Impact of Corporate Social Responsibility and the Mediating Role of Entrepreneurship on Regional Economic Growth in India

Abstract

The concept of Corporate Social Responsibility (CSR) has increasingly gained importance in various domains of social, environmental, business, and academics. CSR and entrepreneurship have emerged as a vital and influential combination in accelerating growth and development. While CSR initiatives are outperforming at the macro level, they tend to be overlooked at decentralized and regional levels in developing countries like India. There is a scarcity of empirical research on measuring the impact of CSR activities and the pivotal role of entrepreneurship on regional economic growth. The present study aims to serve as an impetus by examining how entrepreneurship mediates the impact of CSR expenditures, a measure of social responsibility, on regional economic growth, whereby CSR expenditures affect the entrepreneurship landscape, and the growth in entrepreneurship will essentially advance regional economic growth. To exploit the prospective potentials of CSR and entrepreneurship in mitigating social, environmental, and economic inequalities and spurring economic growth, the study uses a panel of 29 Indian States and UTs for the time period (2014-2020). This study is based on various secondary data sources such as the Corporate Social Responsibility (CSR) Portal of India, Ministry of Corporate Affairs, Global Data Labs, Handbook of Indian States (RBI), and Ministry of Micro, Small and Medium Enterprises, among others. By employing the multivariate regression analysis, we suggest that an increase in CSR expenditures will have a positive impact on the entrepreneurship landscape, by creating a more conducive entrepreneurial environment and opportunities for new venture creation and entrepreneurship growth, in turn, will be instrumental in advancing the regional economic growth by increasing productivity and encouraging nascent entrepreneurs in India.