The Forces Driving and Hindering Corporate Social Responsibility in India By Gurnek Bains

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By Gurnek Bains

Gurnek Bains, Founder and Chairman of YSC, one of the world’s leading corporate psychology consultancies

CSR is sometimes seen as a luxury that can only be afforded by Western multinationals whose strengths enable them to look beyond the pursuit of short-term and narrow goals. However, there is much evidence that CSR is an important theme for many Indian leaders. Surprisingly, the data suggests Indian executives may be more concerned about CSR than those from many other parts of the world.

A McKinsey Survey of international executives found to their surprise that 90% of senior Indian executives felt that business should have a broader societal purpose than simply making profits. The figure for American Executives was 40% and only 10% of Chinese executives endorsed the view. Similarly a study involving executives at 98 Indian companies by HBR found that Indian leaders put a much stronger emphasis on businesses having a positive social purpose and looking after their employees than did American leaders.

In fact, they put serving the interests of shareholders at the bottom of four areas of priority whereas American leaders put it first. However, while a sense of CSR is evident in many circles of Indian business, it is also significantly lacking in others.

In my book, Cultural DNA: The Psychology of Globalization, I argue that there are some significant features in Indian culture that propel a focus on CSR as well as certain deep seated attributes that mitigate against it. Understanding both the positive and the countervailing forces is helpful for progressing the CSR agenda in the country.

On the positive side, the following factors can be identified:

Belief in a broader purpose to life – I argue that for many reasons the early modern humans who settled in India were able to move up the Maslow hierarchy of needs much more quickly than people in other regions. The benign Indian environment enabled a concern for the higher things in life and indeed the strong religious instinct within Indian culture in large part arise from this fact. Many business leaders are able to look beyond a narrow view of what they should be pursuing in life and turn their attention in part to broader goals.

Ahimsa – The concept of “cause no injury” is deeply embedded in Indian cultural DNA. I argue that this arises in large part from the fact that uniquely the humans that moved to India did not have to fight their way in against other competitor human species. Non-violence and a concern for life are deeply embedded elements within Indian cultural DNA. In business, the concept of Ahimsa means that there is more of a focus on positive social contribution and people than one might naturally expect for companies in emerging markets.

The HBR survey quoted above also found that twice as many Indian leaders thought that human capital drove success, compared to American executives. However, over 80% of HR executives said that employee development was critical for business success compared to just 4% in the United States.

Inequality- For a variety of reasons societal inequality is also high in India. Across the world we find that CSR tendencies can be reinforced in context where leaders of successful companies are aware of the vast discrepancies in the conditions of people around them. This is especially the case where the state does not provide a particularly secure safety net or enforces certain responsibilities in a reliable or consistent manner

Family Values – In many environments, executives are beholden to a range of diverse shareholders and this means aligning people around CSR initiatives can be difficult. Many significant businesses within the Indian corporate environment are led by individual founders or members of the founding family. In such contexts it is much easier for the leaders to commit to long-term CSR objectives that may not be of immediate benefit to more short-term stakeholders.

However, there are certain forces which also mitigate against effective CSR in the Indian environment:

Horizontal segregation- After Sub Saharan Africa, India has the highest level of genetic diversity in the world. I argue in my book that in Africa this lead to virtual segregation of communities into tens of thousands of tribal groups. In India, because geographic separation was less possible it led, in the context of a high pathogen environment, to horizontal segregation. Evidence indicates that caste has been around in India for thousands of years and genetic research suggests that there has been very low rates of marriage outflow from many communities with outside of one’s caste.

This strongly engrained sense of horizontal segregation can limit empathy for others and lead to a focus on narrower sectional goals and a preparedness to disregard the interests of groups to whom one does not have high levels of loyalty. Understanding and fighting this psychological tendency within Indian culture is essential if the CSR agenda if to be advanced in a major way.

Corruption/difficulty of doing business- For a variety of deep seated cultural reasons, many officials in India see business as an opportunity to extract gains for themselves. India is also rated as one of the most difficult countries in the world for people to do business in. For many Indian business leaders, day to day life is consumed by managing these challenges – leaving little passion or energy for driving wider societal goals. Tackling these issues would unleash the high levels of pent up energy within Indian executives for CSR activities.

Tendency to focus on the short term- Inevitably, given where India has been as a country, many businesses struggle with the challenge of survival and getting through things one day at a time. CSR is a flower that flourishes best in environments where people have the luxury of being able to focus on the long-term picture. In my experience Indian leaders also tend to regard CSR as a worthy act rather than as an intrinsic lever for building engagement with their communities and work forces or as a way of driving tangible business benefit in the long run.

Understanding the above forces and creating a dialogue between the ‘converted’ vs the ‘unconverted’ would be helpful for leveraging the strengths for CSR that are latent, but often only partially expressed at the moment, in Indian business culture.

The research cited here is covered in Gurnek Bains’ book Cultural DNA: The Psychology of Globalisation (Wiley 2015)

[ By Gurnek Bains, Founder and Chairman of YSC, one of the world’s leading corporate psychology consultancies. YSC has 20 offices around the world and works with 40% of FTSE100 companies, leading U.S. multi-nationals, as well as a host of companies in other regions. Gurnek is listed in HR Magazine’s Top 100 Most Influential People and has worked for over 25 years with senior leaders around the world. He is author of the best-selling “Meaning Inc: The Blueprint for Business Success in the 21st Century” and his latest book “ Cultural DNA: The Psychology of Globalization” was published in March 2015.]

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