Essay: CSR strategies

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  • Subject area(s): Business essays
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  • Published on: February 28, 2016
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  • CSR strategies
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Similar to Militna (2012) study of using Carroll’s pyramid for consumer behavior with regards
to CSR, Sharma & Shravani (2013) conducted a study of a similar vein in India, however added the
India, arguably, has one of the longest histories when implementing CSR strategies in
businesses. However, recent years has shown a swift change from traditional philanthropy
techniques to a direct engagement with business.
Reference: Cone Communications (2013)
52%
88%
77%
27%
67%
50%
0% 20% 40% 60% 80% 100%
Consumers who believe they can make
significant change through thier purchase
decisions
Consumers who are willing to buy products with
a social/environmental benefit
Consumers who would tell thier family and
friends about a cpmpany’s CSR initatives (WOM)
World Average India
MSc Management CID: 00972342
11
dimension of ‘environment responsibilities’. Findings showed that Indian consumers value economic
responsibility and the ethical dimension the most followed by philanthropic. However, the legal and
environmental dimensions have a mild impact on consumer behavior. Sharma & Shravani (2013)
found that consumers prefer a firm that indulges in philanthropic activities such as participating in
community services and sponsoring education, indicating they want businesses to contribute to the
welfare of the community. Also, it is not surprising that the legal dimension was ranked as least
important, Indians have been known to bend and ignore stipulated rules mainly due to the
widespread corruption (esp. bribery) that allows many people to get away with doing so.
Another study by Mishra (2012) on this topic found that Indian consumers expect companies
to engage in CSR initiatives as it can impact their purchasing motives. These initiatives also help
the company in building a good reputation that in turn, increases their consumer following as shown
by Smith (2003) and Bird et al., (2007) in section 2.3.3. Indian consumers have also been known to
punish and reward companies as shown by e.g., Sen & Bhattacharya (2001) in section 2.3.3, they
are also prepared to pay a premium for goods that contribute to the society and would prefer buying
these products, as shown by e.g. Auger et al., (2003) in section 2.3.1. Mishra (2012) findings
regarding price sensitive consumers was similar to the findings by Dubinsky et al. (2005) in section
2.3.2, in that price sensitive consumers do not always buy cheaper products just because they are
cheap, they expect corporations to operate in an ethical manner and would prefer buying a product
from such organizations.
As more MNC’s started opening their operations in India due to globalization, they also
brought in and deployed their very own company CSR initiatives. When one talks about MNC CSR
in India, one of the largest beverage companies in the world come to mind. Coca-Cola was awarded
the Golden peacock award in 2008 for the several community initiatives it has taken, especially in
saving water (Faheem, 2009). However, going back five years, this wasn’t the case as a report by
the Center of Science and Environment argued that Coca-Cola had been selling drinks that
contained a high level of pesticides that were known to cause a series of illnesses (e.g. birth
defects, cancer) and accused Coca-Cola of extracting large amounts of ground water and polluting
water sources (Hills & Welford, 2005). This led to the banning of Coca-Cola’s products in a few
Indian states, along with the company earning the brand of a ‘corporate villain’ (Pirson & Malhotra,
2008). Following this, sales dropped by 30-40% as did stock price and a survey among Delhi
consumers found that they agreed with the banning of the drink and boycotting of the brand and
there were numerous protests and demonstrations held against Coca-Cola across cities in India
(Hills & Welford, 2005). According to Pirson & Malhotra (2008), the reason why the consumers
reacted the way they did is due to Coca-Cola’s refusal to acknowledge that the accusations were
true. As a country that ranked highest in UAI among the BRIC nations, Indian consumers do not like
ambiguity in the information they are given. When Coca-Cola denied claims in order to prove it’s
MSc Management CID: 00972342
12
integrity, consumers felt betrayed that led to adverse effects for the brand. In order to recover from
this, Coca-Cola became a member of the World Wide Fund for water in 2007 and signed up to the
CEO Water Mandate in order to improve water usage and develop the framework to maintain water
sources (Pirson & Malhotra, 2008). Coca-Cola also engaged in mixture of implicit and explicit CSR
activities that according to Hofstede’s IDV values (Image 1) is preferred by Indian consumers such
as by launching several rainwater harvesting projects to address water scarcity and depleting
groundwater levels (Implicit) and joining WWF and CEO water mandate, as mentioned above
(explicit).

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