The importance of corporate social responsibility (CSR) has grown demonstrably over the past several decades for corporations (Ferrell et al., 2016; Eccles et al., 2014), investors (Bansal et al., 2022; Kruger, 2015) and other stakeholders (SEC, 2022; Dmytriyev et al., 2021; Edmans, 2011; Russo and Perini, 2010). However, much of the core research has been focused in developed economies, specifically the United States and Western Europe, where voluntary or mandatory standards have been implemented (Bochkay et al., 2025; Erbach, 2021; Acemoglu et al., 2016). Given the importance of regulatory frameworks to country-specific developments in sustainable business practices (Singhania and Saini, 2023), an important empirical question for study is which idiosyncratic and institutional structures drive CSR and other responsible business practices in emerging markets. Moreover, the subsequent role of companies' CSR and the related environmental, social and governance (ESG) activities in emerging markets is less understood, particularly around the demands for these activities and the challenges to their implementations.
Several studies suggest that corporations engage with stakeholders to enhance value, which results in their “doing well by doing good” (Kruger, 2015). Under this stakeholder perspective, corporations with sustainable business practices enhance shareholder value through various channels. For example, companies with high-ESG activities benefit from higher employee satisfaction (Edmans, 2011), consumer loyalty (Servaes and Tamayo, 2013), improved stakeholder relationships (Kacperczyk, 2009) and easier access to capital (Cheng et al., 2013). ESG activities can also aid firms in risk management by diversifying risk allocations and driving consumer demand even during financial crises (Lins et al., 2017; Becchetti et al., 2015). Finally, ESG activities can provide differentiation strategies for corporations, creating competitive advantage and reducing systematic risks (Albuquerque et al., 2019; Eccles et al., 2014).
Historical economic theories, however, suggest that expenditures made for stakeholders' benefit at the expense of shareholders' benefit are value-reducing activities and should not be taken by managers (Friedman, 1970). Further, other researchers argue these value-reducing activities are managerial agency conflicts and are myopic in nature, simply representing managers' reputation building among stakeholders to the detriment of shareholder wealth (Cheng et al., 2013; Barnea and Rubin, 2010). An intriguing question is whether these agency conflicts will be exacerbated or diminished in developing economies where capital markets and institutions are weaker (Estache and Wren-Lewis, 2009; Knight, 1998), property rights are less defined or enforced (Schneider, 2005) and governance reforms are relatively recent as a result of economic globalization (Reed, 2002). The South Asian context, with differential levels of institutions, capital markets and oversight across the various emerging markets (e.g. Pakistan vs. India), provides an interesting setting to assess whether managers can utilize ESG activities for their own benefits at the expense of shareholder wealth.
Further confounding these issues, recent research warns about potential corporate greenwashing, where companies disclose, or selectively disclose, socially responsible business practices but, in practice, do not truly engage in responsible business practices (Free et al., 2024; Lee and Hagemen, 2018; Kim and Lyon, 2015; Lyon and Maxwell, 2011; Delmas and Burbano, 2011). An inherent question is whether greenwashing can provide a “win-win” for corporations, which increases firm value through improving managerial and corporate reputation with stakeholders without the large expenditures that could limit shareholder profits.
Finally, political and cultural backlash against responsible business practices has plagued developed countries in recent years (Ioannou, 2025; SEC, 2025). This has created a changing landscape around the supply and demand for CSR and the role of corporations in contributing to ESG activities around the world. To what extent do public and private companies adapt their responsible business practices, which in some cases have been instituted over several decades, to such increased short-term pressure? This is a question ripe for academic research in both developed and developing regions. Further, researchers can investigate constructs to establish whether corporations simply begin to relabel or reduce public advocacy for ESG activities to continue to implement firm- and social-value-maximizing activities while avoiding potential downside risks of political and cultural pressures. For example, current regulatory standards in the US make emissions of certain pollutants illegal, but potential reductions in Environmental Protection Agency enforcement put into question the true “bite” of these regulatory requirements (McGuire et al., 2025). Thus, enforcement may fall on activists' groups to pressure corporations' reputations, particularly when previous commitments for ESG activities had already been agreed upon. Going forward, corporations must weigh, beyond just economic theory, the benefits of providing responsible business practices to stakeholders' groups, particularly when these commitments are largely favorable such as local community building or employee development and advancement, with the risk of appearing “woke” and inciting further backlash from ultra-conservative actors (Reuters, 2023).
Against this backdrop we set out to publish this special issue (SI) titled, “Collisions and confusion – business, corporate responsibility, and the profit motive,” where we examine the growing disconnect between corporate purpose (which is aligned with responsible business practices) and actual practice, particularly in the markets of South Asia, but with broader implications to the global development of sustainable activities and disclosures. For our SI, we define corporate responsibility as the broader view of corporate purpose towards CSR, corporate sustainability, responsible business practices and ESG activities and disclosures.
Contextualizing CSR in emerging markets and South Asia
In recent decades, state-owned and privately owned businesses in South Asia have become enthusiastic supporters of CSR, like their counterparts in developed markets. CSR is a term to explain the commitment of business to simultaneously do good to society while doing well for owners and stakeholders. Over time, CSR has become the means for big business to contribute to positive societal outcomes – by contributing to charity, planting trees, staff volunteering and raising money for pressing social causes like education and healthcare. Recent research has shown that consumers' views of CSR are somewhat different between India and the United States (Gupta, 2011), suggesting that conceptualizations of CSR determined in studies of developed nations may not apply to developing countries. As such, it is important to investigate, or revisit, research questions specifically in South Asia, which is fundamentally different from developed economies. For example, in India, CSR contributions are mandated by law (Manchiraju and Rajgopal, 2017), but the charity giving under the name of responsible business conceals more than it reveals (Rajgopal and Tantri, 2023). Here, compliance with ESG standards stands out because even a superficial glance at company balance sheets reveals that “Big Business” may be talking the right talk, but evidence to support their commitment to protecting the environment, promoting diversity and inclusion and paying taxes seems to be falling short (MCA, 2023; Rajgopal and Tantri, 2023; Wu et al., 2020).
Recent research in the region suggests that CSR improves organizational images to job seekers (Chowdhury et al., 2023) and consumers (Aparna et al., 2023). From a stakeholder welfare perspective, genuine increases in responsible business practices may create imbalances in welfare growth that may not be in line with the ideal initiative developed by governmental bodies. For example, the Ministry of Corporate Affairs (MCA) of India reported a minimal effect of CSR projects across India despite the growth in CSR spending following regulatory action, largely due to initiatives only in the regions in which corporations operate (MCA, 2023). Therefore, companies generate goodwill with their local communities, driving philanthropic opportunities in regions that have already benefited socio-economically from the corporate investment and excluding smaller regions that have higher incidences of poverty and underdeveloped infrastructure. For example, the top ten states receiving CSR funds include the eight largest state economies, but the northeastern states of Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura have received less than 1% of the total CSR funds. Therefore, a key challenge for both corporations and regulatory bodies implementing CSR plans and requirements is misalignments between the anticipated beneficiaries of the responsible business practices.
At the same time, this tension in the practical approach to implementing responsible business practices is under the presumption that all parties agree about the philanthropic and community-building efforts of all parties. However, worldwide, corporate greenwashing is on the rise (Kim and Lyon, 2015) because corporate managers believe it is in the best interest of the business to do so. As such, the importance of understanding the incentives or repercussions of greenwashing cannot be understated. Recent research has demonstrated, from the consumer perspective, that greenwashing is not wholly beneficial. These practices have increased consumer skepticism, and as a result, discerning Indian consumers have demonstrated less receptivity to green advertising (Jog and Singhal, 2020). From the regulatory framework as well, India has seen considerable increases in CSR expenditures by corporations following the Companies Act 2013, but “the impact of the CSR funds is not widely felt” (MCA, 2023). In 2023, the MCA called for corporations to take a long-term comprehensive approach to their CSR expenditures, committing to appropriate structures for these expenditures and ensuring that these initiatives are self-sustaining. It is yet to be seen whether corporations will heed this call and integrate these practices in a meaningful and impactful way. Either way, while businesses have expanded their financial contributions to charity, less attention is being paid to whether their responsible business practices have been shaped by the rigorous regulatory regime or from increased investor attention to these practices (Pizzetti et al., 2021; Johnson et al., 2020).
Another reason to investigate these questions from the South Asian context is that developing regions in South Asia are on the frontlines of climate distress and social dislocation (EJF, 2025; World Bank Group & Asian Development Bank, 2021; Sapkota, 2015). As such, investor and corporate divestitures of CSR practices in developed countries in the last five years can (1) have had a large impact on South Asian countries such as those with rising sea levels or exposure to severe weather patterns due to climate change; (2) damage the supply and demand equilibrium for CSR in these local regions, where greater, not less, CSR is fundamentally needed and (3) dampen the likelihood of initiating or maintaining global regulatory standards/frameworks for these responsible business practices (SEC, 2025; TFCD, 2021). This backtracking of Western nations has compounded the need for developing areas in South Asia to enact their own regulatory requirements, particularly around factors contributing to climate change. In this SI, we look to a variety of countries in South Asia to help answer these questions and to drive further research in the area.
Response to the call for submissions
We issued the Call for Papers in May 2024 with a submission deadline of January 10, 2025. Submitted articles were initially assessed for fit with the SI and articles in line with the context of the SI were then blind reviewed by two or more experts in the field. In the spirit of the call to bridge the gap between research and industry, the articles were reviewed by one academic peer reviewer and one practitioner peer reviewer. All articles went through a “revise and resubmit” process, with most doing more than one round of reviews. We are grateful and appreciative of the effort and dedication of the reviewers whose contributions were paramount to the success of this SI. Out of the 19 articles submitted, 7 appear in the SI with authors from Bangladesh, India, Pakistan and Singapore.
Contributions of the SI articles
The studies received and published for this SI align well with the spirit of CSR and ESG, providing a diverse set of academic disciplines, topics, research methods, settings and author locales. For example, of the seven studies included in the SI, four relate to pure empirical work, two are mixed-method studies with both qualitative and quantitative analyses and one is a pedagogical case study. Furthermore, the studies in this SI touch upon accounting, finance, economics, marketing and management, befitting the interdisciplinary nature of this journal.
This broad theme of diverse experiences, research areas and methodologies can be classified and measured within a few less-expansive categories: (1) the supply and demand for responsible products and business practices, (2) the benefits and challenges of implementing these ESG activities and (3) the interplay between institutions, capital markets and regulatory enforcement with corporate sustainability. Overall, they contribute to our understanding of the mechanisms that drive these associations, providing evidence for several economic theories such as stakeholder theory, resource dependency, signaling theory and legitimacy theory, as opposed to other economic theories such as agency problems and self-serving myopic initiatives at the expense of maximizing firm values.
ESG ratings are commonplace in Western and other developed countries, but how should responsible business practices be assessed in developing regions where ratings do not yet exist and regulatory frameworks for guiding ESG activities by corporations are fundamentally absent? Further, what determining factors drive corporations' decisions to invest in ESG activities in markets without regulatory standards to require these investments? These are interesting questions investigated by Tauseef and Khurshid (2025) in the Pakistani setting, who create an ESG ranking of publicly traded firms on the Pakistan Stock Exchange (PSX) based on corporate disclosures of these activities. The authors find that in the absence of regulatory requirements, firms opt for higher dimensions of governance activities but lower environmental and social (ES) performance, providing evidence consistent with the idea that corporate managers perceive governance activities as value-maximizing while not perceiving E and S activities as value-maximizing, ceteris paribus. They then investigate the firm characteristics that can help determine this ranking and find that firms with higher financial performance and lower leverage are more likely to rank highly in ESG dimensions. These findings further our understanding of signaling theory, in which corporations demonstrate to investors that they have the additional resources necessary to fill institutional voids (Su et al., 2016), as it pertains to ESG in this emerging market. The paper also has several practical implications for foreign inflows and for potential future ESG disclosure regulations in Pakistan.
Further investigating the relationship between corporate governance and ES activities is Jabin (2025). In the spirit of Dyck et al. (2019), who find evidence that institutional investors promote their social norms around ES practices to developing countries, Jabin (2025) investigates the relationship between board characteristics (i.e. governance) and ES activities as moderated by institutional investors in the banking sector of India. The author finds a positive association between board size, board independence, the presence of CSR committees and board gender diversity with ES performance. Moreover, the author also finds that institutional investor ownership enhances this relationship. Taken together, these results provide supporting evidence for the notion that corporations' good corporate governance can meet investor demands for ES activities while limiting the potential for managerial agency conflicts to drive responsible business practices outside of investments that are in the best interest of shareholders.
The next group of studies investigates the benefits and consequences of responsible business practices to investors but through differing frameworks and innovations, which provide differential insights to academics' and practitioners' understanding of corporate responsibility. In Shah and Shome (2025), the relationship between CSR expenditures and dividend policies is investigated across Indian firms. The authors find a positive and statistically significant relationship between companies' CSR expenditures and their likelihood of dividend issuances to shareholders. This finding addresses the broad contextual mechanism for sustainable business practices, providing evidence supporting the stakeholder theory and contradicting the agency problem theory. However, their findings demonstrate that this relationship is nuanced, with firm size mediating the relationship and audit quality moderating it. The authors conjecture that corporate responsibility can be aligned with both societal interests and shareholders' interests. Further, the authors interpret that the “Indian regulatory measures mandating CSR spending from profits for specific company sizes effectively address stakeholders' social and economic expectations,” providing positive support for the regulatory initiative of the Companies Act 2013. They further call for regulators to promote healthy practices in business, while imploring corporations to continue to consider the broader impact of their operations towards alignment with their social and environmental sustainability and beyond simple value maximization.
Can ESG investing benefit or harm equity investors in India, a mature but developing nation with high growth and a fast-changing regulatory environment? This is an important research question investigated by Raju (2025), for which research has had a limited ability to answer given only 11 ESG mutual funds existed in the market as of Q4 2024. Exploring the halo effect concept wherein more socially responsible companies experience financial benefits due to their enhanced reputation, investor confidence and/or overall market sentiment, the author investigates whether portfolios of higher ESG-performing companies, “Angels,” outperform portfolios of lower ESG-performing companies, “Sinners.” The results of the study suggest that although Angels do not consistently enhance portfolio returns relative to Sinners, some evidence suggests that the Angels' portfolios show better downside risk characteristics. Further evidence consistent with research in other settings and areas is that sectoral effects and firm size have much larger roles in shaping equity valuations than ESG activities. Finally, factor exposure analyses demonstrate that high-ESG portfolios are positively correlated to the profitability factor as opposed to value, investment or momentum factors. This paper has practical implications for investors and the implementation of ESG-related trading strategies and for the Securities and Exchange Board of India as officers consider strengthening current ESG practices and navigating the evolving landscape of ESG activities in developing regions.
Dawar et al. (2025) investigate greenwashing from the investor perspective, drawing on both qualitative and quantitative analyses, to determine which factors investors should utilize to verify the legitimacy of the sustainability initiatives proclaimed by corporations. Based on qualitative survey evidence of 310 equity investors in north India and empirical analyses using the fuzzy analytical hierarchy process technique, the authors find that investors critically evaluate portfolio management practices, cognitive biases and media and public perception when assessing potential greenwashing by corporations. In more disaggregated tests, the authors identified five sub-criteria as extremely pertinent in this decision-making: trust in the organization, inadequate integration of ESG factors into investments, stakeholder attentiveness/recognition of greenwashing practices, overreliance on ESG ratings/scores and media coverage. Factors that were considerably less relevant were disclosure and transparency, regulatory and legal frameworks and a board's influence. The study has practical implications for the supply and demand for responsible business practices and investors' perceptions of greenwashing, with the relatively surprising finding, among others, that regulatory and legal frameworks are less relevant for the screening of greenwashing to these investor participants.
While much of the accounting and finance literature focuses on the supply and demand of corporate business practices, these areas have largely excluded the supply and demand of green or sustainable products from the consumer perspective. Jasrai and Kaur (2025) explores this concept through segmentation of green consumers through the lens of consumer innovativeness (CI). This analysis then further disaggregates the relationship between CI and green consumer segmentation into CI's unique personality trait determinants: opinion leadership, product involvement, price sensitivity, venturesomeness and need for uniqueness. The key findings of the study classify green consumers into the following clusters: enthusiasts (male, younger individuals and risk takers), influencers (middle-aged and opinion leaders), image-lovers (male, older and self-identity lovers) and apathetic (middle-aged and passive). Enthusiasts, who are typically male, younger and have moderately high income, are highly motivated towards purchasing green products and doing so at earlier stages, while underestimating the potential risks relating to these green products or features. Influencers, who are typically middle-aged with moderately high income, are more likely to encourage others to purchase green products and have strong convictions about purchasing specific green durables. Alternatively, apathetics, who, though sharing similar demographics to influencers, are more likely to remain steadfast in their consumerism and are less likely to take on any risks relating to green durables. Lastly, image-lovers, typically male, older and with moderate-high income, are those individuals who have great technical knowledge around green features and take great pride in purchasing green products as a means of differentiation in society. This study's classification approach has implications for both the supply and demand side economics of green products/sustainable consumption. The authors suggest, “Companies can enhance their sustainable brand image and competitive advantage by being more responsive to market trends, fulfilling consumer demand and embracing regulatory changes related to environmental safety.” Further, focusing on green consumer segments from this marketing perspective could help companies foster resilient and sustainable business models that also align with long-term corporate value maximization.
Finally, Tiwari and Tiwari (2025) provide an important case study about the challenges to managers for integrating CSR plans into current business strategies, particularly in the business-to-business market. Focused on pedagogy, the authors provide the hypothetical scenario, based upon one of the 12 real-life reinsurance companies operating in India, to students, who are then tasked with evaluating the CSR budget and expenditures for the company, the impact and sustainability of its CSR initiatives and how these initiatives fit into the framework of governmentally mandated CSR requirements and the United Nations Sustainable Development Goals. This case study was piloted in a graduate-level course, with qualitative assessments before and after the pilot program, demonstrating that students' understanding of CSR and how it relates to the Indian Companies Act 2013 increased dramatically. Students' responses highlighted corporate growth, cost inefficiencies and investment time horizons as key challenges for corporate implementation of CSR initiatives. Students were also asked to provide recommendations of responsible business practices and CSR expenditures that could help reduce the misalignment of these CSR expenditures with the long-term strategic goals of the business outlined in the case. This study provides a clearly articulated and succinctly molded pseudo real-world case that has benefits for both pedagogical and academic purposes as higher education instructs the managerial leaders of tomorrow on the benefits and challenges of implementing responsible business practices in general as it relates to regulatory requirements and sustainability guidance.
It is our hope that future research will continue the work presented in this SI, providing insights into corporate responsible business practices from the South Asian perspective and demonstrating additional evidence on the supply and demand for responsible products and business practices, the benefits and challenges of implementing these ESG activities and the influence of institutions, capital markets and regulatory enforcement on corporate CSR that furthers our understanding in the broader, global context. The research in this SI provides evidence of differential conceptualizations, preferences and effects of responsible business practices for the developing markets of South Asia relative to other developed areas. We hope that additional research can critically analyze the differences in findings in the South Asian context from those of Western countries (e.g. United States and Western Europe) and grow the literature's understanding of, and implications for, these important, evolving topics. Further, how local dynamics change as a result of the recent Western nations' withdrawals from previous commitments and initiatives is an important aspect to research, which could have implications for both the South Asian context and for other developing nations under the extreme threat of climate change and social dislocation.
