Effects of corporate social responsibility on the performance of firms within the financial sector: a case study of Postbank
Kirwa, Vincent Luke
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Business organizations are faced with the reality of the compelling need to show commitment towards Corporate Social Responsibility. Whereas organizations are participating in CSR activities, there is an emerging thought where firms are asking questions about business sustainability of these activities. It is with this background that this research investigated the effects of corporate social responsibility on the performance of firms operating within the financial sector. Postbank which is the only pure savings bank in the country was selected for purpose of the study. The study determined the extent to which environmental issues, customer concerns, employee concerns, philanthropic activities and products and services influences the performance of the Bank. It is important to note that no such study had been done in the Bank and it is therefore deemed that its findings provides input for policy improvement as well as enhance the existing knowledge relating to the area of study. The population of the study comprised 300 staff of Postbank from specific departments and working within the CBD area of Nairobi. A sample of 20% of the population was obtained using stratified random sampling. Questionnaires were used to source data. Other sources were journals, company publications, reports, circulars, text books and information from websites in the internet. The data collected was analyzed using descriptive statistical methods including measures of central tendencies and dispersion to explain the population distribution. Findings indicated that CSR activities have a higher effect on the performance of the bank as performance focused on image, profitability, customer satisfaction, employee satisfaction, costs and risk profile of the organization. Given that the market place has become competitive and players in the industry compete for customers with an intention of increasing the deposits level, the findings indicated that CSR may be considered a differentiation strategy by the bank. Based on the findings the study recommends that the bank should participate more on corporate social responsibility activities while at the same time using it as a platform for marketing its products. The study advocates for CSR to be accommodated as a differentiation strategy with the objective of making the organization attain increased performance. The study confined itself to Kenya Post Office Savings Bank which is a purely savings bank and is not a commercial bank. It may therefore not be fully representative of the financial sector and as such it is proposed that a study of the whole industry in Kenya comprising over 45 banks be undertaken.