Impact of Corporate social Responsibility on Business performance: A survey of banks in Nairobi city.

Abstract

Research findings have provided support for the benefits that CSR spending yield to companies, particularly in terms of enhanced consumer perceptions of the company. However, understanding of the different CSR spending associated with bank performance is still limited especially in developing countries. Even though there have been earlier researches on the effects of CSR on business performance, little has been done and reported on Kenyan firms. The main focus of this study was to understand whether or not there exists any relationship between CSR spending and the performances of firms thereof, within the banking industry in Nairobi city. The study objectives were to determine the effect of ethical spending on bank performance, effect of economic spending on bank performance, effect of legal spending on bank performance and effect discretionary spending on bank performance. The study was developed and guided by the stakeholder theory, which obligates corporate directors to appeal to all sides and balance everyone‘s interests and welfare in a bid to maximize benefits across the spectrum of those whose lives are touched by the business. Edward Freeman, the main proponent of this theory with other scholars, views it as the mirror image of corporate social responsibility, and they hold the view that the more socially responsible the firm is, the better its performance. The study targeted leading banks within Nairobi city. Nassiuma sample size formula was used to obtain 144 respondents. The study adopted explanatory research design. This design focuses on why questions. In answering the 'why' questions, the study was involved in developing causal explanations. Stratified random sampling technique was used to select the respondents. A 5 likert scale structured questionnaire was used for data collection. The validity and reliability of the questionnaire was checked by use of pilot testing and Cronbach alpha test respectively. Data collected was coded and analyzed using both descriptive statistics (means, standard deviation, Skewness and kurtosis) and inferential statistics (Multiple regression and Pearson correlation).The study findings point out that CSR ought to be adopted and executed smartly by firms so as to avoid the imbalances of performing and not performing by only achieving its advantages and avoiding its disadvantages.