The practice of corporate social responsibility by commercial Banks In Kenya

Abstract

Corporate Social Responsibility (CSR) is increasingly a core component of corporate strategy in the global economy. In recent years its importance has become even greater, primarily because of financial scandals, investors' losses, and reputational damage to listed companies. While corporations are busy adopting and enhancing CSR practices, there is (beyond very few notable exceptions) little empirical research on CSR's practice by Commercial Banks in Kenya and the challenges related to it. I propose an economically coherent analysis of Corporate Social Responsibility (CSR), and suggest the challenges related to it. CSR is defined as a program of actions taken to reduce externalized costs or to avoid distributional conflicts. It is an institution that has evolved in response to market failures, a coasion solution to some problems associated with social costs. As mentioned earlier the objective of the •... study was to establish how Commercial Banks in Kenya practice CSR and the challenges they face. The study targeted corporate managers involved in CSR. A descriptive survey was used and the questionnaire consisted of open ended structured and semi structured questions which was pretested for clarity. 'Drop and Pick later' method was used to administer the questions to the respondents in different Commercial Banks in Nairobi. The study was a census survey. The data was analysed using frequency distribution and percentages. Content analysis was also used to analyse unstructured questions. The results showed that in most of the companies, the Functional group in a company such as the Foundation, Marketing Department, and PR Department Etc initiates CSR programs with the blessing of the CEO. The entry point for CSR practice has been concentrated on two aspects: community work and PR. Also getting the other functional groups involved in embedding the CSR strategy into the way the company plans and implements products and services is rare. More findings revealed that most companies leave the CSR implementation to the corporate foundation or its equivalent, while half say they let the public relations or corporate communications group take the lead. Next to the community, the employees are the stakeholders that the companies target for their CSR. Investors are low priority. The limitations for the study were evident. Though the study was generally successful, it was faced by some limitations. First of all, only two thirds of the selected organizations comprising 65.71 percent took part in the study. 34. 29 percent did not take part in the study. This means that the study cannot be generalized to the entire banking industry. Also the study was carried out within limited time and resources. This constrained the scope as well as the depth of the research. The study also focused on management perspective. It would have been of value to obtain views of other stakeholders as well. Finally the researcher suggested that a comprehensive study be undertaken which involves other stakeholders such as the community and others. A narrower case study of individual banks was also necessary to avoid generalization. Besides another detailed study to address solutions to the CSR challenges was deemed necessary.