Mandatory corporate social responsibility in India and its effect on corporate financial performance: Perspectives from institutional theory and resource‐based view

The enactment of the Companies Act of 2013 in India mandating CSR spending is a regulatory pressure from the government. Institutional theory suggests that such regulatory pressure has an impact on firm heterogeneity and consequently on the competitive advantage of a firm. On the other hand, a firm's resources and capabilities like R&D expertise, advertising intensity and staff welfare& training intensity leads to firm heterogeneity and helps firm to achieve competitive advantage. So, this paper combines the insights of the resource‐based view with the institutional perspective from the organization theory to study the combined impact of both on financial performance. The study was conducted on Indian firms which belonged to the top thousand firms by sales for the time‐period between the years 2010 and 2018. The data was collected from CMIE Prowess database.