Corporate Social Responsibility and Profitability in Selected Business Firms of Kasese District- Uganda

ABSTRACT 

The study was set to establish the relationship between Corporate Social Responsibility (CSR) and profitability in selected business firms of Kasese District. The study had its specific objectives as; (i) To find out the level of corporate social responsibility in the selected business firms of Kasese District, (ii) To examine the role of corporate ethical business practices on profitability of Business firms in Kasese District. (iii) To find out how the corporate legal and economic responsibility of business firms translates into profits. (iv)To examine the relevance of the Philanthropic responsibilities of a business firm to its profits. The study employed descriptive and correlational design; data was collected using a researcher devised questionnaire and interview guide. The researcher used the judgmental Pearson’s correlation coefficient(r) and the regression linear analysis were used to establish the relationship between CSR and the profitability of business firms in Kasese District In regard to the demographic characteristics, the study was dominated by respondents in the age bracket 31- 4oyears (82, 41 %), majority were male (62%) and mostly the married (121, 60.2%) with Degree holders 108(54%) being the majority. Results showed the overall average mean on the level of CSR as (3.78) interpreted as satisfactor3. In regard to the corporate ethical business practices, a very satisfactory average mean of 4.11 was established as respondents confirmed that good business ethical practices attract and influences consumer behavior (4.31) and that the fair and right pricing improve sales (4.29). In regard to the level of profitability, the researcher established a satisfactory level of profitability with an average mean of 3.87 through increased sells; enjoy an increased level of returns on equity of the business firm (4.28) and profitability in business firms taking an upward trend (4.27). The results suggested a positive and strong correlation between CSR and Profitability (r = 0.908, Sig.= 0.000) an implication that the prevalence of CSR in a business firm is directly responsible for business firms’ profit improvement. The regression analysis showed a very significant relationship (Sig. 0.000**) between CSR and profitability with a 99% level of significance given the “Adjusted R-Square” that shows 80.3% of the variance accountable for profitability with “R-Square 0.825’ that reveal the dependence of profitability on the corporate social responsibility. The researcher concluded by highlighting a great linkage of CSR with the profits of any business firm. The researcher recommends that all business firms’ stakeholders now have a food for thought for further establishment of any gaps to consolidate and put right the corporate social responsibility to improve on their business firms profits.

TABLE OF CONTENTS

DECLARATION A

DECLARATION B

DEDICATION jjj

ACKNOWLEDGEMENT iv

LIST OF ABBRIVIATIONS v

ABSTRACT vi

LIST OF TABLES vii

LIST OF CHARTS

LIST OF GRAPI-IS ix

TABLE OF CONTENTS x

CHAPTER ONE: 1

INTRODUCTION 1

1.0. Introduction 1

1.1. Background of the study 1

1.1.1. Historical Perspective 1

1.1.2. Theoretical Perspective 3

1.1 .3. Conceptual Perspective 3

1.1.4. The contextual perspective 6

1.2. Statement of the problem 9

1.3. Objectives of the study 9

1.3.1. General Objective 9

1.3.2. Specific Objectives of the study 10

1.4. Research Questions 10

1.4. Hypothesis (Ho) 10

1.5. Significance of Study 10

1.6. Scope of the study 11

1.6.1. Geographical Scope 11

1.6.2. Content Scope 11

1.6.3. Theoretical Scope 12

1.6.4. Time Scope 12

1.7. Definition of terms. 12

1.8. Organization of the Thesis 13

CHAPTER TWO 14

REVIEW OF RELATED LITERATURE 14

2.0. Introduction 14

2.1. Theoretical Review 14

2.1.2. AssumptionS of the relational model theory 17

2.1.3. Criticisms of the Relational model 18

2.2. Conceptual Framework 19

2.2.1. Overview 19

2.2.2. Narrative of the Conceptual Framework 20

2.3. Review of Relevant Literatures 22

2.3.1. The level of corporate social r~sponsibility in the business firms 22

2.3.2. The Corporate legal and economic responsibility of business firms 25

2.3.3. Relationship between Ethical Business Practices and Profitability 27

2.3.4. The philanthropic responsibilities of a business firm and its profitability 29

2.3.5. The relationship between corporate social responsibility and profitability 32

CHAPTER THREE:METHODOLOGY 35

3.0. introduction 35

3.1. Research Design 35

3.2 Research Population 35

3.3 Sample Size 36

3.4 Sampling Procedure 38

3.5 Research Instrument 38

3.6 Validity and Reliability of the Instrument 41

3.7 Data Gathering Procedures 42

3.8 Data Analysis and Descriptive Statistics 43

3.9 Ethical Considerations 44

3.10 Limitations of the Study 44

CHAPTER FOUR 45

DATA PRESENTATON, ANALYSIS AND INTREPRETATION 45

4.1 Introduction 45

4.1 Demographic characteristics of the respondents 45

4.2 The level of corporate social responsibility in the selected business firms 48

4.3 Corporate ethical business practices and profitability 51

4.4 How the legal and economic responsibilities of the business firms 54

4.5. The philanthropic responsibilities of Business firms and profitability improvement. 57

4.6 The Level of profitability in the selected business firms 60

4.7. The relationship between corporate social responsibility and profitability of Business firms in the Kasese District and Uganda as a whole. 64

CHAPTER F1VE:FINDINGS, CONCLUSION AND RECOMMENDATIONS 67

5.1 Introduction 67

5.1 Findings 67

5.1.1 Objectives of the study 67

5.1.2 Demographic characteristics of the respondents 67

5.1.3 Level of corporate social responsibility 68

5.1.4 The role of corporate ethical business practices on profitability of Business firms. 68

5.1.5 Corporate legal and economic responsibility of business firms and profitability. 69

5.1.6 The relevance of the Philanthropic responsibilities of a business firm to its profits 70

5.1.7 Level of Profitability 71

5.1.8 The relationship between Corporate social responsibility 72

5.2 Conclusions 72

5.3 Hypothesis testing 74

5.4 Validation of the Theory 74

5.5 Conclusion on the theory 74

5.6 Contribution to Knowledge 74

5.7 Recommendations 75

5.8 Areas for further research 76

REFERENCES 77

APPENDICES 84

APPENDIX I A: TRANSMITTAL LETTER 84

APPENDIX IB: TRANSMITTAL LETTER FOR RESPONDENTS 85

APPENDIX II: CLEARANCE FROM ETHICS COMMITTEE 86

APPENDIX III: INFORMED CONSENT 87

APPENDIX IVA: FACE SHEET TO EXAMINE THE PROFILE OF THE RESPONDENTS 88

APPENDIX IVB: QUESTIONNAIRE TO EXAMINE THE INDEPENDENT VARIABLE (CSR) 89

APPENDIX IV C: QUESTIONNAIRE TO EXAMINE THE DEPENDENT VARIABLE (Profitability) 91

APPENDIX V: INTERVIEW GUIDE FOR KEY INFORMANTS 92

APPENDIX VI: CURRICULLUM VITAE 93