In earlier times it was considered that the business is only responsible for the shareholders’ interest and other investors who have invested in the business but later on it was realized that business is not only responsible for its shareholders but each and every stake holder who is affected by the activities of the company (Sacconi, 2004, p.6). Corporate social responsibility is a broader concept as per which the corporate organizations has some responsibilities towards the society as a whole and therefore should practice ethical behavior and should also work towards the development of the society. This is a way of paying back to the society for the resources it has used and the environment in which it operates (Murthy, 2007, p.13). Thus Corporate Social responsibility can be described managing business responsibly (The world business organization, n.d, p.4). As per the OECD guidelines CSR activities should be such which through which the MNCs can contribute in economies and promote social welfare and sustainable environmental development in the countries in which they are operating such type of activities in turn will reduce the obstacles faced by the companies like agency problems in those areas (Heal, 2004, p.12).
The corporate social responsibility helps the company in a number of ways. For example by following the CSR activities the company can reduce the risk at the same time it can reduce the wastage of scarce resources as the CSR guidelines will lay down the principles which will be followed to while working. CSR activities also helps the company to gain the brand equity as the companies who contributes towards the society are favored more and are respected everywhere. CSR also helps in increasing employees’ productivity and performance by promoting staff welfare (Heal, 2004, p.13-19). Thus by ensuring corporate social responsibility the companies can also improve their own performance. As per Mr. Gerald