Lessons from India’s Struggles with Corporate Purpose

RESEARCH HANDBOOK ON CORPORATE PURPOSE AND PERSONHOOD, Elizabeth Pollman & Robert Thompson eds., Forthcoming

26 Pages Posted: 15 Dec 2020 Last revised: 21 Sep 2021

See all articles by Afra Afsharipour

Afra Afsharipour

University of California, Davis - School of Law ; European Corporate Governance Institute (ECGI)

Date Written: November 20, 2020

Abstract

The debate on corporate purpose is not confined to Western developed economies. Rapidly developing economies like India are similarly grappling with how to define and develop a legal framework around corporate purpose. For over a decade, India has taken a multi-pronged approach toward redefining corporate purpose. These include voluntary guidelines, corporate social responsibility mandates in corporate law, a stakeholder-oriented articulation of director fiduciary duties, and increased sustainability disclosure for listed firms.

The success of India’s multi-pronged initiatives has been mixed. While domestic philanthropic giving has increased significantly, it is unevenly distributed. And mandatory CSR, a stakeholder-oriented approach to corporate law, and additional sustainability disclosures have made little dent in India’s massive inequality, poverty, corruption and pollution.

The Indian experience presents an important perspective for the corporate purpose debate from a country where firms are dominated by controlling stockholders. In a country where politics and business are deeply intertwined, and where powerful controlling stockholders have an outsized role, stakeholderism may make little headway. Instead, the Indian approach to stakeholderism provides an environment where corporations can use their CSR efforts and corporate purpose rhetoric to curry political favor with the state, while the state can use stakeholderism to politically signal that it values society, even in the face of rising inequality and persistent poverty.

Keywords: Corporate Purpose, Corporate Social Responsibility, CSR, Stakeholders, India

JEL Classification: K22

Suggested Citation

Afsharipour, Afra, Lessons from India’s Struggles with Corporate Purpose (November 20, 2020). RESEARCH HANDBOOK ON CORPORATE PURPOSE AND PERSONHOOD, Elizabeth Pollman & Robert Thompson eds., Forthcoming , Available at SSRN: https://ssrn.com/abstract=3735034 or http://dx.doi.org/10.2139/ssrn.3735034

Afra Afsharipour (Contact Author)

University of California, Davis - School of Law ( email )

Martin Luther King, Jr. Hall
Davis, CA CA 95616-5201
United States

HOME PAGE: http://law.ucdavis.edu/people/afra-afsharipour

European Corporate Governance Institute (ECGI) ( email )

Belgium

HOME PAGE: http://www.ecgi.global/users/afra-afsharipour

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