Corporate Social Responsibility Practices and Performance of Safaricom PLC, Kenya

Abstract

Most organizations globally have dwindled in their performance due to unethical behaviour towards the surrounding communities who form the source of their materials or factors of production and also market for their products. Organizations are open systems and this closely interacts with the surroundings to get access to resources which need to be transformed for production of goods and services for consumption. In order to compensate the community for allowing the firms to use its resources, most organizations have resorted to corporate social responsibility practices. The lobby groups including environmental conservationists have also pilled pressure to most firms to ensure they behave ethically as they operate within their environments. The issue of corporate social responsibility has gained attention among scholars because organizations today are not only motivated to pursue profit objective but also ensuring that they give back to the community. The increased demand of increased accountability among shareholders and lobby groups has pilled pressure on firms requiring them to behave ethically. This has resulted into increased recognition of CSR among firms. It is argued that CSR programs though costly at implementation have long term potential benefits of improving financial performance of the firm. By acting ethically, it is believed that the corporate image of the firm would improve resulting into an increased level of loyalty among customers and thus better performance. Safaricom Limited is a telecommunications giant in Kenya and has performed well since inception. The study therefore sought to establish the contribution of CSR to the performance of the Telco. The main objective of this study was to determine the effect of corporate social responsibility practices on the performance of Safaricom PLC, Kenya. The study focused on CRS practices with specific emphasis on how they influence corporate performance. The theories of this study were as follows; Social Contract Theory, Carroll´s Pyramid of Corporate Social Responsibility and Stakeholder Theory. This study used descriptive research design to provide description of the population. Descriptive survey design was used and both qualitative and quantitative analysis was performed. Therefore the design was sufficient in data collection, classification, analysis and interpretation. The population comprised of employees of Safaricom. The data was coded then a multiple regression analysis carried out. This study will be used as reference point for other scholars who are studying related topic. The study will also be used by corporate management team of other firms that carry out corporate social responsibility to formulate of proper CSR practices that promotes performance of firms. The study established that health infrastructure development, provision of education, environmental awareness and employee focus CSR programs had a positive and significant relationship with performance of Safaricom. The study concludes further that the firm faced a range of problems implementing the CSR programs like costs, capacity, legislation and lack of direct benefit but was still running the programs The study concluded that implementation of the CSR programs helped in enhancing corporate reputation, improving relations with suppliers, institutions, donors and community, to strengthen the sense of employees, increased operational efficiency, helped in acquisition of commercial benefits and identification of reputational risks at the firm. The study recommends that Safaricom should ensure that it engages with the public when coming up with environmental CSR programs, consider those that affect a large number of people, focus both internally and externally to ensure their clients are involved and feel the impact of the benefits.