Corporate Social Responsibility and Performance of Commercial Banks Listed at the Nairobi Securities Exchange in Kenya

Abstract

Organizations today are experiencing increased pressure from their surrounding environments to act as good social citizens while still being profitable. Acting socially and ethically responsible has become an expectation rather than a differentiation strategy to obtain organizational legiti-macy. The Study is about CSR and performance of Commercial Banks listed at the Nairobi Securities Exchange in Kenya and was informed by the instrumental theories of CSR that focus on the use of CSR as a platform for companies to achieve their business goals. To enable the relationships between performance variables and CSR to be analyzed, the study relied on responses to a structured questionnaire by the management of the listed Banks and secondary data collected for a period of five years (2009 to 2013) from the financial statements database maintained by Nairobi Securities Exchange for the purpose of effective periodical analysis. The Key findings supported the hypotheses that the practice of CSR based on instrumental theories has a positive effect on the performance of the listed banks. This was shown by a positive and statistical significance correlation, supporting the view that CSR initiatives can be associated with bottom-line benefits to organizations. The study concluded that there is a positive effect of CSR on the performance of Commercial Banks listed at the Nairobi Securities Exchange in line with the CSR principles in the instrumental theories focusing on competitiveness. This study’s findings inform the recommendations that CSR should be part of a companies’ strategic planning process and operations. The study recommends that measurement of CSR is important since it informs whether the CSR is efficient and effective for a bank’s objectives and for creating sustainable development. The measurement and results of the effect of CSR can be used by listed banks in positioning themselves to be more competitive. Further research is recommended that a similar study be conducted in other sectors where such studies have not been done.