Corporate Social Responsibility in Indian Pharmaceutical Industry
An Exploratory Study
Outlook of CSR in India
History of CSR in India
Philanthropy in Indian Society
Modern Form of CSR in Indian Society
Profile of Indian Pharmaceutical Industry
Rationale for Selection
CSR Activities by Indian Pharmaceutical Companies
Major Influences Over CSR Activities
Scope of CSR Activities
Comparison of Indian & Western Pharmaceutical Companies
This research paper is concerned with the recent practices of Indian pharmaceutical companies in the field of corporate social responsibility. For this purpose, various research questions were devised which were intended to explore the scope and nature of these CSR activities in comparison with international practices. The research was based on secondary data available on the subject matter. A careful analysis of the given information revealed that the concept of CSR is not new Indian pharmaceutical industry.
Instead of being based on specialized management theories, these CSR practices are driven by social, cultural and economic factors. Secondly, the history of subcontinent has also played its role in shaping CSR in India. After thorough analysis it was found that there is a considerable degree of variation between Indian and western pharmaceutical companies when it comes to CSR compliance. These efforts are mainly focused on healthcare, education and society's welfare whereas environmental protection is a rather ignored area. It was also established that with the age of the pharmaceutical company, the scope of its CSR practices also varies greatly mainly because of availability of resources.
However, where the foundation of CSR has been laid down in Indian pharmaceutical industry, there is a need for strict regulations and legislations which would hold these pharmaceutical companies liable for environmental protection and providing long-term solutions to diseases.
Chapter 1: Introduction
Corporate social responsibility (CSR) refers to the commitment of a business to improving the quality of life of their clients or customers, their employees, the local community and the society at large. This term covers the efforts undertaken by the business towards sustainable economic development (Holme & Watts, 2006).
CSR initiatives seek to establish businesses as good corporate citizens in the society (Sagar & Singla, 2004). They are essentially the ethical responsibility of all corporations and businesses and are commensurate with the concept of "compassionate capitalism." The efforts include everything done with the purpose of social upliftment and development. Other considerations for these activities include economic reasons, reduced risk, increased access to capital, larger market share, better supplier relationships, and especially increased customer satisfaction and loyalty (Agarwal, 2008). A study conducted by Mishra and Suar in India showed that responsible actions and dealings with primary stakeholders increased firm performance (Mishra & Suar, 2010).
The pharmaceutical companies exist in an industry that serves as a bellwether of economic liberalization, so they need to be very careful of their interactions with societal members as well as their positive contributions towards society (Mitra, 2012).
This research aims to conceptualize corporate social responsibility in the pharmaceutical industry of India and judge the scope and content of activities they carry out for the benefit of the community at large. For the purpose of this research, a secondary data is used for evaluation purposes and the comparison between the practices of Indian pharmaceutical companies and western companies is performed. The research is intended to evaluate the current status of CSR compliance in India. For this purpose, historical background along with development of pharmaceutical industry in India is evaluated. The evaluation of rationale behind the philosophy of CSR in India helped in performing a thorough analysis of the current CSR practices. Through this research, the literature review of the secondary data is performed in the light of given research questions by using explorative research methodology.
Chapter 2 Literature Review: Outlook of CSR in India
In order to under CSR has been flourishing in Indian pharmaceutical industry, it is important that a comprehensive overview of current practices of CSR in India economics is obtained. For this purpose, a correlation of current practices will be performed with the historical development of CSR in Indian economy. CSR has emerged out of basic business ethics. These business ethics are expected to set out a framework within which the enterprises operate (Caza et al. 2004). In Indian society, most of the concepts of CSR have been rooted out of basic regime of social welfare. As per the research conducted by Gopal and Karjat (2012), the whole process of CSR has been rolled out in Indian economy in four phases. The first phase was concerned with the charity and philanthropy. Values, cultural norms, traditions were the main driving forces which caused the CSR to gain grounds in Indian society.
2.1 History of CSR in India
The first period was prior to 1860 which is known as pre-industrialization era. In this era, the wealthy families of the region were contributing to overall welfare of the society. Building temples and helping the overall population in overcoming problems caused by natural calamities and epidemics was one form of social welfare. However, with the arrival of British colonies in sub-continent, this culture of social welfare changed its landscape. In the second phase, the movement of independence began in which major stress was levied on the industrialists to show their commitment to the society. This was precisely the time when figures like Mahatma Gandhi appeared as the sole examples of social workers. Where most of the industrialists focused on well-being, there were many who contributed to the society and the changing scenario of the subcontinent by developing a character of trusteeship. As put up by Mahatma Gandhi, the industries should be the temples of modern India. Trusts, schools, colleges, hospitals and other social welfare organizations came into existence during the same timeframe. In early 1900s when the struggle for independence was gaining grounds, the main focus of Gandhi regime was on rural development and women empowerment (Khan, 2008).
The third phase continued from mid of twentieth century. This was the time when Indian economy was presenting an outlook of mixed economy. The power was being transferred from the government to the private sector and many industries, and entrepreneurs along with private organizations emerged in this time period. Where the public sector tried to refrain from being a passive player, the resultant was higher tax rates, embargos, restrictions on the private organizations and licensing system. As a result of these troubles, a culture of malpractices emerged. The rich began to become richer and the overall balance of the state wealth got disturbed which lead to formation of labor laws, and other legislations related to corporate governance and environmental issues. The fourth phase of this economic and social change began after 1980s. This was the precise period when the Indian private industries and firms began to make efforts in promulgating a culture of corporate social responsibility which later on became an integral part of business strategy mode. From 1990s onwards, the major interest of western buyers was in environmental impacts of the productions being taking place in India. Therefore, special international standards were set so that the environmental and labor laws are considered for the continuum of business. Hence, in order to remain active in international industry, the Indian private companies were forced to comply with international CSR standards.
2.2. Philanthropy in Indian Society
When business ethics in the western society are based on the Abrahamic religious traditions, the CSR culture in Indian industry is also stemming out of Gandhism. The cultural and social outlook of Indian society helps in establishing a notion that there is a harmonious relationship between man and nature. The multifaceted presence of religious ideologies in the Indian culture gives the CSR practices in Indian industry a spiritual outlook instead of a realistic business practice. Hence, the idea is to give preference to salvation over worldly gains and urges to attain profit (Sharma & Talwar, 2005). Therefore, the current business practices of corporate social responsibility are based on spirit of voluntary sacrifices and sharing keeping the future gains and harmony in nature in consideration.
A simple example of the attempt of causing minimum harm to the society is the spirit of vegetarianism. The current model of CSR practices in Indian economy especially pharmaceutical industry is based on the social trusteeship theory which was based on the ideology of Gandhi. It was his idea of non-violence which later on formed the basis of struggle for independence and which acted as a concrete ground against British rule in the subcontinent. The idea of Gandhi trusteeship theory was to cause no harm to any living thing and nature itself, and acknowledgment of the rights of others along with compliance to basic grounds of morality. Since the evils of industrial developments without any consideration to social welfare, were causing harm to the roots of Indian society, Gandhi presented the philosophical theory of trusteeship which was intended to focus on women independence and rural development.
The whole idea of this Gandhi's philosophy was based on the idea that everyone is equal before Almighty powers and…