Effects of corporate social responsibility on financial performance of manufacturing companies in Kenya

Abstract

Corporate Social Responsibility is a commitment, which involves organizations globally to contribute to the development of the economy of any country. CSR is done to improve the well-being of the communities around us. This study sought to find out the effects of corporate social responsibility on financial performance of manufacturing companies in Kenya. This descriptive and inferential statistics study was conducted by the use of secondary data. The data was collected using structured data collection instrument and analysis of the financial statements of manufacturing companies in Kenya. The study targeted 68 manufacturing companies in the Kenya association of manufacturers. The data was analyzed using multiple regression model. The study found out that there was a small significant direct relationship between corporate social responsibility and the financial performance of manufacturing companies in Kenya. The findings of the study showed that corporate social responsibility had little effect on the financial performance compared to the total assets, which had significant effect on financial performance. The study also showed that participation in Corporate Social Responsibility was on voluntary basis and it aimed at improving the social welfare of the community. The study concludes that many manufacturing companies in Kenya do participate in CSR activities and CSR has weak effect on the financial performance of the manufacturing companies. From the study, the key recommendations are that manufacturing companies in the Kenya association of manufacturers should engage in CSR activities because it will increases their customer base especially those regarded as small and medium size manufacturing companies. The study suggests further research to be carried out on the effects the corporate social responsibility on financial performance of manufacturing companies but in small and medium size companies in Kenya.