Application of real options theory in strategic corporate social responsibility; the scope and challenges in the emerging economy of India
The purpose of this paper is to explore the applicability of real options theory in the domain of strategic corporate social responsibility (SCSR). This research further conceptualises a strategic CSR call/put and buy/sell real option instruments and a Black–Scholes real option model. This research also offers answers to questions relating to difficulties of doing CSR in emerging economies with strategic contexts. This paper has a mix of both empirical work input and conceptual framework propositions. Managerial input has been used to answer the research objectives. For managers a strategic CSR conceptualisation, as a plate of call/put and buy/sell has been developed. This can be used by managers to design their firm's SCSR initiatives to time investments to reduce associated risks. There has been very limited literature relating strategic CSR to real options theory for investment and risk reduction. This cross industry domain study would enrich the theoretical understanding of both real options theory application and strategic CSR decision making.
Keywords: real options, strategic CSR, corporate social responsibility, SCSR, social investment, risk reduction, emerging economies, India