TITLE:
A Research on the Impact of Corporate Social Responsibility on the Performance of an Organization: An Empirical Study of the Banking Sector in Tanzania
AUTHORS:
Rhoda Obed Mcharo, Benjamin Blandful Cobbinah
KEYWORDS:
Corporate Social Responsibility, Organizational Performance, Banking Sector, Stakeholder Theory, Tanzania, Financial Performance
JOURNAL NAME:
Open Journal of Business and Management,
Vol.10 No.6,
November
30,
2022
ABSTRACT: The study used the banking sector in Tanzania as a case
study to examine the impact of corporate social responsibility on organizational
performance. In this case, 425 employees were employed as the study’s sample and
population. The participants’ response rate was 100%, as every one of the 425 employees
that were sampled completed the surveys completely. The study’s technique was both
descriptive and exploratory. To investigate the extent to which corporate social
responsibility has an impact on organizational performance, a quantitative method
and regression analysis were utilized. To make statistical inferences, all relevant
tests were performed to establish the quality and reliability of the data employed.
To confirm convergent and discriminant validity of the data, a normality test was
done, as well as a test of sufficiency of the data, composite reliability, Cronbach
alpha, and average variance explained. To meet
the aims, the current study used quantitative data analysis approaches. The
data was analyzed using the Statistical Package for Social Sciences (SPSS v.21.0).
Following that, the researchers used the ordinary least square (OLS) approach to
determine the coefficients of the correlations between the variables or constructs
used to proxy corporate social responsibility and organizational performance. Organizational
performance was examined in three dimensions: employee commitment, corporate reputation,
and financial performance. Corporate social responsibility was measured in two dimensions:
social CSR and environmental CSR. Both the quantitative and regression analysis
revealed that corporate social responsibility has a favorable and significant impact
on an organization’s performance. According to the regression analysis, there is
a positive association between corporate social responsibility (CSR) and organizational
performance (PFR), as indicated by the regression coefficient value of = 0.17 (p-value
0.05). This is due to the direct effect of corporate social responsibility on organizational
performance; as a result, an increase of 0.17 percent in corporate social responsibility
activities among Tanzanian banks could boost their performance (corporate reputation,
employee commitment, and financial performance). To account for the indirect influence
of social and environmental CSR, the regression coefficient value for social CSR
to performance was = 0.56 (p-value = 0.01) and for environmental CSR to performance
was = 0.81 (p-value = 0.01). According to the findings, a 1% increase in the banks’
social CSR may boost their performance by 0.56 percent, while a 1% rise in their
environmental CSR might boost their performance by 0.81% This finding could literally mean that by demonstrating social responsibility, an organization’s image is projected,
thereby strengthening its corporate brand and reputation. It also increases
market share because existing and potential customers perceive the organization as charitable and giving back to society. This
research also backs up the stakeholder theory, which focuses on the concept
of a social contract, meaning that a company’s survival is contingent on how well
it functions within society’s rules and standards. According to the study’s findings,
some employees, or respondents, were unaware of the organization’s specific CSR
initiatives, as well as the quarters that make choices about CSR projects. In this
regard, the study would like to advise and suggest to organizations how to increase
employee participation in CSR projects and how to effectively convey CSR initiatives
to all stakeholders.