Abstract
Due to globalization and technological change, the current business environment in a developing country is competitive, which requires a firm’s engagement in CSR to remain competitive. Therefore, this study examined the linkage between different dimensions of CSR engagement (customer, employee, community & environmental) with the banking industry’s competitive advantage strategy and ranked the contribution of these stakeholders of CSR to their competitive advantage. The study used a cross-sectional data of 28 branches of Lion International bank of Ethiopia and analyzed using confirmatory factor analysis and structural equation model. The results showed that separate stakeholders of CSR implementation (customer, community, employee, and environment) had a positive influence on the bank’s attached elements of competitive advantage. Explicitly, the banks are more concerned about customer-based CSR and are considered the most vital factor for their competitive advantage. Conversely, banks gave the least emphasis on environment-related CSR. Hence, the bank managers should give more stress on environment-related CSR and integrating it with the firm’s business operation that might have a high impact on the firm’s competitive advantage, helping them to ensure sustainable development.
Highlights
Corporate social responsibility (CSR) is the way organizations integrate social, environmental, economic concerns in their business operation and interactions with stakeholders voluntarily in a transparent and accountable manner (European Commission, 2001; Van Marrewijk, 2003)
Measurement scales The measurement instrument and key stakeholder groups in the banking industry were identi fied through a literature review and developing the instrument items related to each dimension of CSR activities with the banks’ competitive advantage
The study analyzed the influence of different dimensions of CSR practice on banking competitive advantage using confirmatory factor analysis (CFA) and structural equation model (SEM)
Summary
The industries can address customer, employee, community, and environmental issues for main taining its competitiveness. This study exam ined the linkage between different dimensions of CSR engagement with the banking industry’s competitive advantage strategy and ranked the contribution of these stakeholders of CSR to their competitive advantage. The collected data ana lyzed using confirmatory factor analysis and structural equation model. This study showed that there was a linkage between the banking industry’s competitive advantage and its CSR engagement. The paper contributed to establish ing which stakeholders of CSR are more targeted strategies followed as the company’s competitive advantage. Business managers may use the findings to design more effective dimen sions of CSR strategies to their competitive advantage. Subjects: Environment & Business; Statistics; Sustainable Development; Environmental Economics; Business, Management and Accounting
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