Effect of Corporate Social Responsibility on Financial Performance in the Telecommunication Industry in Kenya

Abstract

It is a fact that CSR is a technique, which has and continues to be used in many organizations to communicate with the public indirectly about the existence of a certain firm and its products and/or services being offered. In most cases CSR is carried out as a way to show gratitude to the community by giving back. CSR, therefore, is a concept often used in Kenya and indeed globally by many organizations to engage in philanthropic work by giving back to the community aiming at being seen as a good neighbour by the immediate community next to the organization in question. Thus, the main purpose of this study was to establish the effects of corporate social responsibility on financial performance in the telecommunication industry. This study adopted a cross-sectional survey whereby three companies in the telecommunication industry, were targeted. A statistical packages for social sciences (SPSS version 21.0) was used to analyze the quantitative data for a period of 10 years. Both correlation and a multiple regression were applied to determine the strength of the relationship between and among the variables. From the findings of the study, it was concluded that there is a significant relationship between the CSR and financial performance (ROA and ROE) for all aggregated telecommunication companies in Kenya. Hence, it was recommended that Telecommunication companies should engage in very many CSR activities as this increases their customer base which will eventually increase the amounts of profits hence the company‟s financial performance also improves