On the other hand CSR policies are a better package for the severe law regulations. There have been arguments that corporate social responsibility (CSR) as a practice has come to light because the companies have not succeeded in creating trust and relationships with their stakeholders. Corporate social responsibility was born because of failure, lack of oversight. It is a concept that the government and the stakeholders wants the companies to follow.
The government uses a number of instruments for motivating and engaging the companies in the social welfare and policy objectives. It includes “Informational Instruments” such as campaigns, trainings and awards that highlight the consequences trough the mode of information and knowledge and hence have least barriers and constraints. Then there are “Economic Instruments” such as the taxes, tax abatements, subsidies and rewards, that are based on the taxes and monetary resources and regulated by the taxing authorities. And then there are “Legal Instruments” such as laws, regulations and directives that abide the companies with rules and laws and let them chose their course of action.