Corporate Social Responsibility (CSR) Practices and Financial Performance of Firms

Abstract

Purpose: The aim of the study was to assess the corporate social responsibility (CSR) practices and financial performance of firms. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: Research on Corporate Social Responsibility (CSR) practices and financial performance of firms suggests a nuanced relationship between the two. While some studies indicate a positive correlation, highlighting how CSR initiatives can enhance long-term financial performance by improving brand reputation, customer loyalty, and stakeholder trust, others reveal mixed or inconclusive results, indicating that the impact of CSR on financial metrics can vary depending on factors such as industry, geographical location, and firm size. Additionally, researchers have noted potential limitations, such as the difficulty in accurately measuring the impact of CSR activities on financial performance and the potential for short-term financial sacrifices in pursuit of long-term sustainability goals. Implications to Theory, Practice and Policy: Stakeholder theory, resource-based view and legitimacy theory may be use to anchor future studies on assessing the corporate social responsibility (CSR) practices and financial performance of firms. Further research should prioritize longitudinal studies to provide insights into the causal mechanisms underlying the relationship between CSR practices and financial performance. Firms should adopt integrated CSR strategies that align with their core business objectives and values.