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Mukesh Gulati and Ruchita Sanwal

Micro, small and medium enterprises (MSMEs) have a pivotal role in the socio-economic development of India owing to their vast number and their employment generation potential. However, most of the enterprises are typically small and unregistered. Provision of social security through legal measures is limited due to weak enforcement of regulatory policies and entrepreneurial attitudes. A development project funded by the European Union, ‘Scaling up sustainable development of MSME clusters in India’ (2012–16), undertaken by the Foundation for MSME Clusters (FMC) in partnership with various institutions to promote energy efficient measures in foundry clusters in the states of Punjab, Rajasthan and West Bengal, significantly benefited the foundries economically. As a result of the project, the enterprises were more receptive to the otherwise perceived non-business cases of social issues. Occupational health and safety (OHS) and labour welfare were targeted as part of the corporate social responsibility (CSR) activities adopted in the project. This chapter draws on the lessons learned during this project to highlight key factors that can trigger adoption and scaling up of CSR activities among MSMEs. The chapter demonstrates that entrepreneurs’ lack of awareness about the potential business case arguments for CSR activities is the first hurdle. Second, the role of local industry leaders and business membership organisations is crucial in establishing a business case among industry. Lastly, ensuring continuity of interventions through cost reduction by standardisation of such activities, local institutionalisation, and linking up with other funding options in industrial clusters, is important for scaling up such interventions.

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Mukesh Gulati, Peter Lund-Thomsen and Sangeetha Suresh

In this chapter, we investigate corporate social responsibility (CSR) in industrial clusters in the Indian context. We use the definition of CSR as given in the Indian Ministry of Corporate Affairs’ National Voluntary Guidelines (NVGs) for Business Responsibility: ‘the commitment of an enterprise to operating in an economically, socially and environmentally sustainable manner, balancing the interests of diverse stakeholders’. Our choice of India as the focus of our chapter is justified by the fact that the Indian economy has grown tremendously in recent decades. Moreover, not only do Indian enterprises sell their products successfully in international markets, but there is also an increasingly large consumer base within India. Indeed, Indian industrial clusters have contributed to a substantial part of this growth process, and there are several hundred registered clusters within the country. At the same time, several attempts have been made at promoting the adoption of CSR in MSMEs in Indian industrial clusters. In fact, India has proved to be a kind of laboratory for experimenting with different types of cluster-based CSR and is thus an interesting location in relation to the broader aim of this handbook, which focuses on the role of CSR in MSMEs. Hence we contribute to the literature on CSR in industrial clusters and specifically CSR in Indian industrial clusters by investigating the drivers of CSR in India’s industrial clusters.