Effect of corporate social responsibility on customer loyalty among commercial banks in Nairobi, Kenya

Abstract

This study specifically assessed the impact of CSR on customer loyalty among commercial banks in Nairobi, Kenya. The objectives of the study were to establish the extent customer awareness on CSR activities carried out by commercial banks and to determine the effects of corporate social responsibility activities on customer loyalty among commercial banks. This study also exposed the challenges experienced by commercial banks in the conduct of its CSR programmes. The literature review focused on the concepts of CSR and strategic intent and their relationship with corporate performance. It also focused on the practice of CSR. The conceptualization of the study included CSR programmes as the independent variables, CSR policy and approach as the intervening variable and attainment of the strategic intent as the dependent variable. The results of the study showed that the CSR practice in commercial banks is aligned with the strategic intent and that generally the CSR programmes met the expectations of employees, investors and local communities and improved customer loyalty. However, there was no certainty that the expectations of customers were met due to the fact that customers also doubled up as employees and local community members. The key recommendation of the study was that the current CSR programmes should be expanded to engage more employees and serve more needy cases in wider geographical areas. Secondly, commercial banks need to partner with more co-sponsors in order to benefit from the economies of scale. The study found out that all the CSR programmes are aligned with the Strategic Intent of most if not all commercial banks. It also established that all the CSR programmes do contribute to attainment of the Strategic Intent at commercial banks through their joint and several contributions to the expectations of the various stakeholders of the organization. To the employees the CSR programmes allows their participation as volunteers and instills a sense of responsibility and belonging to the overall mission of the organization. To the customers the study established that they specifically derived prestige from the socially responsible brand and also shared in the increased share value created for the investors and the economic, social and environmental benefits enjoyed by the communities. The study established that the regulators were interested in corporate citizenship of the players through the practice of CSR as embodied by commercial banks. The main challenges that commercial banks face in the practice of CSR was resource constraints and deteriorating macroeconomic environment characterized by inflation, increased poverty levels and youth unemployment. The other main challenge was lack of free will and passion in the employees and customers. Lastly, commercial banks like many other organizations lacked models of CSR that could have ensured delivery of value to all the stakeholders of the organization.