Convergence of CSR and Industry 4.0. Recent Trends in Indian Public Sector Enterprises

Full text

Proceedings of the 5th NA International Conference on Industrial Engineering and Operations Management
Detroit, Michigan, USA, August 10 - 14, 2020
© IEOM Society International
Convergence of CSR and Industry 4.0. Recent Trends in
Indian Public Sector Enterprises
Arun K.
Department of Commerce and Management
Amrita School of Arts and Sciences
Amrita Vishwa Vidyapeetham, Amritapuri, India
arunkpillai@am.amrita.edu
U. Krishnakumar
Dean, Faculty of Arts, Media and Commerce; and
Director, Amrita School of Arts & Sciences, Kochi, India
asaskochi@gmail.com
Dayana Das
Department of Commerce and Management
Amrita School of Arts and Sciences
Amrita Vishwa Vidyapeetham, Amritapuri, India
amritalakshmi@am.amrita.edu
Abstract
Public sector enterprises (PSEs) in India are under constant scrutiny to reduce their excessive burden on environment
and labor force, while improving efficiency and effectiveness in a sustainable manner. Advances in manufacturing
technologies and automation have forced PSEs in India towards digitalisation of industrial production and creating
efficiencies. Consumers of products and services are inclined towards companies that have established Corporate
Social Responsibility (CSR) practices towards making societies better and saving lives. This study intends to
determine the areas of convergence of Industry 4.0 and CSR in Indian PSEs, which could generate significant
economic, environmental, and social benefits. and ultimately, sustainable. Orientating PSEs in India towards industry
4.0 has a direct impact on employees and, finally, on society. For implementing successful Industry 4.0 strategies,
CSR policies and strategies of Indian PSEs and its stakeholders must direct their initial efforts in upskilling their
employees in order to achieve economic, social and environmental sustainability.
Keywords
Corporate Social Responsibility, Industry 4.0, Public Sector Enterprises, and Sustainability
1. Introduction
Change is inevitable, and when it happens all of a sudden, the term revolution is ascribed to it. The evolution of
businesses has occurred through such revolutionary changes, although the processes of change are spread across
decades. The first industrial revolution, referred to as Industry 1.0 was marked by the concept of machines and factory
system resulting in organized businesses. The second industrial revolution, referred to as Industry 2.0 was largely
powered by electricity and management as a science began to take shape. The third industrial revolution or Industry
3.0 built upon Industry 2.0 and was driven by integrated circuit and allied technologies towards efficient, stable, and
cost productive operations. Faster processing and internet speed in the recent years were the precursors to the fourth
industrial revolution or Industry 4.0. Convergence and integration of big data solutions, cloud services, automation
processes, integration technologies, Internet of Things (IoT), cybersecurity systems, additive manufacturing,
augmented reality and simulation technologies are the driving forces of Industry 4.0. In order to ensure future growth,
it is imperative that organizations embrace and integrate the technologies relevant to the sector in which they operate
to become more efficient, more agile and faster Time-To-Market (TTM) for new products and services (Schwab,
2017).
3955

Proceedings of the 5th NA International Conference on Industrial Engineering and Operations Management
Detroit, Michigan, USA, August 10 - 14, 2020
© IEOM Society International
CSR is the set of policies, practices, and programs that augment the relationship between business and society and are
integrated into an organization's strategic and operational activities (Bowen, 1953; Carroll, 1999). The primary
objective of CSR is not only managing its stakeholders in an ethical and responsible manner, but also in building a
better community and a sustainable world. CSR activities and practices adheres legal, economic and ethical principles
(Carroll, 1999; Schwartz & Carroll, 2003, Prasad et.al, 2018) and are directed towards the benefit of people, profit,
planet, also known as the ‘triple bottom line’ (Elkington, 1998). Employee well-being, Corporate Governance,
Business ethics, conservation of natural resources, community development and environmental protection are some
of the prominent CSR areas of attention (Blowfield & Murray, 2008). Meeting current needs without disrupting the
future needs is considered sustainable development (Brundtland, 1987) and sustainability is considered a variation of
CSR predominantly by mid and large cap companies of oil and pharma sector during CSR reporting (Ihlen, Bartlett,
& May, 2011, p. 6). Weder and Karmasin (2011) have proposed a “quadruple bottom line” postulating that ethics and
commitment must be understood communicatively, as well.
Prior to 1960s in India, CSR was predominantly a philanthropic activity in which organizations mainly supported the
government programs for socioeconomic development. Of late, Indian companies have begun to comprehend the
relevance and significance of CSR, as well as understanding their responsibility towards shareholders and stakeholders
(Urmila, 2011). The laws governing CSR come under the Companies Act, 2013, and became effective on 1 April
2014. The criteria for a company to compulsorily engage in CSR were; if its net worth was more 500 crore or earned
revenue of 1,000 crore or more or if its net profit was over 5 crore during the immediately preceding fiscal, The
organization should spend 2% of their average net profit in immediately preceding three financial years on activities
related to social development such as sanitation, education, including special education and employment, eradication
of hunger, poverty and malnutrition, conservation of heritage, art and culture, and enhancing vocation skills and
literacy of children, women, elderly, and the differently abled (Anil et. al, 2019). Prior to enactment of CSR laws,
private companies showed a greater predilection towards CSR activities, although no discernible difference was noted
between private and public sector after April 2014 (Anil et. al, 2019). Indian companies keep investors informed
through official disclosures about their future strategies, not only from financial point of view, but also from an ethical
standpoint. Communicating to customers that the organization is socially responsible and ensures the wellbeing of
employees and community is a tested measure of establishing credibility and building long lasting relations (Arun,
2020).
Public sector enterprises (PSE) were primarily established to achieve sustainable growth of Indian economy. Since
1948, PSEs have witnessed tremendous growth in size and volume of investment (Jain, 2014, Prasad. et.al, 2020).
PSEs in India have strived to achieve high economic growth, a major macroeconomic objective and to maintain
stability in balance of payments. Promoting redistribution of income, regional development and creating employment
opportunities. were the key thrust areas of PSEs in India. Following the economic reforms of 1991, Indian PSEs began
to compete with domestic private sector companies and large multinational corporations, by investing in contemporary
technology initiatives and have adopted the various technologies driving Industry 4.0. Thus, the continued focused
CSR efforts towards achieving sustainable development have helped several of the PSEs to play a critical role in
building the Indian economy and modern India, and moving towards stakeholder capitalism (Arun, 2020). CSR
activities have helped these PSEs to develop a stronger Indian economy and promoting sustainable development, a
fillip to the image of modern India. Our study was directed towards 5 of these Indian PSEs to assess the convergence
of the drivers of Industry 4.0 and the various stakeholders or dimensions of CSR.
2. Materials and Methods
Qualitative data analyses of the official disclosures and interviews of five PSEs were done to understand the
convergence patterns of drivers of Industry 4.0 and the CSR activities. Following is the list of companies.
2.1 Indian Oil Corporation Limited
Indian Oil Corporation Ltd (IOCL) was established as an oil marketing entity in 1959. IOCL operates along the entire
hydrocarbon value chain – from exploration, production, refining, transportation and marketing of oil and gas and
petrochemicals. The company is now actively looking into alternative energy.
2.2 Oil and Natural Gas Corporation
3956

Proceedings of the 5th NA International Conference on Industrial Engineering and Operations Management
Detroit, Michigan, USA, August 10 - 14, 2020
© IEOM Society International
Oil and Natural Gas Corp Ltd (ONGC), incorporated in 1993, is a Maharatna public sector undertaking of the Govt.
of India. ONGC’s business interests span the entire hydrocarbon value chain and also include renewable and
alternative sources of energy. ONGC is engaged in exploration, production, refining, transportation and marketing of
oil and gas and petrochemicals with interests in new sources of energy.
2.3 Coal India Limited
Coal India Ltd (CIL) was incorporated in 1974 as Coal Mines Authority Ltd and acquired its present name in 1975.
CIL has 7 coal producing subsidiaries and its operations are spread across 82 mining areas, 8 Indian states. The
company's key suppliers include 98 out of 101 coal based thermal power plants. CIL also offers consulting services
in mine planning.
2.4 Bharat Petroleum Corporation Limited
Bharat Petroleum Corporation Ltd (BPCL) was nationalized in 1976 under the name of Bharat Refineries Ltd, which
was changed to BPCL in 1977. BPCL is engaged in the exploration, production and retail of petroleum and petrol-
related products. like petrol, diesel, kerosene, LPG, specialty oils, automotive engine oils, and other products.
2.5 National Thermal Power Corporation Limited
NTPC Ltd (NTPC) was incorporated in 1975 and is a major power player with presence in the entire value chain of
the power generation business. Apart from generating electricity via hydro, nuclear and renewable energy sources,
NTPC offers consultancy, power trading, training of power professionals, rural electrification, ash utilization and coal
mining as well.
3. Discussion
Industry 4.0 technologies such as big data solutions, cloud services, automation processes, integration technologies,
IoT, cybersecurity systems, additive manufacturing, augmented reality and simulation technologies are mapped
against shareholders, employees, suppliers, financial institutions, society, customers, government, law and special
interest groups, the dimensions of CSR.
3.1 Indian Oil Corporation Limited
CSR activities directed towards suppliers enabled automation and integration technologies to be implemented.
Introduction of automation technologies was perceived as a negative trait and learning technologies introduced
through augmented reality did not gather momentum. Simulation of processes showing the measured taken to mitigate
environmental concerns was received positively by residents living around the plants as shown in Table 1.
Table 1. Convergence Matrix of Industry 4.0 driver and CSR of Indian Oil Corporation Limited
Industry 4.0 Technologies
Big Data
Solutions
Cloud
Services
Automation
Processes
Integration
Technologies
IoT
Cybersecurity
Systems
Additive
manufacturing
Augmented
Reality
Simulation
Technologies
CSR dimensions
Shareholders
Employees
Suppliers
Financial
Institutions
Society
Customers
Government
Law
Special
Interest
groups
Convergence with benefits
Convergence with negative impact
3957

Proceedings of the 5th NA International Conference on Industrial Engineering and Operations Management
Detroit, Michigan, USA, August 10 - 14, 2020
© IEOM Society International
3.2 Oil and Natural Gas Corporation
CSR activities directed towards suppliers enabling integration technologies to be implemented along the value chain
was received positively. Introduction of automation technologies was perceived as a negative trait as shown in Table
2. Simulation of processes showing the measured taken to mitigate environmental concerns was received positively
by residents living around the plants. Supply chain integration with global partners was viewed favorably by the
government. Automation in financial transactions was viewed favorably by financial institutions.
Table 2. Convergence Matrix of Industry 4.0 driver and CSR of Oil and Natural Gas Corporation
Industry 4.0 Technologies
Big Data
Solutions
Cloud
Services
Automation
Processes
Integration
Technologies
IoT
Cybersecurity
Systems
Additive
manufacturing
Augmented
Reality
Simulation
Technologies
CSR dimensions
Shareholders
Employees
Suppliers
Financial
Institutions
Society
Customers
Government
Law
Special
Interest
groups
Convergence with benefits
Convergence with negative impact
3.3 Coal India Limited
CSR activities directed towards employees using augmented reality and simulation as part of safety measures was
viewed positively as shown in Table 3. Enabling automation technologies while viewed favorably by shareholders did
not enthuse employees. Availability of data was received positively by environmental activists and medical fraternity.
Table 3. Convergence Matrix of Industry 4.0 driver and CSR of Coal India Limited
Industry 4.0 Technologies
Big Data
Solutions
Cloud
Services
Automation
Processes
Integration
Technologies
IoT
Cybersecurity
Systems
Additive
manufacturing
Augmented
Reality
Simulation
Technologies
CSR dimensions
Shareholders
Employees
Suppliers
Financial
Institutions
Society
Customers
Government
Law
Special
Interest
groups
Convergence with benefits
Convergence with negative impact
3958

Proceedings of the 5th NA International Conference on Industrial Engineering and Operations Management
Detroit, Michigan, USA, August 10 - 14, 2020
© IEOM Society International
3.4 Bharat Petroleum Corporation Limited
CSR activities directed towards customers using automation technologies and cloud-based services was received
positively as shown in Table 4. Enabling integration technologies was viewed favorably by shareholders and suppliers
Table 4. Convergence Matrix of Industry 4.0 driver and CSR of Bharat Petroleum Corporation Limited
Industry 4.0 Technologies
Big Data
Solutions
Cloud
Services
Automation
Processes
Integration
Technologies
IoT
Cybersecurity
Systems
Additive
manufacturing
Augmented
Reality
Simulation
Technologies
CSR dimensions
Shareholders
Employees
Suppliers
Financial
Institutions
Society
Customers
Government
Law
Special
Interest
groups
Convergence with benefits
Convergence with negative impact
3.5 National Thermal Power Corporation Limited
CSR activities directed towards environmental activists through data transparency was received positively as shown
in Table 5. Enabling integration technologies was viewed favorably by shareholders and suppliers. Simulation
technologies used as communication strategies was received positively by local communities. Introduction of
automation technologies to safeguard life and health was viewed as a threat.
Table 5. Convergence Matrix of Industry 4.0 driver and CSR of National Thermal Power Corporation Limited
Industry 4.0 Technologies
Big Data
Solutions
Cloud
Services
Automation
Processes
Integration
Technologies
IoT
Cybersecurity
Systems
Additive
manufacturing
Augmented
Reality
Simulation
Technologies
CSR dimensions
Shareholders
Employees
Suppliers
Financial
Institutions
Society
Customers
Government
Law
Special
Interest
groups
Convergence with benefits
Convergence with negative impact
3959

Proceedings of the 5th NA International Conference on Industrial Engineering and Operations Management
Detroit, Michigan, USA, August 10 - 14, 2020
© IEOM Society International
4. Conclusion
To secure and maintain a contented work force and to act in the best interests of these stakeholders, it is necessary to
engage with them before the implementation of Industry 4.0 strategies. For successful implementation of Industry 4.0
strategies in PSEs in India, it is now imperative that employees are provided with opportunities of developing their
latent skills through training and education. CSR mandate for the companies in India, insists to align with the
sustainable development goals of UN, which in-turn is matching with Industry 4.0 strategies. CSR in India is naturally
partnering with Industry 4.0, and the convergence is visible, at many places. As PSEs were the first to move forward
with mandate CSR initiatives, the Industry 4.0 will also be spearheaded to its expected visions, effortlessly.
Acknowledgement
We would like to express our deep gratitude to the Chancellor of Amrita Vishwa Vidyapeetham, a world-renowned
humanitarian, Dr. Mata Amritanandamayi Devi, popularly known as Amma. Her inspired mentorship facilitates
unique opportunities for a seamless blend of advanced scholarship, personal integrity, and spiritual development.
References
Anil A., Nair AS., Charuvila A. & Arun K. (2019). CSR as a Game Changer towards Sustainability in India. Journal
of Advanced Research in Dynamical and Control Systems. 11 (3), 1295-1300
Arun K, Babu S. (2020). Are Corporates Renouncing Shareholder Capitalism and Moving Towards Stakeholder
Capitalism? 10th Annual International Conference on Industrial Engineering and Operations Management.
IEOM Society International. ISSN: 2169-8767 ISBN: 978-1-5323-5952-1 Available at
http://www.ieomsociety.org/ieom2020/639.pdf
Arun K, Babu S. (2020). CSR Communication Strategy of Indian Organizations. In 10th Annual International
Conference on Industrial Engineering and Operations Management. IEOM Society International. ISSN:
2169-8767 ISBN: 978-1-5323-5952-1 Available at http://www.ieomsociety.org/ieom2020/papers/638.pdf
Blowfield, M., & Murray, A. (2014). Corporate responsibility. Oxford University Press.
Bowen HR (1953) Social Responsibilities of the Businessman, vii–viii. doi:10.2307/j.ctt20q1w8f.3
Brundtland, G.H. (1987) Our Common Future: Report of the World Commission on Environment and Development.
Geneva, UN-Document A/42/427. http://www.un-documents.net/ocf-ov.htm
Carroll, A. B. (1999). Corporate Social Responsibility. Business & Society, 38(3), 268–295.
doi:10.1177/000765039903800303
Elkington J (1998). Cannibals with forks: the triple bottom line of 21st century business. Choice Reviews Online,
36(07), 36–3997–36–3997. doi:10.5860/choice.36-3997
Ihlen, O., Bartlett, J. L., & May, S. (Eds.). (2011). The Handbook of Communication and Corporate Social
Responsibility. doi:10.1002/9781118083246
Jain, P. K., Gupta, S., & Yadav, S. S. (2014). Public sector enterprises in India. The Impact of Disinvestment and Self
Obligation on Financial Performance.
Kumar, S. (1991). Public enterprise policy and reform measures. The Indian experience. Public enterprise, 11(4), 327-
335.
Prasad G, Rajesh R., Arun K (2020). Land Use Pattern as an Indicator of Sustainability: A Case Study, 10th Annual
International Conference on Industrial Engineering and Operations Management. IEOM Society
International. ISSN: 2169-8767 ISBN: 978-1-5323-5952-1, Available at
http://www.ieomsociety.org/ieom2020/papers/836.pdf
Prasad G, Ramesh MV. 2019. Spatio-temporal analysis of land use/land cover changes in an ecologically fragile area
Alappuzha district, southern Kerala, India. Natural Resources Research pp 1–12.
https://doi.org/10.1007/s11053-018-9419-y
Schwab, K. (2017). The fourth industrial revolution. Currency.
Schwartz, M. S., & Carroll, A. B. (2003). Corporate Social Responsibility: A Three-Domain Approach. Business
Ethics Quarterly, 13(4), 503–530. doi:10.5840/beq200313435
Urmila, M. (2011). Corporate Social Responsibility in India. (2011). doi:10.4324/9780203805343
Weder, F., & Karmasin, M. (2011). Corporate communicative responsibility. Kommunikation als Ziel und Mittel
unternehmerischer Verantwortungswahrnehmung—Studienergebnisse aus Osterreich. zfwu, 12(3), 410–428.
doi:10.5771/1439-880x-2011-3-410
3960

Proceedings of the 5th NA International Conference on Industrial Engineering and Operations Management
Detroit, Michigan, USA, August 10 - 14, 2020
© IEOM Society International
Biographies
Arun K is a Senior Grade Assistant Professor, Department of Commerce and Management, Amrita School of Arts
and Sciences, Amritapuri Campus, Kerala, India. Mr. Arun holds a Bachelor of Technology (B.Tech) degree in
Electrical and Electronics Engineering from University of Calicut and a Master of Technology (M.Tech) degree in
Technology Management from University of Kerala. He has a multi-disciplinary experience spread over 15 years in
industry as well as academia, with experiences in working at Ernst and Young, Centre for Management Development,
Tokyo Engineering Consortium, Centre for Environment Development and AMRITA University. His research areas
are Corporate Social Responsibility (CSR), Responsible Tourism and Community Development through Sustainable
Development Goals. He has taught courses in CSR, Business Ethics, Green Marketing, Entrepreneurship, ERP,
Technology Management and Tourism Management.
Dr. U. Krishnakumar currently serves as Dean, Faculty of Arts, Media and Commerce and Director, Amrita School
of Arts and Sciences, Amrita Vishwa Viduapeetham, Kochi Campus, Kerala, India. He received his Ph. D. from IIT-
Mumbai and M.E. in CS from I.I.Sc., Bangalore. He has 40 years of academic experience and 22 years of research
experience in India and globally. His areas of research include Distributed Computing, Medical Informatics,
Mentoring, Culture, Media Studies, Business Ethics and CSR.
Dr. Dayana Das serves as Assistant Professor and Chairperson in Department of Commerce & Management, Amrita
School of Arts & Sciences, Amrita Vishwa Vidyapeetham, Amritapuri. She earned her Ph.D. on "Women
empowerment, work life balance and work ethics sustenance in women enterprises" from Amrita Vishwa
Vidyapeetham. With a background of Post-Graduation in Business Administration -specialized in Human Resources
Management and Marketing, she has over a decade of academic experience at Amrita School of Arts & Sciences,
Amritapuri. Her teaching experience include Human Resources Management, Entrepreneurship, Women
Empowerment, Management for Engineers, Managerial Economics, Econometrics, Research Methods and Statistical
Tools. Her research interests are on sustainable development, non-profit organizations and business ethics.
3961