Corporate Social Responsibility and Competitive Advantage by Commercial Banks in Kenya

Abstract

Corporate Social Responsibility (CSR) refers to operating a business in a manner that accounts for the social and environmental impact created by the business. Strategic decisions of large companies involve social as well as economic consequences, which are intimately connected. Commercial banks in Kenya operate in a dynamic environment characterized by technological changes, competition, regulatory requirements, economic changes and opportunistic strategic decisions. CSR programmes are applicable to virtually all organizations and banks are more sensitive to these programmes as they have to strive to satisfy a multiplicity of stakeholders. The objective of this study was to determine the influence of Corporate Social responsibility as a strategy on the Competitive Advantage of the commercial banks in Kenya. This study used descriptive research design. The population of this study comprised all Banks that were in operation in Kenya by December 2012 whereby a census was conducted. The study used both primary and secondary data. Primary data was collected using a semi structured questionnaire; the questionnaires were administered to Corporate Affairs Managers of the banks. Quantitative data collected was analyzed by the use of descriptive statistics using SPSS and presented through percentages, means, standard deviations and frequencies. The findings of this study established that CSR increased customer awareness of the core function and products offered, improved the level of customer loyalty, improved the Bank’s product marketability, diversification, reduced the marketing costs and operational cost as well as promotion of the image of the Bank. The study found out that CSR was integrated with some element of marketing the banks; it is therefore recommended that banks should ensure that CSR activities are integrated with all element of marketing the bank. Further, the study established that CSR promoted the employees’ perception of the Banks, increased the interaction of the Bank with its stakeholders, promoted the relationship between the Bank and the society. The study further found out that CSR increased customer awareness of the core function and products offered, improves the level of customer loyalty, improves the Bank’s product marketability, diversification, reduce the marketing costs and operational cost as well as promotion of the image of the Bank. The study findings also showed a positive correlation between corporate social responsibility and age of the Bank, ownership and number of employees. The study recommends that Banks should use CSR in order to enhance their level of competitiveness. The study therefore recommends that the banks should adopt CSR so as to increase customer awareness of the core function and products offered, improve the level of customer loyalty, improve the Bank’s product marketability, diversification, reduce the marketing costs and operational cost as well as promotion of the image of the Bank. This study recommends that CSR should be adopted in order to enhance the level of competitiveness in the banks.