Nidradaan (Gift of Sleep): A Corporate Social Innovation by Agarwal Packers and Movers for Truck Drivers in India

Issues Affecting the Trucking Industry

Two-thirds of the nation’s cargo is transported by trucks, and the trucking industry remains one of the largest employers, providing jobs to drivers and cleaners, as well as auxiliary trade and employment opportunities to brokers, booking agents, people operating garages, loading and unloading operations, wayside facilities, etc. In this case, Exhibit 3 provides the structure of the trucking industry with the various direct stakeholders.

The industry is highly disaggregated, with low entry barriers for operators and drivers and cutthroat competition. Due to this, many unlawful and dangerous practices are prevalent, such as deflation of market rates, truck overloading, poor maintenance of trucks, use of low-quality spare parts, violation of traffic rules, corruption to escape penalties, etc. Other issues that plague the industry include poor vehicle technology, absence of wayside amenities, bad road conditions, unnecessary detention of vehicles at toll gates and complex legal frameworks involving multiple legislations. The truck drivers who are at the bottom of the industry structure bear the brunt of these issues. They endure risky working conditions due to the poor maintenance of the roads and the vehicles, meagre wages as many are illiterate and unqualified and cannot demand reasonable salaries, unrealistic delivery schedules that force them to drive for long hours without breaks, harassment by officials who force them to pay bribes, prolonged absence from family and social life, and low social status due to poor public perception.

Many of these issues are systemic and cannot be addressed without the cooperation of all the stakeholders involved in the value chain, which will take considerable time. However, some issues need immediate attention for the survival of the industry. One such issue is the declining number of drivers in the industry. The upsurge in e-commerce has increased the demand for trucking. However, the number of drivers per 1,000 trucks is only 450 (Exhibit 2 from the case). This means that the transportation industry is losing billions of dollars due to the idling of trucks, delays, cancellations and poor delivery to remote areas. This has the potential to create a vicious cycle as the increasing losses will further reduce the investments in the industry, affecting the well-being of the drivers who are the workhorses in the industry. Hence, the need of the hour is to develop a solution that attracts more drivers to the industry, helping to improve operational efficiency and profitability. This will create a conducive environment for additional investments which can positively impact the industry as a whole, including the lives of the drivers.

Selection of a Pertinent Issue

Addressing multiple issues in the industry, understanding how it impacts various stakeholders, and trying to proactively address these concerns are important for a firm. The framework created by Simon Zadek helps firms to evaluate multiple issues and identify the ones that pose the greatest opportunity or threat. He also suggests different ways in which firms can respond to the issues. A combination of the issue and the organizational response would determine the outcome for the firm. The four stages of issue maturity, according to Zadek are depicted in Table 1.

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Table 1.

Four Stages of Issue Maturity.

Stages of Issue Maturity	Characteristics
Latent	Only activists and NGOs are aware of the issue. Weak scientific evidence to support the need for action. The issue is largely ignored by the business community.
Emerging	Political parties and the media become aware of the issue. Greater scientific evidence is emerging to support action. Firms start experimenting with different approaches to addressing the issue.
Consolidating	There is litigation and an emerging view of the need for legislation. Voluntary standards are developed, and collective action occurs.
Institutionalized	Legislation and business norms are established. Embedded practice becomes a norm of the business-excellence model.

Source: Adapted from Zadek (2004).

The organizational responses to these issues may vary as shown in Table 2.

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Table 2.

Organizational Response to Issues.

Stage	Steps	Rationale
Defensive	Deny practices, outcomes and responsibilities	Defend attack against reputation in the short term
Compliance	Adopt a compliance approach as a cost of doing business	Mitigate the erosion of economic value in the medium term due to reputation and litigation risks
Managerial	Embed the issue into the core practices	Achieve long-term gains by integrating responsible business practices
Strategic	Integrate the societal issue into the core business strategy	Attain competitive advantage by aligning strategy and process innovations with the societal issue
Civil	Promote the practice industry-wide	Enhance long-term value by overcoming first-mover disadvantage and realize gains through collective action

Source: Adapted from Zadek (2004).

Figure 1 indicates the outcomes for firms based on the maturity of issues and the type of organizational responses. The maximum threat occurs if a firm takes a defensive stance against an issue that has become institutionalized. In contrast, if a firm promotes industry-wide adoption of standardized practices concerning an emerging issue, it stands to gain maximum economic and social value for its effort. Moreover, such firms can differentiate themselves in the eyes of those stakeholders for whom the issue is important.

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Figure 1.

Source: Chandler, D. (2019). Strategic corporate social responsibility: Sustainable value creation (5th ed.). Sage Publications.

In the scenario presented in the case, APML is trying to address an emerging issue that has the potential to stifle the growth of the trucking industry. By becoming an early adopter of a solution that attempts to redress the appalling working conditions of the truck drivers, the firm is likely to create goodwill amongst the driving community, which would help to attract more drivers to the organization, thereby addressing the concern of underutilization of trucks.

Creating Shared Value Through Innovation

According to Porter and Kramer (2011), social harms and weaknesses create costs for the firm. Addressing these constraints through innovative operating methods and management approaches helps firms to increase their productivity and profitability. They put forward the concept of creating shared value (CSV), in which firms develop policies and operating practices that enhance their competitiveness while advancing the economic and social conditions in which they operate. Porter and Kramer differentiate between corporate social responsibility (CSR) and CSV, as depicted in Table 3.

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Table 3.

Difference Between CSR and CSV.

CSR	CSV
Value: Doing good	Value: Concurrently achieve economic and social benefits
Corporate citizenship, philanthropy, sustainability	Joint firm and community value creation
Drivers: Discretionary or due to external pressure	Drivers: Improving competitiveness
Separate from profit maximization	Integral to profit maximization
Agenda: Decided by disclosure and personal choice	Agenda: Company-specific and internally generated
Impact: Limited by company footprint and budget	Impact: The entire company budget realigned for impact

Source: Adapted from Porter and Kramer (2011).

Porter and Kramer identify three ways in which organizations can create shared value:

Reconceiving products and markets to meet societal needs especially those of the disadvantaged and under-served markets.

Porter and Kramer argue that fair wages, safety, wellness, training and opportunities for advancement have a positive effect on productivity. For instance, many corporates baulk at the cost of employee health coverage. However, it has been proved that lost workdays and diminished employee productivity due to poor health cost more than the health benefits.

Mr Agarwal has taken a leaf out of Porter and Kramer’s playbook of shared value creation by setting up the DSKs for nidradaan. There has been sufficient evidence to determine that sleep deprivation and the resulting ill effects on the physical and mental well-being of truck drivers remain one of the major causes of poor enrolment in the profession and low utilization and productivity in the industry. APML’s studies have shown that nearly 20% of road accidents are caused by drivers dozing off at the wheel. By providing a safe and hygienic resting place for the drivers, APML ensures that the probability of accidents and resultant delivery disruptions are reduced, which benefits the company. Along with proper rest, the drivers can ensure proper maintenance and service of vehicles, which again reduces delays caused by breakdowns during long trips. The productivity enhancements that the company can achieve are more than likely to cover the expenses incurred in running the DSKs. At the same time, the goodwill created in the industry by such practices will attract more drivers to the company, ensuring better utilization of their trucks and more business for the company.

Convert Corporate Social Innovation into a First-mover Advantage

Some students may argue that the Indian trucking industry operates on lower margins by offering low prices to the customers, and service quality is only secondary for the client. In this context, APML incurring additional expenditure to run the DSKs is taking a hit on its margins as it may not be in a position to transfer the prices to the customers due to the cutthroat competition.

However, the company will be able to gain a first-mover advantage due to this intervention. As already seen, the issue is at a latent stage now and may soon become a major concern for the trucking industry due to the huge opportunity costs of not having enough drivers to operate the full fleet of vehicles. Both industry associations and regulatory bodies are likely to take more interest in this issue and force the trucking organizations to address it in a constructive way. At this juncture, APML being the first mover would be consulted to suggest best practices for adoption by the industry. The company may leverage its experience and give its recommendations, which can include many of the practices adopted at its DSKs. It creates a situation where the practices followed by APML for the welfare of its drivers become the industry norms and APML being the first mover can take advantage of this situation. Moreover, as everyone starts to follow these practices, their costs will also go up and many may be forced to transfer this increased price to the customers, thereby increasing the prices across the trucking industry. APML, which already has accounted for the DSK expenses in its operations, may be able to enjoy better margins than its competitors during this phase and will be able to offset the initial losses.

Epilogue

As discussed earlier, the judiciary has taken note of the plight of the truck drivers. A landmark judgment passed by the Patna High Court in the case of Sumit Kumar vs State of Bihar on 22 December 2020 and later a special leave petition decided by the Supreme Court made important remarks about the abysmal working conditions faced by the truck drivers. The courts opined that there is an immediate need to improve the conditions of truck drivers across the country. It is a matter of time that the truck industry will have to set up a code of conduct for driver welfare.

Organizations in other segments of the transportation sector have also started interventions for the benefit of truck drivers. For example, Tata Motors launched a programme called samarth aimed at addressing critical areas of well-being of drivers such as swasthya (wellness programme), sampatti (finance programme) and siksha (education programme) along with surakshit samarth (driver on wheel insurance).