importance. Corporate Social Responsibility (CSR) has become one of the key elements of sustainable business. An examination of the present status of corporate social responsibility (CSR) would be an ideal starting ground for the conceptual development of suitable corporate business practices for emerging markets. Kerala, has achieved social and educational development comparable to most Western nations and has been acclaimed worldwide for its Kerala model of development though this achievement is not yet matched by industrial growth or economic development. With over a thousand companies registered and head quartered within the state coupled with many national and international ones operating in the state, will this regulatory mandate on CSR spending be a shot in the arm in social development of the state is a question that seeks answer from various quarters. The combined CSR spending in Kerala by all the qualified entities put together will work out to be around Rs 350 core to Rs 400 crore. It is in the backdrop, the study examined the CSR effectiveness of seven drivers namely regulatory compliances, brand reputation, employee interests, community concerns, investor interests, environmental interests and sustainability initiatives as identified by companies in Kerala in design and implementation of their CSR initiatives. The study relied on structural equation modelling based on partial least squares path modelling (PLS-PM) using data collected from 91 executives, who are directly involved in CSR planning and implementation. The first order constructs as mentioned as drivers of CSR were modelled with five measured variables each and the second order construct namely effectiveness of CSR was evaluated using standardised construct scores of the first-order constructs as indicators. The results of analysis revealed that overall model fit was adequate, and all the drivers of CSR showed a high coefficient of determination of more than 0.43 except the employee interests which showed an R-squared of only 0.32. The dependent variable namely sustainability where all the other 6 drivers converge showed an R-square of 0.70.