Abstract
Orientation: With banks faced with fulfilling the increasing demands of diverse stakeholders, this study sought to explore the views and motives for corporate social responsibility practices in the Ghanaian banking sector and also to investigate any possible relationship between these practices and financial performance.Research purpose: This article examined the impact of corporate social responsibility on financial performance using empirical evidence from the Ghanaian banking sector.Motivation for the study: Although corporate social responsibility is a hot topic in Ghana and banks do practise it, no detailed study has been conducted to ascertain whether banks derive any benefits therefrom.Research design, approach and method: A sample size of 22 banks was involved. A structured questionnaire was used to obtain primary data whilst archival records were used to gather the secondary data.Main findings: The findings revealed that banks in Ghana view corporate social responsibility practices to be a strategic tool; banks are motivated to practise corporate social responsibility by legitimate reasons as much as they are motivated by profitability and sustainability reasons. Also, although there is a positive relationship between corporate social responsibility practices and financial performance, the financial performance of banks in Ghana does not depend significantly on their corporate social responsibility practices but rather on other control variables, such as growth, origin, debt ratio, and size.Practical implications: Properly adopted and implemented, corporate social responsibility can pay its way by contributing toward firm performance.Contribution: There is a positive but currently insignificant relationship between corporate social responsibility and financial performance amongst Ghanaian banks. However, given the numerous benefits of corporate social responsibility, it is recommended that firms continue to give priority to this practice.
Highlights
In the last few years, Corporate Social Responsibility (CSR) as a concept has captured the attention of the majority of management scholars, with studies of Corporate Citizenship, Ethics and Social Responsibility appearing with greater frequency
The standard deviation figures further suggest that respondents and, for that matter, banks have the most closely-related view regarding the fact that CSR improves business image, as it records the least standard deviation (0.46)
Corporate Social Responsibility practice within a strategic scope is integral to corporate strategy
Summary
In the last few years, Corporate Social Responsibility (CSR) as a concept has captured the attention of the majority of management scholars, with studies of Corporate Citizenship, Ethics and Social Responsibility appearing with greater frequency. CSR as a term is often used interchangeably in these studies with such concepts as corporate responsibility, corporate citizenship, social enterprise, sustainability, sustainable development, triple-bottom line, corporate ethics and, in some cases, corporate governance (Bassen, Hölz & Schlange 2006). Varied definitions of the concept have been put forward by various observers (governments, companies, business associations, business consultants, non-governmental organisations, shareholders, employees, consumers and communities) in an effort to endorse, encourage or criticise its practical implications. These definitions are based on the different values and expectations that each of these stakeholders bring to their relationship with corporations (Moon 2007). In the final report to the International Standards Organization’s Committee on Consumer Policy (ISO/COPOLCO) on Desirability and Feasibility of ISO CSR Standards, it was noted that ‘corporate social responsibility’ or ‘social accountability’ are approximately equivalent terms, ‘corporate responsibility’ is the most inclusive concept for reflecting the focus on a firm’s triple bottom line as well as a firm’s social engagement and interaction with stakeholders in society for economic, social and environmental purposes (ISO Working Group 2002)
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