Corporate Social Responsibility and Corporate Performance: A Study of the Top 100 Performing Firms in Ghana
Abstract
Corporate social responsibility (CSR) is often viewed as a necessary ingredient for the survival of organizations in contemporary business world. However, much of the studies that examine its relevance have been carried out in the developed economies like the UK and USA. The major aim of this study was, therefore, to explore the nature and pattern of relationships between some indicators of financial performance and standing on CSR. The relationships between CSR and indicators of organizational performance (such as turnover, turnover growth rate, net profit, ROE, the number of employees, and composite performance) were examined. Using Ghana Investment Promotion Centre’s data used for the 2005 Ghana Club 100 (GC100) ranking, a correlation matrix was constructed and a One-Way between-subjects analysis of variance (ANOVA) was carried out. Results of the analysis showed no significant correlation between any of the indicators of financial performance and standing on CSR. However, a nearly perfect correlation was found between composite corporate performance [made up of turnover, turnover growth rate and return on equity (ROE)] and turnover. The conclusion drawn from this study was that inactivity of the few institutional investors and absence of strong lobbyists in Ghana and other developing countries coupled limited listing on stock exchange markets make financial performance of such companies unaffected by their standing on CSR.
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