Corporate Social Responsibility and Its Impact to The Financial Performance: Study On Financial Industry in. The main objective of this research is to examine the significant impact of CSR activities on four groups of stakeholders, namely employee, customer, supplier and society, which are linked to a company's financial performance. In this research study, 200 sets of questionnaires were prepared and distributed to the targeted respondents working in Kuala Lumpur and Selangor.
Ultimately, the final result shows that there is a significant impact of CSR activities on four groups of stakeholders that are linked to a company's financial performance.
INTRODUCTION
- Research Background
- Corporate Social Responsibilities Activities within
- Problem Statement
- Research Questions
- Research Objectives
According to Zulkifli & Amran (2006), Malaysia is considered as one of the most active developing countries in terms of corporate social responsibility. Researchers have found that corporate social responsibility has a positive (Pfajfar et al., 2022), negative, (Oh et al., 2017) and neutral impact on financial performance (McWilliams and Siegal, 2001). Several empirical studies provide evidence for the idea that corporate social responsibility has a negative relationship with financial performance.
In addition, corporate social responsibility (CSR) is said to help improve the company's reputation in the eyes of all stakeholders, not just shareholders.
LITERATURE REVIEW
- Introduction
- Concept of Corporate Social Responsibilities (CSR)
- CSR from Stakeholders’ Perspectives
- CSR and Organisational Performance
- CSR toward Employees
- CSR toward Customers
- CSR toward Suppliers
- CSR toward Community
- Impact of CSR on Stakeholders
- Impact of CSR on Financial Success
- CSR activities on Different Countries
- Hypotheses Development
- Conceptual Framework
Consequently, it is assumed that corporate social responsibility (CSR) towards customers has a positive effect on the financial success of the organization. As a result, there is a hypothesis that corporate social responsibility (CSR) towards the community has a beneficial effect on the financial performance of the company. Corporate social responsibility directly affects the financial sector of the company, which in turn affects the benefits of the shareholders.
Corporate social success (CSR) is a measure that examines the relationship between CSP and long-term firm performance measurements such as accounting or financial profitability (Waddock and Graves, 1997). The findings of the study revealed that there is a positive and statistically significant relationship between corporate social responsibility and financial results. Researchers in the third group found no relationship between corporate social responsibility (CSR) and financial success.
METHODOLOGY
- Research Population
- Sampling Design
- Survey Instrument
- Descriptive Statistic
- Analysis Method
- Statistics Package for Social Science (SPSS)
The population for this study consists of stakeholders in the financial industry in Kuala Lumpur and Selangor area, as the majority of the organization's headquarters are mostly located in the city of Kuala Lumpur and Selangor respectively. A survey questionnaire, which will interview a large target population, is one of the collection approaches (Bowling, 2005). Non-probability sampling was used as a comprehensive list of the population's responses was not readily available.
The language of the questionnaires to be used is in English, as universally understood by the various races, i.e. From the literature survey, the main interest groups of the financial industry are identified and their perspective is recorded through a structured questionnaire. This questionnaire is designed to seek general information of respondents, the impact of CSR activities on employees, customers and suppliers would affect and give impact on financial performance.
All questions are designed to test the relationship between financial performance (the dependent variable) along with independent factors in the financial industry. This study uses descriptive statistics to determine the central tendency and dispersion of a variable's distribution (Saunders et al., 2012). Categorical data refers to data that does not have a monetary value and can be divided into two types: nominal data and ordinal data, where the latter can be analyzed mainly according to the manner and number of occurrences of the data (Saunders et al., 2012). ).
According to Lim (2014), internal consistency reliability or homogeneity has resulted in a check on the reliability and correctness of the survey data results. Moreover, the value of the coefficients, which is close to 1.0 in Cronbach's alpha, indicates that the result is consistent.
RESEARCH RESULTS
Descriptive Analysis
The frequency of the age group of research respondents is shown in Table 4.3 and Figure 4.3.1 respectively. Respondents aged between 31 - 40 represent the second largest group, accounting for 35.2% or 38 respondents. The frequency of the educational level of the research respondents is shown in table 4.4 and figure 4.4.1.
According to the table, the respondent in this study has not reached any other level of education. As a result, we can conclude that most of the respondents had a certain level of education. The frequency of work experience of the respondents in the research is presented in table 4.5 and figure 4.5.1.
According to the results, most of the respondents had more than 10 years of working experience. According to the table above, the largest number of respondents (63.1% or 69) are employed in the private sector, which represents the majority of respondents.
Construct Measurement of Central Tendencies
2 Suppliers will tend to be obliged if the company's practices are in accordance with the purchase contract/agreement. The mean scores for questions 1 and 4 were 4.22 and 3.95, respectively, and they were ranked fourth and fifth. 4 Community voluntary initiatives are a good way for a company to create trust and brand awareness, and will thus lead to better support from the local community.
5 Employment for the disadvantaged will enable the community to improve their skills and thus lead to better support for them.
Scale Measurement
Crosstab Analysis
For example, they may have started out as an executive, but eventually progressed over the years to become a leader of the company, empowering them to make important decisions on behalf of the company. A company's operational and financial performance would improve with competent management, effective governance, and adequate training, education, and career development. A company's financial performance would be improved by a valued and loyal employee who would reduce sales.
Referring to Table 4.15, the majority of male respondents strongly agree that "The quality of products/services offered by a company will add value to the customer". Product quality is crucial, as it influences the company's success and helps to establish the company's reputation in the customer markets. As a result, the company's operational and financial performance will improve as it runs more smoothly and efficiently.
This is due to the fact that those who worked, for example, in the Company Secretary or Compliance department were required to follow the rules and requirements set forth in a company's Corporate Governance (“CG”) statements regarding fair and ethical conduct. dealing with customers. As a company's profit margins increase relative to costs, the benefits of cost transparency diminish and financial performance improves. According to Table 4.19, the majority of respondents between the ages of 41 and 60 strongly agree that “financial donations to the community will build a good reputation for a company”.
Consequently, the majority of respondents believe that financial donations will help a company's efforts to build reputation. This contribution will therefore help to reduce a company's tax burden, which will help to improve a company's financial performance.
Correlation
Customer, Employee, Supplier and Customer on the financial performance of the company used in this model. The majority of respondents who "strongly agree" and "agree" with the independent variables proved to be related to the dependent variable where CSR initiatives for the customer, employee, supplier and community will affect the financial performance of the company. company. It presents a summary of facts relating to the demographic profile of the respondents as well as the dimensions (profiling, benefits and barriers) investigated in this study.
It also contains a tabular report that describes the percentage of respondents who accepted the variables that will be used to develop the relationship between the independent (CSR activities on the stakeholders) and dependent variable (impact on the financial performance). Full product disclosure (ie providing transparent terms..amp; condition) on products/services is important to attract customer support. Regular communication with customers (ie sharing information on social media) will get more support from customers.
Developing and maintaining long-term purchasing partnerships is essential to a company's relationship with its suppliers. Suppliers will tend to be committed if the company's practices are consistent with the purchase contract/agreement. Fair and ethical handling of conflicts and disputes will lead to better long-term support/commitment from suppliers.
Community volunteering initiatives are a great way for a company to build trust and brand awareness, thus leading to better community support. Employment for the underprivileged will enable the community to improve their skills and thus lead to better support for them.
DISCUSSION AND CONCLUSION
Introduction
An Empirical Study of the Relationship Between Corporate Social Responsibility and Profitability, Academy of Management Journal, 28(2), pp. The relationship between corporate social responsibility and competitive performance in Spanish SMEs: empirical evidence from the stakeholder perspective.
Statistical Analysis Summary
- Descriptive Analysis
- Inferential Analysis Summary
- Reliability Test
Major Finding Discussion
- Employee
- Customer
- Supplier
- Community
Limitation of Study
The main problem is that the researcher has no control over how people respond to questionnaires. Also, the researcher struggles to get answers, as only 108 of the 200 questionnaires sent to the chosen respondents were returned. Due to the restrictions imposed by Covid19, the researcher was unable to conduct face-to-face interviews, as physical interviews are very risky during Covid19.
As a result, the researcher was unable to increase the response rate, which contributed to the low non-response rate among them. Due to the short deadline and the coordination of the work and the preparation of the report, the researcher managed to analyze only data based on 108 respondents. In addition, the researcher cannot determine the exact number of respondents residing in Kuala Lumpur and Selangor.
Since the researcher does not have complete control over the dissemination of questionnaires, some respondents just forwarded surveys to someone in any city, not just Kuala Lumpur and Selangor. Communication was also a major problem for the researcher because the questionnaires were only delivered in English. They were also unable to verify and obtain clarification from the researcher because the surveys were distributed online.
The problem also arose because the questionnaire was developed for the first time, which made it impossible to ensure that the constructed questions are complete and comprehensive. Apart from the aforementioned issues, the researcher is under pressure to complete the research because work commitments are a major obstacle and limitation to completing the thesis.
Impact of Study
Considering the above examples, this research can be used as a benchmark for a company when conducting a survey of their stakeholders, and consequently the findings can be used as an example of CSR initiatives that can be practiced by any organization especially in Malaysia because it will not only maintain a company's relationship with its stakeholders but it will also increase a company's financial performance.
Recommendation for Future Studies
Conclusion
