Statist Theory

The statist theory traces its roots to Neo-Marxian thinking on the role of public sector
institutions. The theory seeks to emphasis on the necessity of public sector
institutions in taking the economy to “commanding heights.” This theory had
found in application in India during the Nehruvian era and hence is at times
also referred to as the Nehruvian theory of CSR.

Most emerging economies share a common economic and political history of having been
subjected to colonialism. IT is in this context that the theory proposes the
active participation of government run economic institutions in economic
development. Moreover it also stresses on the need to regulate and control
corporate behavior by means of restrictive licensing and permit mechanism.
Private sector institutions are required to comply with the regulations and
recommendations of government in order to stay active in business.