1. Can Business Regulation Stimulate Responsible Corporate Conduct – Gathering Evidence from a Few Indian States RESEARCH METHODOLOGY BRCC Regional Dialogue (Southern India) Bangalore, 15 th July 2011

2. 2 OUTLINE OF RESEARCH METHODOLOGY Research Question & Diagram Definition & Typology (Business Regulation, Corporate Conduct) Drivers of BR & CC Metrics of BR & CC Frame of Analysis (Indicators of BR & CC) Choice of Sectors

3. 3 Research Question & Figure What are the Elements of Effective Business Regulation? What are the Elements of Responsible Corporate Conduct? Are Business Regulation and Corporate Conduct Linked? What are the Linkages between Effective Business Regulation and Responsible Corporate Conduct? How to Measure and Influence such Inter-linkages so as to achieve Optimal Business Regulation and Corporate Conduct? Business Regulation Corporate Conduct Effective Responsible

4. 4 Business Regulation: Definition & Typology Business Regulation –Public regulation: between government (executive and judiciary arm) and business. (Acts, rules, notifications, etc) –Co-regulation: interplay between industry associations, civil society or other pressure groups and the business (Standards, certification) –Self regulation: firm level action to adopt voluntary norms and standards of conduct for itself

5. 5 Corporate Conduct : Definition Business Responsibility involves businesses being thoroughly aware and conscious of their social, environmental and economic responsibilities, and balance these different considerations in an ethical manner (National Guidelines for Social, Economic and Environmental responsibilities of business, 2010)

6. 6 Corporate Conduct: Typology –Economy (tax, consumer protection, fair competition) –Environment (air, water, land, forest) –Social (worker, communities, vulnerable groups) –Governance (disclosure, transparency, compliance)

7. 7 Drivers of (E)BR & (R)CC BUSINESS REGULATION Social/political/historical context Value systems of government Compliance and enforcement mechanisms CORPORATE CONDUCT Market (profit) vs. non- market (value systems) Voluntary vs. mandatory Incentive mechanisms Influence of value chains

8. 8 Metrics of (E)BR & (R)CC BUSINESS REGULATION Macro indicators Business facilitation measures (taxes, time to open business, e.g.) Governance: compliance rates CORPORATE CONDUCT Economic: competition, consumer welfare, e.g. Environmental: measures of environmental protection or conservation Social: impacts on workers, minority groups, e.g. How to measure? Indices for analysis? Methods for analysis?

9. 9 Framework of Analysis What are the indicators of Responsible Corporate Conduct? What are the indicators of Effective Business Regulation? How can the linkage be traced between them? Elements of Responsible Corporate Conduct Specific AspectsImpact Indicators pertaining to each Aspect Factors (Public Regulation + Self Regulation) impacting each Impact Indicator ECONOMYTaxImpact IndicatorFactors (Public Regulation) Factors (Self Regulation) Fair CompetitionImpact IndicatorFactors (Public Regulation) Factors (Self Regulation) Consumer WelfareImpact IndicatorFactors (Public Regulation) Factors (Self Regulation) Etc.Impact IndicatorFactors (Public Regulation) Factors (Self Regulation)

10. 10 Framework of Analysis Elements of Responsible Corporate Conduct Specific AspectsImpact Indicators pertaining to each Aspect Factors (Public Regulation + Self Regulation) impacting each Impact Indicator ENVIRONMENTAirImpact IndicatorFactors (Public Regulation) Factors (Self Regulation) LandImpact IndicatorFactors (Public Regulation) Factors (Self Regulation) WaterImpact IndicatorFactors (Public Regulation) Factors (Self Regulation) ForestsImpact IndicatorFactors (Public Regulation) Factors (Self Regulation) SOCIALWorkers Communities Vulnerable Groups Etc. GOVERNANCEAccountability Transparency Disclosure Compliance Etc.

11. 11 Choice of Sectors for Study Large Vs. SMEs Manufacturing, Services Brown vs. non Brown -- Pharma, Chemicals Vs. Banking, IT services Global Vs. local (MNC Vs. Local; Export-oriented, part of global supply chains) Place in the value chain – final, intermediary Impacts – Visible vs. Invisible

12. 12 Thank You!