Corporate Social Responsibility and Organizational Performance

ABSTRACT

Corporate Social Responsibility (CSR) is how business organization activities influences the stakeholder’s interest. Most organizations have embraced corporate social responsibility practices without substantial increase in organization performance.  Hence the research sought to find out the effect of CSR on organization performance using RURAL INVWSTMENT CREDIT UNION KONGSABA branch as our case study.

The researcher made use of both the primary and secondary data collection methods using both questionnaires and documentary studies respectively.

Fifty (10) well designed and structured questionnaires were administered to workers in RURAL INVESTMENT CREDIT UNION KONGSABA branch.

Published materials such as textbooks obtained from the libraries of the University of Bamenda and the south west city council were used a as source of secondary data for the researcher.

Data from questionnaires were compiled, sorted, classified and interpreted using ordinary least square (OLS) technique because it provides the best linear unbiased estimates (BLUE) according to the Gauss Markov Theorem.

After all interpretations of results obtained from the field were completed, it was concluded that there is a strong positive relationship between Cooperate Social Responsibility and organisational performance. The results imply that the more the management of RURAL INVESMENT CREDIT UNION apply the appropriate Cooperate Social Responsibility strategies, the more the organization will perform better.

The study ends by citing some recommendations to implemented by the firm in question such as the integration of CSR as part of the firm’s corporate and business level strategies, taking into consideration workplace related CSR activities, and the education of other people especially other management members within the organization on CSR activities.

CHAPTER ONE

INTRODUCTION

Background Information

Corporate social responsibility (CSR) is a concept that has acquired a new character in the global economy. “With the advent of globalization, managers in different contexts have been exposed to the notion of CSR and are being pressured to adopt CSR initiatives” (Jamali and Sidani, 2008). Therefore, even more corporations are increasing conscience about the importance of matching their own interests and the interests of society by taking responsibility for the impact of their activities on employees, suppliers, customers, communities and other stakeholders as well as the environment. Although, this is an obligation that goes beyond economics or law, and in which companies have to act ahead in pursuing long term goals that can also be good for the society and the environment as a whole.

Traditionally, companies have to focus on strategies for their business operations and profits such as differentiation, diversification, turnaround, concentration, just to name a few. However, recent developments  in strategic thinking  support  the  need  to  add  activities  that  expand  out  from  the  company  into society. Scholars have identified these activities as corporate social responsibility (CSR) activities (Carroll 1979; Margolis and Walsh 2001).  Further, CSR scholars, managers and  authors  have  recognised  the  actions  of  cause  marketing,  donation,  society improvement,  disaster  relief,  protection,  peace  initiatives  and  pollution  reduction  as companies‘  social  responsibility  activities. 

The idea of CSR is that companies have more responsibilities than to achieve a high profit for their shareholders. They should also care about the society and act in a responsible way. (Carroll &Shabana, 2010).

Corporate  Social  Responsibility  (CSR)  as  a  concept  entails  the  practice  whereby corporate  entities  voluntarily  integrate  both  social  and  environment  upliftment  in  their business  philosophy  and  operations. It is a commitment to improve the wellbeing of a community through discretionary business practices and contributions of corporate resources (Charkraborty (2010).

 A business enterprise is primarily established to create value by producing goods and services which society demands. The present-day conception  of  corporate  social  responsibility  (CSR)  implies  that  companies  voluntarily integrate  social  and  environmental  concerns  in  their  operations  and  interaction  with stakeholders. The notion of CSR is one of ethical and moral issues surrounding corporate decision making and behaviour, thus if a company should undertake certain activities or refrain  from  doing  so  because  they  are  beneficial  or  harmful  to  society  is  a  central question.  Social  issues  deserve  moral  consideration  of  their  own  and  should  lead managers to consider the social impacts of corporate activities in decision making.

Cameroon has been highlighted (Rampersad and Skinner, 2014) as one of the countries in Africa in which large businesses promote the practice of CSR primarily through philanthropic projects in health, education and poverty reduction. Several sector businesses are involved in development initiatives to create employment and generate sources of income. Most large businesses such as ENEO, MTN, SGBC etc have taken discretionary measures to improve the living conditions of the local population. Increasingly, the employees, consumers and the local communities are expecting a lot from businesses operating in the country and local areas. Corporate social responsibility (CSR) existed in Cameroon since the colonial period, although it was not recognised as CSR. Company policies were geared towards their workers which in turn benefited   the   people   living around the operating areas of these companies

It is no longer acceptable for a corporation to experience economic prosperity in isolation from those agents impacted by its actions. A firm must now focus its attention on both increasing its bottom line and being a good corporate citizen. Keeping abreast of global trends and remaining committed to financial obligations to deliver both private and public benefits have forced organizations to reshape their frameworks, rules, and business models. To understand and enhance current efforts, the most socially responsible organizations continue to revise their short-and long-term agendas, to stay ahead of rapidly changing challenges.

In addition, a stark and complex shift has occurred in how organizations must understand themselves in relation to a wide variety of both local and global stakeholders. The quality of relationships that a company has with its employees and other key stakeholders—such as customers, investors, suppliers, public and governmental officials, activists, and communities—is crucial to its success, as is its ability to respond to competitive conditions and corporate social responsibility (CSR). Organizations have developed a variety of strategies for dealing with this intersection of societal needs, the natural environment, and corresponding business imperatives.

Furthermore, developing countries  have  societal  and  environmental  problems  such  as  human  rights, environmental  pollution  and  labour  issues.  However, people in developing countries believe that multinational companies (MNCs) can solve these problems engaging with CSR initiatives under sustainable development and co-operation with civil society (Ite, 2004).  Business organizations are always thinking to increase their financial performance.  If  they  engage  with  socially  responsible  activities,  they  can  solve  the societal and environmental problems  (Henderson, 2001).  Because the above problems are  common  to  developing  countries,  researchers  also  suggested  to  overcome  those issues  implementing CSR practices. 

The pioneer of this view, Oliver Sheldon (1923, cited in Bichta, 2003), however, encouraged management to take the initiative in raising both ethical standards and justice in society through the ethic of economizing, i.e.  economize  the  use  of  resources  under  the  name  of  efficient  resource mobilization  and  usage.  By  doing  so,  business  creates  wealth  in  society  and  provides  better  standards  of living. The  present-day  CSR  (also  called  corporate  responsibility,  corporate  citizenship,  responsible business and corporate social opportunity) is a concept whereby business organizations consider the interest of  society  by  taking  responsibility  for  the  impact  of  their  activities  on  customers,  suppliers,  employees, shareholders,  communities  and  other  stakeholders  as  well  as  their  environment.  This  obligation  shows  that the  organizations  have  to  comply  with  legislation and voluntarily  take  initiatives  to  improve the well-being of their employees and their families as well as for the local community and society at large. CSR simply refers to strategies corporations or firms conduct their business in a way that is ethical and society friendly.  CSR  can  involve  a  range  of  activities  such  as  working  in  partnership  with  local communities,  socially  sensitive  investment,  developing  relationships  with  employees,  customers  and  their families, and involving in activities for sustainability.

Today, it is becoming increasing apparent that organizations in the telecommunication industry are constantly looking for new strategies to gain a positional advantage over their competitors in order to increase their customer base and enhance their performance. One of these strategies is the adoption of corporate social responsibility practices. Mohr, Webb and Harris (2001) describe corporate social responsibility as a firm’s commitment to minimizing or eliminating any harmful influence and maximizing its long-run beneficial impact on society. For example, one could observe that in recent times some major corporations like, MTN Cameroon and Les Brassieres Du Cameroun are embarking on a number of social intervention programmes in areas of health, education and general community development. This concept of corporate social responsibility (CSR) which has long been established in academic literature as both a business philosophy and practice is seemingly much more prevalent, timely and important in this millennium, as firms attempt to be seen as being sustainable or socially responsible in nature due to the demands of target stakeholders. 

Problem Statement

There  is  no  evidence  about  the  relationship  between  corporate  social  responsibility  and  organization performance  that  include  financial  and  non-financial  performance.  In  spite  of  the  existing  of  some  literature about the role of corporate social responsibility in the aspects of environment and society, there is a significance gap  about  how  corporate  social  responsibility  improves  organization  performance  due  to  lack  of  documented evidence  of  the  benefits. It appears a view is emerging that corporate social responsibility can contribute to the financial performance of   companies (Mathew et al., 2007). This view the researchers believe has engendered considerable interest in the operations of Rural Investment Credit Union Nkongsaba- branch   in  recent times, and as a result, Rural Investment Credit Union Nkongsabsa- branch  has set up   as separate legal entity as its foremost corporate social responsibility management structure. According to the union  CEO in 2012 alone, critical interventions were been made through the provisions of school blocks, medical equipment, information communication centers and infrastructure to bring about quality care in deprived communities that has and continue to impact on millions of Cameroonians. The questions however are; what are the motives for credit union adopting corporate social responsibility? Has the financial performance of the company worsened or enhanced by adopting corporate social responsibility practices? Finding answers to these questions attracted the interest of the researchers to investigate or examine the effect of corporate social responsibility on corporate financial performance using the experiences of Rural Investment Credit Union, Nkongsaba- branch.

Research Questions

Main question:

• Is Corporate Social Responsibility a key ingredient in achieving organisational performance?

Specific questions:

• What are the corporate social responsibility practices used by Rural Investment Credit Union Nkongsaba- branch as a means of improving the organisation’s performance
• How effectively is CSR used as a marketing strategy. In Rural Investment Credit Union Nkongsaba branch
• Are Society-oriented activities of any importance in achieving organisational performance?

Research Objectives

Main objective:

To examine the effectiveness of corporate social responsibility as a means of improving organisational performance.

Specific objectives:

• To investigate corporate social responsibility practices used by credit unions as a means of improving the organisation’s performance.
• To examine the influence of CSR as a marketing strategy by credit unions.
• To analyze the importance of society-oriented activities in achieving organisational performance by credit unions.

Further reading: Management Project topics with Materials