What Drives Location Preference for Corporate Social Responsibility (CSR) Investments in India?

Abstract

Corporate Social Responsibility (CSR) is seen as a means for companies to contribute towards broader societal goals beyond their immediate industrial focus, and companies are known to donate a part of their profits to social development for education, health, and other sectors. In 2014, the Government of India made CSR mandatory for companies beyond a certain level of profitability. It was observed however that many geographies in need of financial assistance for social development actually did not receive much CSR funds. In this paper, we investigate what might be the reasons behind how companies choose the locations for their CSR investments. In particular, we examine political reasons where companies may use CSR to seek favours from politicians. We find several interesting patterns and show that there might be grounds for the government to regulate CSR to some extent.