Why Firms Need a Social Heart for Better Business Strategy
Featuring Hariom Manchiraju
Mandatory CSR is often seen as an additional burden, but a new study finds that it can benefit both firms and the government.
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Hariom Manchiraju
Associate Professor of Accounting at the Indian School of Business (ISB). He holds a PhD and an MBA from the State University of New York – Buffalo, a Master of Financial Management (MFM) from Sri Satya Sai University, India, and Bachelor’s degree in Commerce from Osmania University, India.
Key Takeaways
- The study looks at how India’s mandatory CSR law changed firms’ pricing power.
- Firms responded in three ways. NEWSPENDERs began CSR only after the law. PROSOCIALs continued their existing CSR efforts. NONSPENDERs chose not to invest in CSR.
- After the mandate, NEWSPENDER firms charged higher prices and earned larger gross margins, especially when their CSR spending was supported by advertising.