Corporate Social Responsibility its impact on Stakeholder

Currently, large industries like garments, Textile and Leather industries in India have interested to implement CSR activities. Hence, this study examined the causal relationship between stakeholders’ and CSR implementation in leather footwear industries based on employees’ perceptions. After reviewing several works of literature we developed CSR implementation measurements. For analysis of CSR implementation, a total of 891 respondents were taken from leather footwear industries of Vellore District in Tamil Nadu. Then we applied frequency, percentage, Confirmatory factor analysis and structural equation model for this data analysis. The empirical result showed that environment, customer, owner/shareholder, community have a significant positive effect on CSR implementation in leather footwear industries. However, it was also confirmed that employees have a negative significant effect on CSR implementation. Consider identified evidence of determinant factors of CSR implementation, managers of leather footwear industries should take actions to improve CSR implementation and to alleviate those problems. Introduction Corporate social responsibility (CSR) in India has become an important aspect of managing industries like footwear Industries, Leather Manufacturing food processing, beverages,and textiles. As well said by Hohenen (2007), the business can only flourish when the communities and ecosystems in which they operate are healthy. In a study by Ingley, Mueller, and Cocks (2010), CSR implies all the proper social, environmental and economic actions that a firm must incorporate to satisfy the concerns of stakeholders and the financial requirements of shareholders. CSR is the procedure for assessing an organization’s impact on society and evaluating their responsibilities. And also is a form of corporate self-regulation integrated into a business modal. It is sustainable, involving activities that an organization can uphold without negatively affecting the business goals. It begins with an assessment of each business that should have a positive impact through its activities on; Customers, Suppliers, Environment, Communities, and Employees (Yasmin&Shamshuddin, 2014). The CSR investments lead to higher levels of credibility (Lin, Chen, Chiu, & Lee, 2011), improved image or reputation (Tewari, 2011), higher employee retention (Kim and Park, 2011) and build customer relationships (Peloza& Shang, 2011). CSR is an organization’s obligation to engage in activities that protect and contribute to the welfare of society, including general communities, customers, shareholders, the environment and employees (Davis & Frederick, 1984). Henrique and Sadorsky (1999) pointed out that stakeholders can influence organizational behavior via direct pressure or by conveying information. Primary stakeholders (shareholders and investors, employees, customers, government) are essential for the survival of the company; secondary stakeholders (media, nonprofits) influence public opinion and thus can damage or enhance a company’s reputation (Godfrey, Merrill, & Hansen, 2009; Harrison, Bosse, & Phillips, 2010). Author Clarkson (1995) stated that primary stakeholders influence CSR implementation more than do secondary stakeholders. According to Campbell (2007), secondary stakeholders could have a direct impact on CSR implementation. Also, secondary stakeholders exert indirect impacts by influencing primary stakeholders, usually through the provision of information or by setting social agendas, such as through mass media. As reported by IMF (2006) that Developing countries’ economies are changing rapidly. Their organizations have a profit-making growth market for their operational activities. It also has significant social and environmental problems that may include civil wars, disasters and political instability (UNDP, 2006). © 2020 JETIR October 2020, Volume 7, Issue 10 www.jetir. org (ISSN-2349-5162) JETIR2010324 Journal of Emerging Technologies and Innovative Research (JETIR) www.jetir. org 2495 Developing nations will be forced to adopt CSR practices in response to environmental and social factors such as globalization, economic growth, investment and business activity (World Bank, 2005). Besides, Visser (2007) showed that CSR in Africa is still at an early stage. The legal infrastructure is poorly developed; hence it is a less demanding driver of CSR. Carroll (2016) indicated that the majority of the world’s population lives in developing countries and each country’s experience its own unique social, political and environmental issues. These countries are in the process of industrialization and are often characterized by unstable governments, higher levels of unemployment, limited technological capacity, unequal distribution of income, unreliable water supplies and underutilized factors of production. As a result of rapid industrial development, policies are pursued that aim to attract greater foreign investment, and the investors are often keen to start benefitting from fiscal incentives and cheap labor. While these strategies make economic sense, they have adverse social and environmental effects, including the use of child labor, low or unpaid wages, unequal career opportunities, occupational health and safety concerns, and increased pollution (Carroll, 2016). Academic and business people of India were interviewed about CSR implementation and revealed that a handful of individuals control the majority of private sector wealth. Firms in India do not think in terms of CSR while for the most part, are concerned with economic survival. Ownership structure has a decided impact on CSR in a given country. The proportion of public versus private ownership of firms matters because it influences how executives make decisions about CSR; in a publicly-traded company the interests of shareholders must be considered. As economies grow, the trend is often towards increasing market capitalization, which in turn should have some bearing on the nature of CSR (Robertson, 2009). 2.Empirical literature review and hypotheses development As pointed by Maimunah (2009), the stakeholder approach has been developed as one of the strategies in improving the management of the firm. It is also said as a way to understand reality to manage the socially responsible behavior of a firm. Hopkins (2003) provided that CSR means treating the stakeholders of the firm ethically or responsibly. Strategic CSR is when a firm undertakes certain caring corporate community service activities that accomplish strategic business goals (Lantos, 2002). Smith (2003) stated that CSR is the obligations of the firm to society, or more specifically, the firm’s stakeholders those affected by corporate policies and practices. CSR is a concept whereby business organizations consider the interest of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities and other stakeholders as well as their environment. This obligation shows that the organizations have to comply with legislation and voluntarily take initiatives to improve the well-being of their employees and their families as well as for the local community and society at large (Maimunah, 2009). To measure CSR implementation within the organizational strategic planning systems. CSR is the continuous management of business processes to produce an overall positive impact on society. Hence, the Company and/or industries strategic planning systems provide the foundation for Owners/Shareholders, Employees, Environment, Community, Customers and Government. All these stakeholders influence CSR practices of the industries/company. 2.1 CSR and owner/shareholder It is one of the important stakeholder groups that companies must serve (Freeman, 1984) and it can influence important organizational decisions (Lambooy, 2010). A firm’s activities affect the employees, the environment and the society. Hence, it is evident that part of a business’s CSR engagement may have to account for the interests of its shareholders from a CSR perspective. The result of previous studies shows that CSR aims to reduce the agency issue because CSR is considered to be a means of reconciling business goals with social and ethical ends and of avoiding a conflict of interest among managers, shareholders and other stakeholders, thus their finding confirms that CSR disclosure in the company may be used as a means of anticipating and avoiding social pressure to enhancing the firm’s image or reputation status (Riyadh, Sukoharsono, &Alfaiza, 2019). Based on the literature review, this study proposes the following hypothesis: H1: The owner/shareholder of a corporation has a significant impact on CSR activities. © 2020 JETIR October 2020, Volume 7, Issue 10 www.jetir. org (ISSN-2349-5162) JETIR2010324 Journal of Emerging Technologies and Innovative Research (JETIR) www.jetir. org 2496 2.2. CSR and environment An industry activity could have some environmental impacts. To start addressing them, the company needs to prioritize and develop a strategy on how to tackle these issues (UNDP, 2010). As stated by Turker (2009), today, the responsibility of Corporations to the natural environment is not only to avoid environmental harm but also to protect and improve the natural environment. The right of future generations is another important dimension in stakeholder management. Environment-friendly products, hazardous-waste management, pollution control, recycling (Sen& Bhattacharya, 2001). Integrating the environmental dimension in the management system of a business improves its environmental performance (Huang & Watson, 2015). The study of green human resource management practices showed most organizations that require survival, sustainability, and the creation of a good positive image. As a result, most firms encouraged a green approach as a way of acting socially responsible and creating a sustainable environment. Henc