CHAPTER - 1

CSR AND ITS IMPACT ON ORGANIZATION

Introduction

Corporate Social Responsibility is how business organization

activities influences the stakeholder intrest.CSR plays a very
important role in organizational performance. Most organizations
have embraced corporate social responsibility without substantial
increase in organization performance hence the research sought to
find out the effect of CSR on organization performance. It’s now
recognized that sustainable development and reduction of poverty
are the key issues that need to be addressed by the governments,
mostly in the developing world. Policy makers are paying much
attention to the potential contribution of the private sector to such
policy objectives. As the issue of sustainable development becomes
more important, CSR becomes an element that addresses these
issues and therefore it becomes more vital in the daily operations
of financial institution in the banking industry. According to Pranjali
(2011)The World Business Council for Sustainable Development
(WBCSD) describes CSR as a contribution to sustainable economic
1
development ;It is said that there is no way to avoid paying serious
attention to corporate social responsibility: the costs of failing are
simply too high. There are countless win opportunities waiting to
be discovered: every activity in a firm’s value chain overlaps in
some way with social factors, everything from how you buy or
procure to how you do your research, yet very few companies have
thought about this. The goal is to leverage your company’s unique
capabilities in supporting social causes, and improve your
competitive context at the same time. The job of today’s leaders is
to stop being defensive and start thinking systematically about
corporate responsibility according to Michael Porter (2005) who
says successful executive or leaders know that CSR is inevitable and
their long term success is based on continued good relationship
with the society.

Corporate social responsibility is applicable to almost all

organization but the banks are keener to these programmers as
they have to do extra in order to satisfy their multiplicity of
stakeholders. According to Nwankwo (1991) he points the
advantages of CSR as, maximizing profit to shareholders who are
the real owners of the business, maintaining optimal liquidity for

2
depositors, Complying with regulators demand, Satisfying the
deficit sector demand for credits, contributing to the development
of the economy and Satisfying the needs of the immediate
community in which they operate. CSR is being used today to
establish good rapport with the public according to Nolan, Norton
and Co (2009). It is also used as pre-emption strategy by the
corporations to save their skin from unforeseen risks and corporate
scandals, possible environmental accidents, governmental rules
and regulations, protect eye-catching profits, brand differentiation,
and better relationship with employees based on volunteerism
terms. Corporations today are much conscious to publish their CSR
activities on their websites, sustainability reports and their
advertising campaigns in order to get the sympathy of the
customer. CSR is also practiced because customers as well as
governments today are demanding more ethical behaviors from
organizations. In response, corporations are volunteering
themselves to incorporate CSR as part of their business strategies,
mission statement and values in multiple domains, respecting labor
and environmental laws, while taking care of the contradictory
interest of various stake holders according to Kashyap et al( 2006).
Another justification in favor of CSR actions by the leading
3
corporations today is to gain competitive advantage which may not
be enjoyed by the peer corporations. CSR actions in this respect
also help corporations to attract and retain not only customers but
also motivated employees, which in turn ensure long-term survival
of the corporation. Drumright (1996) supported that companies
with sound CSR actions developed positive social identity and
enjoyed increased loyalty from both customers and employees.
CSR actions are also often associated with better financial
performance of the organizations. Margolis et al. (2001) has found
significant positive relationship between CSR and corporate
financial performance; Research has shown that companies that
care for the environment and exhibit good CSR practices
experience increased consumer purchase preference in addition to
increased investment appeal according to Gildea (1994) and Zaman
et al (1996). Banks cannot do this alone without involving the
community who are the customers. For them to produce relevant
services and products, they must carry out a study to get
information from their customer on their perceptions towards their
business operations particularly their quality of services rendered
to increase customer satisfaction and ultimately their loyalty by
offering a variety of products according to customers expectation.
4
 Identification of problem

Corporate social responsibility or CSR, has come in for its share of

criticism over the years.

Despite being more recognizable, there is no consensus about what

CSR is. A common element in most explanations is the design of
new business practices that respond to civil society expectations of
good corporate citizenship. Rather than fixing the law, CSR
proponents seek to reform the corporation from within and
thereby raise the standards of corporate conduct beyond what is
legally required.

Corporate social responsibility is an old idea, with American roots

in the writings of the steel magnate Andrew Carnegie. Carnegie
believed that the goal of businessmen should be ‘to do well in
order to do well. He maintained that it was up to the more
fortunate members of society to aid the less fortunate – that the
wealthy ought to be stewards of their property, holding their
money ‘in trust’ for the rest of society. As trustees they are entitled
to do with it only what society deemed legitimate.

5
Today, CSR proponents emphasize that virtuous companies will be
rewarded in the marketplace and thus can ‘do well by doing good –
an argument widely referred to as ‘the business case’. Despite the
human rights risks of not ‘doing good’ today when more business is
being done directly or through surrogates (suppliers and
subsidiaries) in politically and socially fragile settings throughout
the world, CSR remains stubbornly rooted in Carnegie’s vision of
the benevolent businessman .

CSR gets defined by business managers who cherry-pick the areas

of social benefit the company will address. Typically CSR managers,
where they exist, struggle mightily to score the financial backing
and human resources they need to address the problem. Often the
first CSR initiatives adopted by companies are environmental
programmes – for example, the reduction of greenhouse gas
emissions or packaging. Through these programmes, companies
can create efficiencies, help their bottom line and improve brand
image all at the same time. These are welcome initiatives. But the
problem with an approach that lets business define corporate
responsibility is that it is not grounded in a set of principles about
what it means to be a responsible business. Ultimately, CSR is

6
whatever companies want it to be – and often, what is most
convenient.

All too often, companies use CSR programs to deflect attention

from socially irresponsible practices in their core operations. In a
2008 article, Conrad MacKerron, of the shareholder advocacy
group As You Sow, identified the problems of discretionary CSR in
the practices of the American retail giant Walmart. He argued that
Walmart’s environmental initiatives to reduce waste and improve
energy efficiency among its vast network of Chinese suppliers not
only ignored, but also came at a cost to workplace health and
safety in those factories.

These initiatives are expensive: to pressure suppliers to ‘go solar’ or

clean up wastewater discharge, all while making low-priced goods
for US consumers, is not possible without cutting corners on
worker pay and safety. MacKerron also noted an overlooked aspect
of Walmart’s green agenda: Chinese makers of those very solar
panels were reportedly dumping silicon tetrachloride, a highly toxic
byproduct of polysilicon manufacturing, directly onto fields in
Henan Province.

7
CSR advocates agree that a ‘business decides’ approach to
corporate responsibility is problematic. But, they counter,
companies that practice CSR do operate under constraints, since
they must do what the public expects of them. The concept of CSR
rests on the idea that businesses operate with a social contract
granted by society. Fulfilling that contract requires businesses to
respond not only to their shareholders, but also more generally to
civil society. Companies that do not behave responsibly in relation
to civil society demands risk losing their ‘social licence to operate’.

Civil regulation, however, often takes place haphazardly in ways

that favour consumers with purchasing power at the expense of
politically and economically marginalized members of society. As
Katherine Trebeck notes, even in a reasonably well-functioning
participatory democracy with a strong civil rights tradition and the
capacity to protest safely, citizen regulation is hard to achieve.
Apathy or indifference can lead to vocal minorities dominating the
decision-making process, while others may find that they do not
have the time or means to participate.

CSR is dependent upon oversight of business by society. Yet

society alone is not capable of articulating the full range of
8
protections its members need; hence, business is free to decide
whether or not to devote resources to prevent harm and, to take it
a step further, exercise its influence and capabilities to protect the
rights of workers and communities. There is little incentive to do so
if business finds it too difficult or if there is little payoff in the
marketplace. For these reasons, human rights advocates have
found that CSR is not up to the task of preventing harm to people.

Out of this dissatisfaction, the business and human rights (BHR)

movement emerged. It has worked to shift the focus from
the ‘needs’ to the ‘rights' of the affected community, and from
acts of charity by businesses, towards full accountability in
international law. The BHR movement distinctively claims that
international human rights law provides a hard legal benchmark
against which companies can be judged and in accordance with
which they must act, regardless of whether it is convenient,
profitable, or will improve the company’s reputation.

Others are skeptical of this approach, questioning the motives of

corporate participants, who join MSIs in the first place to deter
regulation, not advance it. Some concentrate their efforts on
getting intergovernmental organizations and governments to
9
create binding rules that hold companies accountable, while others
push for innovations in international human rights law in the form
of a business and human rights treaty that would explicitly make
corporations subject to it. And yet all within the BHR movement
can agree that the standard of conduct must be based on
international human rights, and that some form of coercion is
necessary to deal with corporate laggards that violate those rights
with impunity.

In short, corporate compliance with human rights standards must

be an end in itself rather than a path to making more profit. The
late Milton Friedman’s famous 1970 New York Times editorial, “The
Social Responsibility of Business is to Increase its Profits”, is best
known for the articulation of the libertarian economist’s doctrine
that “the business of business is business”. There is a lot to
disagree with in the article. But one line still rings true: "...in
practice the doctrine of social responsibility is frequently a cloak for
actions that are justified on other grounds rather than a reason for
those actions.” There is nothing wrong with making money, but
there is when it harms people in the process and, worse, is
camouflaged by the ‘cloak’ of CSR

10
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 hence the researchers focus
was to find out the effect of CSR on organization performance
based on selected commercial banks as we find out whether these
institutions realize any benefits from the much they spend. It also
seeks to find out the policies set by the government concerning the
CSR activities since CSR has been used by business institutions to
evade tax in terms of paying less towards tax as tax is free of CSR
activities organization indulge in
1) To investigate the effect of Philanthropic CSR activities on
organizational performance
2) To investigate the effect of Ethical CSR activities on
organizational performance.
3) To investigate the effect of Environmental focused CSR
activities on organizational performance.
4) To investigate the effect of government policy and priority on
organization performance.

11
 CHAPTER - 2

REVIEW OF LITERATURE

It has been rather difficult to construct a truly representative

measure of CSR due to the complexity of the theoretical construct
itself and because measurements of a single dimension provide a
rather limited perspective with regards to the firm’s performance
in the relevant social and environmental domains (Wolfe, 2003).
Some authors try to identify the type of CSR strategy that best
favours innovation (Sharma and Vredenburg, 1998; Perrine, 2012).
Using supply and demand theory as a framework, McWilliams and
Siegel (2000) show that the adoption of environmental practices,
going beyond legal requirements, may promote investments in
research and development, which in turn can produce both process
and product innovations. By using a case study methodology,
MacGregor and Fontrodona (2008) analyze the CS Renovation
relationship for companies from Spain, Italy and the UK. They
attempt to study this relationship in both directions, that is,
whether CSR influences innovation and vice versa. Their findings
underscore that CSR-driven innovation is aimed at products and

12
services that have some sort of social purpose, while innovation-
driven CSR may be more aligned with creating social processes and
is driven by value. Therefore, we extend these studies to CSR to
analyse if strategic CSR has a positive effect on its propensity to
innovate. Thus, we hypothesis:
1. There is a positive relationship between CSR and organizational
innovation
The impact of CSR on economic performance has received
considerable attention in the literature over the past three
decades. There is generally expected to be a positive relationship
between CSR and financial performance according to both
stakeholder theory and agency theory. The instrumental
stakeholder theory (Donaldson and Preston, 1995) argues that
good management implies positive relationships with key
stakeholders, which, in turn, improve financial performance
(Freeman, 1984; Waddock and Graves, 1997). The basic
assumption behind this theory is that CSR may be an organizational
device that leads to more effective use of resources (Orlitzky et al.,
2003), which then has a positive impact on corporate financial
performance (CFP).

13
 2. There is a positive relationship between CSR and firm
performance
Regarding the link between CSR and innovation, Devinney et al.
(2008) considers it as an additional area within the relationship
between CSR and corporate performance, which has been widely
studied in the previous literature (e.g. Ingram and Frazier, 1980;
Aupperle et al., 1985; Waddock and Graves, 1997; Preston and
O’Bannon, 1997) without a global consensus having been reached.
This lack of concurrence may be due to the existence of many
variables that influence corporate performance, making it difficult
to determine the impact of CSR practices effectively. As Surroca et
al. (2010) demonstrate that intangible resources, including
innovation, might be a missing link to explain relationships
between CSR and financial performance. Despite recognition of the
importance of CSR, Lockett et al. (2006) affirm that we remain in a
“continuing state of emergence” as far as theoretical approaches
and methods are concerned.
Innovation heralds the introduction of new products and processes
that, if embraced by the market, will enhance firm’s performance.

14
As firms work to recognize, manage, and reduce environmental
impacts, they potentially reap competitive advantages (Hart, 1995;
Porter and Van der Linde, 1995; Russo and Fouts, 1997), captured
in the form of enhanced innovation. Nidumolu et al. (2009) even
state explicitly that CSR and sustainability are ‘‘key drivers for
innovation”.

3. Organizational innovation mediates the relationship between

CRS and firm performance
The set of relations is illustrated in Figure 1.

15
 CHAPTER - 3

METHODOLOGY

1. DATA COLLECTION AND SAMPLE

The target population of our study is SMEs from the Region of
Murcia (Spain). Currently, SMEs represent around 99% of the total
number in the country. Data collection was conducted following
two phases. First, a pilot study was performed and, following that,
a questionnaire was conducted. Five SMEs were randomly selected
from a database to perform the pilot study. Based on these
responses and subsequent interviews with participants in the
pretest, minor modifications were made to the questionnaire for
the next phase of data collection. Responses from these five pilot
study firms were not included in the final sample.
To ensure a minimum firm complexity in which corporate social
responsibility practices may be relevant, only firms with more than
20 employees were considered for the questionnaire phase. Thus,
the population considered consisted of all Spanish enterprises, with
more than 20 employees, located in the southeast of the country
which have their primary business activity in one of the following

16
business activities: manufacturing, commercial, services and
construction (see Table 1). A total of 2,558 were identified and
contacted for participation. The survey was administered to the
CEO of the companies via personal interview and the unit of
analysis for this study was the company. In total, 550 valid
questionnaires were obtained, yielding a response rate of 21.50
percent. The dataset was examined for potential bias in terms of
non-response by comparing the characteristics of early and late
participants in the sample. These comparisons did not reveal
significant differences in terms of general characteristics and model
variables, suggesting that non-response did not cause any survey
bias.

17
2. MEASURES
Measurement items were introduced on the basis of a careful
literature review. Constructs and associated indicators in the
measurement model are listed in the Appendix and discussed
below. To facilitate cumulative research, operationalizations tested
by previous studies were used.
3. COMMON METHOD VARIANCE MEASURES
We used Structural Equation Modelling (SEM) for measurement
validation and testing the structural model. SEM is particularly
useful for testing complex models and when researchers need to
incorporate latent variables. More specifically, we opted to use
SEM based on Partial Least Squares (PLS) approach because the
variance-based PLS method is preferable to the covariance-based
for exploratory or early-stage theory testing models (Barroso et al.,
2010; Petter et al., 2007). Since we collected both independent and
dependent variables simultaneously from the same respondents,
common method variance could be a concern in this study. The
extent of common method bias was assessed by using four
different methods. First, the Harman’s one factor test was used by
entering all the indicators into a principal components factor
analysis (Podsakoff and Organ 1986). Evidence for common
18
method bias exists when a general factor accounts for the majority
of the covariance among all factors. With all indicators entered, 9
factors were extracted. The variance explained ranged from 9.50%
to 5.17%), indicating no substantial common method bias. Second,
a partial correlation method was used (Podsakoff and Organ 1986).
The highest factor from the principal component factor analysis
was added to the Partial Least Square (PLS) model as a control
variable on all dependent variables. According to Podsakoff and
Organ, this factor is assumed to “contain the best approximation of
the common method variance if is a general factor on which all
variables load” (Podsakoff and Organ 1986: 536). This factor did not
produce a significant change in variance explained in any of the
three dependent variables, again suggesting no substantial
common method bias. Third, we used Lindell and Whitney’s (2001)
method, which employs a theoretically unrelated construct (marker
variable) to adjust the correlations among the principal constructs.

E-business use was used as the marker variable (Soto-Acosta and

Meroño-Cerdan, 2008). Any high correlation among any of the
items of the study’s principal constructs and E-business use would
be an indication of common method bias, as e-business use is
19
weakly related to the study’s principal constructs. Since the
average correlation among diversity and the principal constructs
was r=0.09, this test showed no evidence of common method bias.
Fourth, the correlation matrix (table 2) did not indicate any highly
correlated variables, while evidence of common method bias
usually results in extremely high correlations (r>0.90) (Bagozzi et al.
1991).
In summary, these tests suggest that common method bias is not a
serious threat in our study. Table 2 also provides an overview of
the means, standard deviations and correlations of the constructs.

20
4. INSTRUMENT VALIDATION
The measures from the dataset were refined by assessing their
unidimensionality and reliability. First, an initial exploration of
unidimensionality was made using principal component factor
analyses. In each analysis, given values was greater than 1, lending
preliminary support to a claim of unidimensionality in the
constructs. Next, the reliability and validity of the measurement
model were verified (Barclay et al. 1995). Convergent validity of the
scales is contingent on the fulfillment of three criteria (Fornell and
Larker 1981; Hair et al. 1998): (1) all indicator loadings should
exceed 0.65 (2) Composite Reliabilities (CR) should exceed 0.8; and
(3) the average variance extracted (AVE) for each construct should
exceed 0.5. As table 3 shows, all the indicator loadings are above
the recommended threshold, the CR values range from 0.84 to
0.96, and the AVE ranges from 0.56 to 0.93. All three conditions for
convergent validity thus hold.
To evaluate discriminant validity, Fornell and Larker (1981) suggest
that the square root of the AVE of a latent variable should be
greater that the correlations between the rest of the latent
variables. As table2 shows, discriminant validity holds for the
model, as the square root of the AVE for each construct is greater
21
than the squared correlations between pairs of constructs.
Furthermore, the Cronbach’s alpha values of all indicators should
exceed the recommended value of 0.6 (Nunnally, 1967) and all our
measurement items noted in table 3 exceed 0.6. Thus, overall
measurement items have adequate item reliability.

This study measures corporate social responsibility as a single

construct made up of five dimensions: CSR with suppliers, CSR with
22
customers, CSR with employees, CSR with the local community and
Environmental responsibility. As presented in table 4, the four
dimensions reflect the higher-order construct. Similarly, firm
performance was operationalized as a second-order construct
consisting of three dimensions (see table 5): financial performance,
customer relations performance and human relations performance
(Quinn and Rohrbaugh, 1983).

23
 4. Methods

The study applied a cross-sectional research technique to collect

primary data on 50 selected RCBs in the 10 regions of Ghana. We
selected and focused on RCBs known to engage in CSR in their
communities. The study population was employees of the selected
RCBs. Employees selected were those who had worked in the
selected RCBs for at least 2 years. We selected employees who had
worked in the banks for at least 2 years to ensure that participants
had been exposed to a considerable period of CSR. Of course,
assessment of the effect of CSR on employees requires employees’
exposure to CSR for a considerable period. We used top
management members because these employees had in-depth
knowledge on CSR for employees and better satisfied the selection

24
criterion. Three employees each were selected from 50 RCBs
making a convenient sample of 150 employees. The employees
were selected based on satisfaction of the criterion identified
above.

In all, two variables were measured in this study. The independent

variable (IV) is CSR practice for employees (i.e. CSR-employees) and
the dependent variable (DV) is Employee Organizational
Commitment. The control variables are gender, educational level
and work experience. Employee Organizational Commitment was
measured using items borrowed from the study of Adekola (2012
Adekola, B. (2012). The impact of organisational commitment on
job satisfaction: A study of employees at Nigerian
universities. International Journal of Human Resource Studies,
ISSN, 2, 2162–3058. CSR activities for employees were measured
using items borrowed from the study of Khan and Jan (2015
Khan, A. S., & Jan, F. (2015). The study of organization commitment
and job satisfaction among hospital nurses; A survey of district
hospitals of Dera Ismail Khan. Global Journal of Management and
Business Research: Administration and Management, 15, 17–28.
The control variables were measured by assigning values to their

25
levels as follows: Gender—Male (1); Female (2); Educational level—
Basic/secondary (1); Diploma (2); Degree (3); Master’s degree (4);
PhD or higher (5); Work experience—Up to 2 years (1); 2–4 years
(2); 5–7 years (3); 8–10 years (4); and above 10 years (5).

CSR-employees and OC were measured using a Likert scale which

allowed the participants to respond on a scale of 1–5 in indicating
their extent of agreement or disagreement to each CSR activity or
item. The scale of the Likert scale includes: 1 = strongly disagree;
2 = disagree; 3 = not sure; 4 = agree; and 5 = strongly agree. In
coding however, not surewas corresponded to 0, since it represents
neutrality and uncertainty.

Out of 150 questionnaires sent out, 145 were retrieved and

deemed duly completed, representing a 97% response rate.
Descriptive statistics (including skewness and kurtosis) was used to
check data for outliers and then dependent variable was tested for
data normality (see results in Table 3 and Figure 1). A confirmation
of data normality made it possible to use the parametric statistical
tools, precisely ordinary least square regression analysis.

26
 CHAPTER - 4

ANALYSIS

In this section, data are analysed to address the research

hypotheses. Firstly, PCA is used to explore the first hypothesis.
Theoretically, the validity of results of the PCA is based on various
statistical indicators nested in the PCA. The first of these indicators
is the correlation coefficients formed by each pair of the indicator
variables. The rule of thumb is that a high number of these
coefficients must be greater than .3 (Ringnér, 2008
Ringnér, M. (2008). What is principal component analysis? Nature
Biotechnology; Suhr, 1999Suhr, D. D. (1999). Principal component
analysis vs. exploratory factor analysis (Paper 203–230, pp. 1–
11). Greeley: University of Northern Colorado. In other words, no
pair or just a few pairs of indicator variables should have a
correlation coefficient less than .3. In Appendix Table A1, this
requirement is met. It is therefore more likely that the PCA is
sufficiently valid and would therefore give rise to valid principal
components. However, the validity of the PCA depends on the
results of other diagnostic tests.

27
The value corresponding to the Kaiser-Meyer-Olkin Measure of
Sampling Adequacy (MSA) is required to be greater than 50
(Suhr, 1999 Suhr, D. D. (1999). Principal component analysis vs.
exploratory factor analysis (Paper 203–230, pp. 1–
11). Greeley: University of Northern Colorado, whereas higher
values are better (Ringnér, 2008 Ringnér, M. (2008). What is
principal component analysis? Nature Biotechnology, Suhr, 1999
Suhr, D. D. (1999). Principal component analysis vs. exploratory
factor analysis (Paper 203–230, pp. 1–11). Greeley: University of
Northern Colorado. Moreover, the Bartlett’s Test of Sphericity is
required to be significant at 5% significance level (Ringnér, 2008
Ringnér, M. (2008). What is principal component analysis? Nature
Biotechnology. From Table 1, both requirements are met, further
buttressing the validity of the PCA and its resulting principal
components. In Appendix Table A2, the MSA value of all variables is
represented in the leading diagonals (i.e. values in bold). It can be
observed that each of these values is greater than .50, therefore
the MSA requirement is satisfied for each indicator variable as well.
It is worth saying that the MSA value in Table 1 is for all indicator
variables, whereas those in Appendix Table A2 are for the
individual indicator variables.
28
Based on statistical evidences produced in Appendix Table A1,
Table 1 and Appendix Table A2, the PCA is sufficiently valid and
would therefore produce valid principal components. In Appendix
Table A3, communalities of all indicator variables are shown.
Generally, the size of the communalities or extraction values is the
basis for removing indicator variables from an iteration of the PCA.
An indicator variable is removed when its communality is less than
.5 (Suhr, 1999 Suhr, D. D. (1999). Principal component analysis vs.
exploratory factor analysis (Paper 203–230, pp. 1–
11). Greeley: University of Northern Colorado. In the first iteration
of this analysis, none of the variables has a communality value less
than .50. This result suggests that all indicator variables of CSR-
employees and EC are retained in the PCA.

In Appendix Table A5, the first component includes a majority of

the indicator variables of CSR-employees and EC (i.e. CSR3,
CSR4 … EC7). This means that the first component represents highly
correlated variables of both CSR-employees and EC. This is the first
ultimate statistical evidence of the relationship between CSR-
employees and EC. The second component is made up of only one
indicator variable of EC (i.e. EC8), whereas the third component is

29
constituted by the first two indicator variables of CSR-employees
(i.e. CRS1, and CSR2). The fourth component is made up of only one
indicator variable of CSR-employees (i.e. CSR11).

With reference to Appendix Tables A4 and A5, it could be observed

that a greater part of the total variation explained is accounted for
by the first component. This evidence can be verified from
Appendix Table A5 and is indicated by the fact that all indicator
variables are strongly positively related to Component 1 (see
component loadings formed by component 1 and indicator
variables in Appendix Table A5). Moreover, against components 2,
3 and 4, each indicator variable is relatively weakly related (see
Appendix Table A5). The strongest evidence regarding the positive
relationship between CSR-employees and EC is shown in Table 2. In
this table, the first component is positively related to the second
component (R = .601), third component (R = .630), and fourth
(R = .328). Moreover, components 2 and 3 are positively correlated
(R = .533), likewise components 2 and 4 (R = .362). Components 3
and 4 are also positively correlated (R = .457). It is therefore
evident that components formed by indicator variables of both
CSR-employees and EC are positively correlated. The first null

30
hypothesis is therefore not confirmed. The alternative hypothesis is
therefore provisionally accepted.

The second null hypothesis is tested using OLS regression analysis

as follows. Yet before looking at the results of the OLS regression
analysis, there is a need to ensure that the data came from a
normally distributed population.

The first test, Kolmogorov–Smirnov, is only applicable for large

samples of at least 2,000 cases. Considering the fact that the
sample size of this study is less than 2,000, we would focus on the
second test, Shapiro–Wilk. This test is based on the 5% significance
level. It can be seen that the p-value of the Shapiro–Wilk test is less
than the chosen level of significance (p < .05), suggesting that data
did not come from a normally distributed population. But the
deviation from normality is not serious, considering the Box Plot of
Figure 1. Moreover some researchers (e.g. Sawilowsky, 2005
Sawilowsky, S. S. (2005). Misconceptions leading to choosing the t
test over the Wilcoxon Mann-Whitney test for shift in location
parameter. Journal of Modern Applied Statistical Methods, 4, 598–
600, observed that such moderate deviation from normality is

31
acceptable. We therefore decided to proceed with the test of the
second hypothesis using OLS regression analysis.

There is a strong positive correlation between CSR-employees and

EC (R = .736). Figure 2 shows the line of best-fit associated with the
relationship between EC and CSR-employees and EC. It can be
observed that this line is a perfect straight line, with a variation of
54.1% explained by CSR-employees confirmed. In Table 4, this total
variation explained by the predictor is confirmed; thus CSR-
employees explain 54.1% of the variation. The error term of the
regression model therefore explains 45.9% of the total variation. It
is therefore deemed that our model moderately fitted. In Table 5,
the ANOVA test is significant at 5% significance level
(F = 168.66, p = .000). Significance of ANOVA test is the evidence to
the prediction of EC from CSR-employees. In Table 6, CSR-
employees significantly predicts EC at 5% significance level
(t = 12.99, p = .000, β = .367). In addition, a unit change in CSR-
employees changes the conditional mean of EC by .367 within a
confidence interval of .311–.423. The relationship between CSR-
employees and EC is expressed as follows:

EC=.367∗CSR-employees+7.347EC=.367*CSR-employees+7.347

32
The positive coefficient (that is .367) produced in the mathematical
model supports the positive correlation between the two variables
as seen in Table 4. It is therefore evident that enhancing the level
of engagement in CSR activities for employees increases employee
commitment. The second null hypothesis is therefore not
confirmed and the alternative hypothesis is provisionally accepted.
Though CSR (for employees) significantly predicts Employee
Commitment in the selected RCBs, there is the need to control for
background variables that are likely to influence this relationship
between EC and CSR-employees. As stated earlier, controlling for
these variables is aimed at eliminating alternative effects on EC.
Table 7 shows a model summary of the prediction of EC from CSR-
employees.

CSR and the three background variables (Gender, Educational

Level, and Years of Working in the Bank) account for a 56.1% of the
total variation in EC, with a residual variation of 43.9% accounted.
In Table 4, CSR alone accounts for 54.1% of the total variation. This
means that the three background variables explain just .02% of the
total variation. Moreover in Table 8, the Analysis of Variance is
significant at 5% significance level [F (4, 131) = 41.86, p = .000],

33
suggesting that EC can be expressed as a linear combination of CSR
and the three background variables.

CSR-employees significantly predicts EC at 5% significance level

(t = 12.62, p = .000, β = .349). Gender also significantly predicts EC
at 5% significance level (t = −2.52, p = .000, β = −1.89). Educational
level and “Years of working with bank” however fail to predict EC at
the same level of significance (p > .05). Though gender significantly
predicts EC, the general effect of the background variables on the
relationship between CSR-employees and EC is scanty and almost
negligible. For instance, with respect to Table 4, the background
variables, especially Gender, account for just 5% of the effect of
CSR-employees on EC. Yet this small influence of the background
variables cannot be totally ruled out, though it is largely
contributed by Gender.

34
 CHAPTER - 5

FINDINGS

In this chapter, findings of the study are presented along with the
summary, suggestions and conclusion of the study. The aim of the
study was to find out the awareness, practice, strategy, benefits of
Corporate Social Responsibility practice and to suggest suitable
measures for effective implementation of Corporate Social
Responsibility practices by the select services and enterprises, both
government and non-government organisations. The study being
empirical in character, was based on survey method and
information collected personally through a structured
questionnaire reinforcing its genuineness by initiating personal
interviews. The data collected from executives of the select
services and organisations were analysed and the result drawn on
some major findings are presented as below:

1. Most of the executives in sectors where higher

intellectual/technical skills are required such as Education, Health,
Telecom and Financial sector, are more aware of Corporate Social

35
Responsibility (CSR) while those in sectors where less
knowledge/skills are required, are lesser aware of Corporate Social
Responsibility (CSR).

2. Awareness of CSR and, clarity of its meaning are both important

for the executives and managers to understand its implications.
Sector wise, it reveals that telecom-100 percent, Health-100
percent, Public enterprises-100 percent, 159 Education-92 percent,
Financial sector-87 percent and SS Industries-80 percent have
higher clarity about CSR while Hospitality-70 percent, Brick farm-67
percent and Private Enterprises-60 percent have lower clarity of
CSR. While majority of the executives have the idea of what CSR is,
only a few are fully aware and clear about CSR. It is also observed
that majority have little idea only while 20 percent are unsure
about Corporate Social Responsibility.

3. Profit is important for a business to survive, but profit should not

be the sole aim of an enterprise. The present analysis aims to find
out the understanding of the executives about the relationship
between Corporate Social Responsibility and profitability. It is
found that profitability and practice of CSR are positively related as

36
86 percent respondents revealed their positive relationship while
only 14 percent have revealed negative relationship. Interestingly,
Education service revealed highly negative relationship (33.30
percent) between profitability and CSR, followed by brick farms and
health services.

4. Enterprises and service institutions use different strategies for

implementation of CSR. Most of the Private Enterprises perform
CSR through NGOs, as they do not have large resources whereas
big services / enterprises with large resources set up Foundation
Trusts for CSR implementation. It came to light that big
enterprises/ services have set up separate departments for CSR
implementation.

5. Large corporate and Enterprises like financial institutions (65.2

percent), public enterprises (66.7 percent) earmark a certain
amount of fund for CSR implementation annually. 86.7 percent of
brick firms do not have separate allocation of funds for CSR
implementation. Overall, 33 percent of 160 service/enterprises
allocate fund for CSR and 67 percent do not have allocation of fund
for CSR.

37
6. It is found that 44 percent contribute to Community Investment
Initiatives, and 56 percent do not. Conservation of nature (75
percent), youth development (70 percent), games and sports (68
percent) are the most ventured areas. On the other hand, local
heritage (30 percent), working for disability (31 percent), and
poverty alleviation (32 percent) are the least ventured areas by
service/enterprises.

7. Education is the most vital area for community initiatives by

services/enterprises as this is the basis for development in all
areas. 51 percent service/ organisation are found to have
promoted education and 49 percent do not have investment
initiatives in the promotion of education. It is observed that all the
educational institutions have the facility for subsidised education
for the staff children. Financial sector, health and private. trading
are also contributing in this regard while hospitality services (71
percent), brick farms (manufacturing 86.7 percent) and telecom
services (100 percent) do not invest in education even for its
stakeholders.

38
8. 75 percent of service/organisation are found to have investment
programme for conservation of nature while 25 percent do not
invest in conservation of nature. Telecom and education services
100 percent contributed for the conservation of nature while
financial sector (47.80 percent) as well as Private Trading
enterprises 40 percent do not contribute/ invest for conservation
of natural environment.

9. As a part of community investment initiatives, 42 percent of

service/enterprises have investment programme for Infrastructure
while 58 percent do not invest in 161 Infrastructure. Financial
Institutions 69.6 percent is the highest contributor in this regard
while Brick farms 66.7 percent and Public enterprises 66.7 percent
invest for the development of infrastructure. Education and
Hospitality sector are the lowest/no contributor infrastructure
investment.

10. Brick farms are found to have motivated to practice CSR equally
due to Image buildings, increase in profits and vision of the firm.

39
11. In health sector, the drivers of CSR are equally shared by legal
compliance. Vision and philosophy and rising international
standard while increasing profits. Image buildings, increasing
awareness and community pressure are also weak drivers of CSR.
12. Image building, vision and philosophy and legal compliance
with 33 percent are important CSR drivers for public sector. While
profits, international standard, awareness, increase, and
community pressure do not influence CSR activities.

13. Telecom sector is found to be mostly influenced by vision and

philopshy to undertakes CSR initiatives. The second driver is equally
shared by Image building, rising international standard and
increasing awareness.

14. Vision and philosophy and image buildings are the main drivers
of CSR for Private trading enterprises (non-manufacturing) while
international standard and community pressure do not influence
CSR initiatives.

15. Manufacturing small scale industries and micro industries are

driven highest by philosophy as well as image building (27 percent

40
each). Community pressure does not influence CSR practice except
in the health sector (only 10 percent).

16. Money is found to be the most provided resource with 46

percent for CSR practice, 19 percent in kind, 17 percent as loan, 16
percent provide volunteers and 2 percent only provides other types
of resources. Among the Service/Enterprises, Private Trading
Enterprises provide money with the highest percentage of 80, 67
percent by Public Enterprises and Telecom as well as small scale
industries provide money with 60 percent each. With 2 percent,
Health Services is the lowest provider of money for CSR practice.
Brick Firms provide resources in kind with the highest 60 percent
for CSR practice. Health service and Education sector provides
volunteers the highest with 60 percent and 50 percent respectively
and Financial Institutions provide loan to the needy, with a high of
70 percent.

41
 CHAPTER - 6

SUGGESTIONS:

The present chapter presents suggestions to the various services

and business enterprises both governmental and non-
governmental organizations to promote better relationships
between these services/ enterprises and society in general and the
various stakeholders in particular. Corporate Social Responsibility
can be classified as those policies, activities, or behaviour
undertaken by an organization that goes beyond the traditional
economic and legal obligations that the firm has with its target
internal and external stakeholders. Corporate social responsibility
is more than a business policy or a response to issues raised by
society. It is a governing business philosophy. Responding to the
ethical obligations must be voluntary in nature and if undertaken
effectively should eventually benefit and improve the overall
welfare of the community in which the firm operates. The following
are the suggestions:
1. Identification of reasons and benefits of practicing Corporate
Social Responsibility in different sectors of business can have a
42
scope for further research along with development of company
ethics programme, integration of business ethics and ethics
training to the staff.
2. A study involving other independent variables such as Corporate
Reputation, Organizational Climate, and Sustainability can be
undertaken to find out its effect on Corporate Social Responsibility.
3. Further study may focus on identifying and comparing the
perception of line managers, staff managers, and employees on
Corporate Social Responsibility practices of the company.
4. Future study can look into Corporate Social Responsibility
practices and Business performance of product oriented or services
oriented companies in Manipur.
5. Identification of programs and policies to enhance Corporate
Social Responsibility practices is also a relevant area of research.
6. Companies and organisations should integrate social
entrepreneurship into their core culture by actively channelizing
their research and development capabilities in the direction of
socially innovative products and services.

43
 RECOMMENDATIONS
 Recommends in investing much in ethical activities then
philanthropic as this will lead to improve in performance
 CSR environment has got insignificant impact on organization
performance
 Recommends further research to check other factors as :
 Why environment does not affect bank performance
 The research limited itself to 3 aspect of CSR i.e. Ethical,
Environmental and Philanthropic, further research should
include other factors

44
 CHPATER - 7
CONCLUSION

Items of employee organizational commitment and CSR-employees

are all retained in the Factor Analysis, suggesting that items of the
two constructs are significantly related. Moreover, factors formed
by the two constructs are significantly positively correlated. The
ordinary least squares regression analyses confirm a strong positive
relationship between EC and CSR-employees. Results of both the
FA and OLS regression analysis therefore confirm the hypothesis
that engagement in CSR for employees enhances employees’
organizational commitment. Yet, the relationship between CSR-
employees and EC is influenced by the background variable of
educational level and years of working with the bank. Thus, the
CSR-employees and EC have no relationship when these variables
are controlled for. However, the relationship between CSR and EC
is still significant when gender is controlled for. It is therefore
concluded that CSR-employees makes a significant effect on EC
even when gender is controlled for. This relationship is not
significant when education and work experience are controlled for.
This means that this relationship is based on the effects of

45
education and years of working with the bank. The findings
reported in this study have reinforced the argument that CSR
generally has a significant influence on employee’s commitment
towards his organization. However, the study also indicates that
this relationship is premised on some background variables
including gender, educational level and years of working. This
should inform decision-making regarding the planning and
implementation of CSR strategies in organizations. RCBs in
particular should integrate CSR strategies with their human
resource policies and must acknowledge that having particular
concern for the welfare of employees goes a long way to boost the
employee’s commitment and by extension, their performance and
ultimately the growth of the organization. To boost organizational
performance therefore, managements would have to enhance and
maximize their engagement in CSR for employees. According to
Santoso (2014 Santoso, I. L. (2014). The impact of internal CSR
towards employee engagement and affective commitment in XYZ
hotel Surabaya. iBuss Management, 2, 79–88, this may demand
that managements offer employees better conditions of service, a
fair organizational system and a family-oriented organizational
environment.
46
 REFERENCES

1. Abugre, J. B., & Nyuur, R. B. (2015). Organizations’ commitment to

and communication of CSR activities: Insights from Ghana.Social
Responsibility Journal, 11, 161–178.10.1108/SRJ-06-2013-0066
2. Adekola, B. (2012). The impact of organisational commitment on
job satisfaction: A study of employees at Nigerian
universities.International Journal of Human Resource Studies,
ISSN, 2, 2162–3058.
3. Aguilera, R. V., Rupp, D. E., Williams, C. A.,
& Ganapathi, J. (2007). Putting the S back in corporate social
responsibility: A multilevel theory of social change in
organizations. Academy of Management Review, 32, 836–
863.10.5465/AMR.2007.25275678
4. Albdour, A. A., & Altarawneh, I. I. (2012). Corporate social
responsibility and employee engagement in Jordan. International
Journal of Business and Management, 7, 80–105.
5. Ali, I., Rehman, K. U., Ali, S. I., Yousaf, J., & Zia, M. (2010). Corporate
social responsibility influences, employee commitment and
organizational performance. African Journal of Business
Management, 4, 2796–2801.

47
 BIBLIOGRAPHY

BOOKS:
1. Organization commitment to and communication of CSR
activities by Abugre, J.B., & Nyuur, R.B.(2015)
2. The impact of organizational commitment on job
satisfaction by Adekola, B. (2012)
3. Corporate Social Responsibility by Aguilera, R.V. Rupp,D.

WEBSITES:

www.google.co.in

www.fastcompany.com

www.blendermedia.com

www.csrwire.com

www.csr.gov.in

48