Abstract
There has been a significant growth of interest in the field of corporate social responsibilityand the debate is still hot. There are however very few studies done in the least developedcountries on the subject matter.The main objective of the study was to investigate the impact ofCSR on Firm Financial Performance in the least developed countries, Tanzania being the countryin question. The aim of this paper is to find out if there is a significant difference in financialperformance of firms that engage in CSR relative to those that do not practice CSR. Independentsample t-test was used to test hypotheses. The data set included randomly selected 101 firmsoperating in Tanzania using accounting based measures of financial performance namely Returnon Asset, Return on Equity.The findings presented revealed that there is a significance differencein financial performance favoring those firms that do Corporate Social Responsibility, implyingthat CSR has a positive influence on firm financial performance. Firms should then engage incorporate social responsibility so as to improve their financial performance and managers shouldnot underestimate the contribution they make by committing their time and resources to makesure their CSR programs are effective in order to achieve the competitive advantage.
Highlights
EAs stakeholders become more aware of what is going on with regards to their favorite businesses’ operations and the contribution the firms can make to the development of the communities around them
Hypothesis 1: The findings revealed that there is a significant difference between ROA of firms that do Corporate Social Responsibility (CSR) in comparison to those that do not practice CSR which lead to the rejection of the null hypothesis
Hypothesis 2: The findings revealed that there is a significant difference between ROE of firms that do CSR in comparison to those that do not practice CSR which lead to the rejection of the null hypothesis
Summary
EAs stakeholders become more aware of what is going on with regards to their favorite businesses’ operations and the contribution the firms can make to the development of the communities around them. Pressures have increased on businesses to act more socially responsible. This has forced firms to evolve from their primary goal of profit maximization to the new goal of shareholder’s wealth maximization which requires firm to take into consideration the demands of the different stakeholders as they go about their daily operations and inclusion of social and environmental factors in their decision making (Karaibrahimoglu, 2010). When firm’s engage in CSR they demonstrate the change in behavior that benefits both the firm and the society resulting in a multiple effect, a firm is said to be socially responsible when it becomes a leader in improving the well being of the community and environment around it. The firm accepts the role to balance the expectations of different stakeholders as they are crucial for its survival (Tsoutsoura, 2004)
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