The Effect of Corporate Social Responsibility on Business Operations and Performance

Abstract

In recent years, Corporate Social Responsibility has been attracting heightened attention throughout the world. Stakeholder expectations of the business have increasingly ranged from maximum profits to strong levels of Corporate Social Responsibility (CSR). Previous research into effects of CSR on Business Operations and Performance has yielded mixed results. Research on CSR in the Ugandan context has however been minimal. Business managers in Ugandan Corporations have actively embraced CSR in recent years, but there are still questions on how CSR affects the business operations and performance. This descriptive research study sought to answer the question and provide information to various stakeholders on the effect of CSR, on business operations and performance with a focus on Uganda firms. A survey questionnaire was used to collect primary data on factors that influence CSR practice, and approaches embraced by Ugandan corporations in their practice of CSR. Archival documents and analysis of financial results from 2007 – 2010 of two publicly listed corporations was collected and analyzed against CSR expenditure for the four year period. Trend analysis indicated CSR has a positive effect on internal business processes and the non – financial measures of performance notably corporate image, goodwill and market share. A positive effect of CSR was further observed on sales revenue. CSR practices were however found to have a negative effect on financial performance measures. Results of the study indicated that CSR is just one of the myriad factors that affect business operations and performance as there are many other factors that business managers need to take into consideration regarding operations and performance. The insights obtained in the study are of relevance to stakeholders and managers of an organization small or big in nature.

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