The Impact of Corporate Social Responsibility on Performance: A Case Study: ECOBANK BANK, Limbe-CAMEROON

• Abstract

In recent years, corporate social responsibility has been attracting heightened attention throughout the world. Stakeholders expectations of the business have increasingly ranged from maximum profit to strong levels of Corporate Social Responsibility (CSR). Previous research on the effect of CSR on organization performance has yielded mixed results. Research on CSR in the Cameroon context has however minimal outcome. Business managers in Cameroon organization have actively embraced CSR in recent years, but there are still questions on how CSR affect performance. This descriptive research study sought to answer the question and provide information to various stakeholders on the effect of CSR on performance with a focus on the banking sector of Cameroon. A survey questionnaire was used to collect primary data on factors that influence CSR practices and approaches embraced by Cameroon Corporations in their practices of CSR. Trend analysis indicated that CSR has a positive effect organizational performance of Ecobank Limbe. The result of this study indicated that CSR is just one of the myriad factors that affect the performance of the organization but there are many other factors that business managers need to take into consideration regarding the effect of CSR on performance. Insights obtained in the study are relevant to stakeholders and managers in the organization whether small or big in nature.

CHAPTER ONE

INTRODUCTION

1.1 Background to The Study

The concept of corporate social responsibility has become a common practice among financial institutions in Cameroon such as Ecobank. It is one of the newest management strategies where companies try to create a positive impact on society while doing their business.

Some researchers have been trying for more than half a century to analyze and understand the notion of corporate social responsibility (Bowen,1953: Caroll, 1979: Freeman, 1984) and different definitions were given by them which these definitions have a common idea.

Holme and Watts (2000) defined CSR as and contribute to economic development while improving the quality of the workforce and families as well as the local community and society at large. The phrase corporate social responsibility coined up in 1953 with the publication of Bowen’s Social Responsibility of Businessmen which posed the question “what responsibilities to society can businesspeople reasonably be expected to assume?

Corporate social responsibility got its origin in the ideology of early twentieth-century religious thinkers who suggested that certain religious principles needed to be taken into consideration for instance

(Andrew Carnegie) propose the charity principles that required more fortunate individuals to assist less fortunate members of the society, the Stewardship principle also required that businesses and wealthy individuals to see themselves as steward or caretakers, not just of shareholders financial resources but also of society economic resources, holding their property in trust for the benefit of society as a whole(Mahatma Gandhi)

During the late twentieth century there arose the idea of the corporate social contract which today underlies the corporate social responsibility concept which brought forth that an enterprise responsibility should commensurate with its economic, social, political power (Lippke, 1996)

CSR is an ethical theory that an entity has an obligation to act in a way that benefits society. It is a process that every organization needs to undergo such as the case of Ecobank. CSR activities can be grouped into four main categories; economic, legal, ethical and philanthropic. Such classification assumes abiding by the CSR principles, where company responsibility towards the society is based on normal profit maximization, following the legal rules and moral responsibility.

Corporate social responsibility is a concept based on the relationship between the business world and society and on the behaviour of organisations towards its interest group such as employees, buyers, suppliers, investors, local community (Carroll, 1991)

In order for organisations to be strong, they have to be financially secured, decrease their negative environmental impact and act in conformity with social expectations.

According to Carroll (1979), business encompasses economic, legal, ethical and discretionary expectations that society has of organization at a given time.

Some researchers have argued that CSR can improve on organisations financial performance, in the long run, Implying a positive relationship between CSR and organisations financial performance (Weber, 2008)

Good corporate reputation has strategic value for firms that possess them (Rumelt, 1987).

1.2 Problem Statement

Ecobank primary objective is to increase shareholder’s wealth. There is increased pressure by various stakeholder who quests for the different role for business in society. CSR expenses are been accepted by the managers much the same way as operational expenses. This raises a complex issue of whether they perform better or worse than those firms that are not considered to be socially responsible.

This further raises the question of how much effort and resources should be allocated to societal activity. This study hence sought to examine the influence of CSR on Ecobank performance

The study has shown that there is a close relationship between CSR and performance in the long run but it has failed to bring out the effect that CSR has on the organization (Ecobank) hence there exist a knowledge gap. This research is, therefore, aiming to fill that gap so as to carefully determine the effect of CSR on Ecobank Cameroon or does invest in CSR has an effect on Ecobank. It is true that most companies and corporation do everything within their reach to keep their customers satisfied and faithful to their various brands. In Cameroon, for instance, CSR activities amongst others include, the provision of pipe-borne, the construction of multimedia centres in schools just to name a few.

Despite all the above-listed benefit of corporate social responsibility some customers don’t feel satisfied, this could be a problem of

–           poor and degrading relationships between Ecobank and its customers.

–           No provision of social amenities from Ecobank to society. It is this reason that this research wants to study the effect of corporate social responsibility on performance.

1.3 Research Questions

What is the effect of corporate social responsibility on Ecobank performance?

What are the economic, social and environmental factors responsible for the poor performance of corporate social responsibility adoption in Ecobank?

What type of CSR practice does Ecobank practice?

1.4 Research Objectives

1.4.1 Main objectives

To examine the effect of corporate social responsibility on the performance of Ecobank Cameroon.

1.4.2 Specific Objectives

To examine the economic, social and environmental factor that are responsible for the poor performance of CSR in Ecobank

To evaluate the CSR practices of Ecobank