CORPORATE SOCIAL RESPONSIBILITY EXPENDITURE ON ENVIRONMENT AND FINANCIAL PERFORMANCE OF TEA DEVELOPMENT AGENCY MANAGED FACTORIES IN KENYA
Abstract
Kenya Tea Development Authority registered factories continue to face the challenge of financial performance in regard to declining returnon equity across the period 2017-2021. To ameliorate this challenge, Kenya Tea Development Authority firms are undertaking corporate social responsibility activities in order to gain social license in the areas they operate. However, there has been limited empirical evidence linking corporate social responsibility of environment and financial performance particularly on these Kenya Tea Development Authority firms. Thus, against this background, this study determined the effect of Corporate Social Responsibility on environment on financial performance of Kenya Tea Development Authority managed factories in Kenya. The study was anchored on resource-based view theory, stakeholder theory, institutional theory and social contract theory. The study was based on positivism research philosophy guided by explanatory research design. The target population consisted of all the 67 Kenya Tea Development Authority managed factories clustered into 7 Seven regions as at December 2022. The study applied census technique where data was sought from the entire population. Information in its primary form was gathered through structured questionnaire on corporate social responsibility while secondary data from 2017-2021 was obtained on financial performance and firm size. The Statistical Package for Social Sciences was used to compute descriptive statistics that entailed means and standard deviation. Besides, inferential statistics covering regression analysis were used to test the formulated hypotheses. Presentation of the data was done through tables and figures. The study established that Corporate Social Responsibility expenditure on environment (β=0.505, p<0.05) was a significant predictor of financial performance of Kenya Tea Development Authority managed factories in Kenya. At the same time, firm size was found to have significant moderating effect on the relationship between Corporate Social Responsibility and financial performance of Kenya Tea Development Authority managed factories. The study concluded that there exists significant relationship between Corporate Social Responsibility on environment and financial performance which is moderated by firm size. The study recommended that senior managers working among Kenya Tea Development Authority managed factories in Kenya continue to invest in environmental Corporate Social Responsibility initiatives.
Key words: Corporate Social Responsibility, Environmental Expenditure, Financial Performance
CITATION: Corporate social responsibility expenditure on environment and financial performance of Tea Development Agency managed factories in Kenya. The Strategic Journal of Business & Change Management, 11 (2), 279 – 293. http://dx.doi.org/10.61426/sjbcm.v11i2.2908
Full Text:
PDFReferences
Ahmad, K., & Zabri, S. (2016). The application of non-financial performance measurement in Malaysian manufacturing firms. Procedia Economics and Finance, 35, 476-484.
Al-Masud, A., & Islam, S. (2018). The Relationship between Corporate Social Responsibility (CSR) and Financial Performance of Textiles Sector in Bangladesh Especially in Barisal Division. IJASSH.
Amidu, P.M., Liu, Y., & Sesay, B. (2017). The Impact of Corporate Social Responsibility Disclosure on Financial Performance of Firms in Africa, International Journal of Economics and Financial Issues, 7(5), 137-146.
Arora, P., & Dharwadkar, R. (2011). Corporate governance and corporate social responsibility (CSR): The moderating roles of attainment discrepancy and organization slack. Corporate governance: an international review, 19(2), 136-152.
Berenguer-Rico, V., & Wilms, I. (2021). Heteroscedasticity testing after outlier removal. Econometric Reviews, 40(1), 51-85.
Bernal‐Conesa, J. A., de Nieves Nieto, C., & Briones‐Peñalver, A. J. (2017). CSR strategy in technology companies: Its influence on performance, competitiveness and sustainability. Corporate social responsibility and environmental management, 24(2), 96-107.
Bose, S., Saha, A., & Abeysekera, I. (2020). The Value Relevance of Corporate Social Responsibility Expenditure: Evidence from Regulatory Decisions. Abacus, 56(4), 455-494.
Calabrese, A., Costa, R., Menichini, T., Rosati, F., & Sanfelice, G. (2013). Turning corporate social responsibility-driven opportunities into competitive advantages: A two-dimensional model. Knowledge and Process Management, 20(1), 50–58.
Carroll, A.B. & Shabana, K.M. (2011). The business case for corporate social responsibility. London: Blackwell publishing ltd and British academy of management.
Chen, L. (2015). Sustainability and company performance: Evidence from the manufacturing industry. Sweden: Linkoping University.
Chowdhry, S. (2017). How companies are spending on CSR projects. Live Mint, 17.
Crifo, P., & Forget, V. (2015). The economics of corporate social responsibility: A firm-level perspective survey. Journal of Economic Surveys, 29(1), 112-130.
Daft, R. L., & Marcic, D. (2013). Building management skills: An action-first approach. Cengage Learning.
Deshmukh, D. P. (2017). Corporate Social Responsibility and Education Sector: Issues and Remedies. International Journal of Management, 8(1), 137-144.
Elkington, J. (1997). The triple bottom line. Environmental management: Readings and cases, 2.
Forcadell, F. J., Úbeda, F., & Aracil, E. (2021). Effects of Technological Forecasting and Social Change, 162, 120355.
Freeman, E. (1984). Strategic management: A stake holder approach. Boston M.A: Pitman.
Friedman, M. (1962). Capitalism and freedom a leading economist view of the proper role of Competitive capitalism. Chicago.Theuniversity of Chicago press.
Georgescu, M. A., Pendolovska, V., & Cabeça, J. C. (2010). Distribution of environmental taxes in Europe by tax payers in 2007. Eurostat-Statistics in focus report.
Gitonga, C. M. (2019). Strategy Implementation And Performance Of Kenya Tea Development Agency Limited (Doctoral dissertation, UoN).
Glover, J.L. & Champion, Donna & Daniels, Kevin & Dainty, Andrew. (2014). An Institutional Theory perspective on sustainable practices across the dairy supply chain. International Journal of Production Economics, 15(2). 102–111.
Haller, S. A., & Murphy, L. (2017). Corporate expenditure on environmental protection. Environmental and Resource Economics, 51(2), 277-296.
Ham, M. Pap, A and Istimac, H (2019) Intention to implement corporate social responsibility-The role of religiousness and ethical idealism. Eurasian Journal of Business and Management, 7(1), 18-30
Hoque, N., Rahman, A. R. A., Molla, R. I., Noman, A. H. M., & Bhuiyan, M. Z. H. (2018). Is corporate social responsibility pursuing pristine business goals for sustainable development? Corporate Social Responsibility and Environmental Management, 25(6), 1130-1142.
Inekwe, M., Hashim, F., & Yahya, S. B. (2020). CSR in developing countries–the importance of good governance and economic growth: evidence from Africa. Social Responsibility Journal.
Karaibrahimoglu, Y. Z. (2010). Corporate social responsibility in times of financial crisis. African Journal of Business Management, 4(4), 382.
Kerubo, O. S. (2020). Financial risk and performance of commercial and ser-vices listed companies in Nairobi Securities Exchange, Kenya (Doctoral Dissertation, Kenyatta University).
Kilika, S. (2020). A survey of the environmental conservation costs by Local Authorities in Kenya (Doctoral dissertation, University of Nairobi, Kenya).
Kipruto, D. (2014). Effects of corporate social responsibility on financial performance of commercial banks in Kenya. MSC Finance Project, University of Nairobi.
Ladaru, G. R., & Dracea, R. (2017). Influence of the Environmental Protection Expenditure Dynamics on the Economic Growth in Romania During 2008-2015. Rev. Chim.(Bucharest), 67, 2166.
Luo, H., & Qu, X. (2023). Impact of environmental CSR on firm’s environmental performance, mediating role of corporate image and pro-environmental behavior. Current Psychology, 1-15.
Marwa, P. (2020). Relationship between management control systems and financial performance of commercial banks in Kenya (Doctoral dissertation).
Milgo, A. C., Namusonge, G., Kanali, C., & Makokha, E. N. (2014). Reward and compensation as a determinant of employee commitment: A survey of KTDA tea factories in Kenya. European Journal of Business and Management, 6(15), 117-125.
Miras‐Rodríguez, M. D. M., Carrasco‐Gallego, A., & Escobar‐Pérez, B. (2015). Has the CSR engagement of electrical companies had an effect on their performance? A closer look at the environment. Business Strategy and the Environment, 24(8), 819-835.
Mishra, P., Pandey, C. M., Singh, U., Gupta, A., Sahu, C., & Keshri, A. (2019). Descriptive statistics and normality tests for statistical data. Annals of cardiac anaesthesia, 22(1), 67.
Muchiri, M. K., & Muigai, R. G. (2019). Effect of environmental CSR activities on the financial performance of financial institutions in Kirinyaga county. Research Journal of Finance and Accounting, 10, 78-87.
Muthuri, J., & Gilbert, V. (2011). An institutional analysis of corporate social responsibility in Kenya. Journal of Business Ethics, curities Exchange. International Journal of Business, Humanities and Technology, 3(2), 467-483. 9.
Mwangi, C. & Oyenje, J. (2013). The relationship between corporate social responsibility practices and financial performance of firms in the manufacturing, construction and allied sector of the Nairobi Securities Exchange. International Journal of Business, Humanities and Technology, 3(2), 81-90.
Obara, I. M. I. (2019). Effects of Financial Management Practices On Profitability of the Tea Firms in Kenya: A Case of KTDA Factories in Kisii County. International Journal of Scientific and Management Research, 2(6), 70-81.
Oke, A., & Fernandes, F. A. P. (2020). Innovations in teaching and learning: Exploring the perceptions of the education sector on the 4th industrial revolution (4IR). Journal of Open Innovation: Technology, Market, and Complexity, 6(2), 31.
Ongore, V. O., & Kusa, G. B. (2013). Determinants of financial performance of commercial banks in Kenya. International Journal of Economics and Financial Issues, 3(1), 237.
Osborne, J. W., & Waters, E. (2019). Four assumptions of multiple regression that researchers should always test. Practical assessment, research, and evaluation, 8(1), 2.
Papanicolas, I., Woskie, L. R., & Jha, A. K. (2018). Health care spending in the United States and other high-income countries. Jama, 319(10), 1024-1039.
Pearce, D., & Palmer, C. (2021). Public and private spending for environmental protection: a cross‐country policy analysis. Fiscal studies, 22(4), 403-456.
Sarfraz, M., Ozturk, I., Yoo, S., Raza, M. A., & Han, H. (2023). Toward a new understanding of environmental and financial performance through corporate social responsibility, green innovation, and sustainable development. Humanities and Social Sciences Communications, 10(1), 1-17.
Shrestha, N. (2020). Detecting multicollinearity in regression analysis. American Journal of Applied Mathematics and Statistics, 8(2), 39-42.
Surroca, J., Tribó, J. A., & Waddock, S. (2010). Corporate responsibility and financial performance: The role of intangible resources. Strategic Management Journal, 31(5), 463-490.
Sweeney, L. (2009) A study of current practice of corporate social responsibility (CSR) and an examination of the relationship between csr and financial performance using structural equation modeling (SEM). Doctoral Thesis, Dublin Institute of Technology, Dublin.
Togun, O., & Nasieku, T. (2015). Effect of corporate social responsibility on performance of manufacturing firms in Nigeria. International Journal of Current Advanced Research, 4(8), 228-233.
Uduji, J. I., & Okolo-Obasi, E. N. (2019). Youth empowerment in non-timber forest products (NTFPs) of sub-Saharan Africa: The role of corporate social responsibility in Niger Delta, Nigeria. Journal of Enterprising Communities: People and Places in the Global Economy.
Ullah, M. I., Aslam, M., Altaf, S., & Ahmed, M. (2019). Some new diagnostics of multicollinearity in linear regression model. Sains Malaysiana, 48(9), 2051-2060.
Vidhi, B. and Nilmani, T. (2016) Corporate social responsibility and its implication in India. International Journal of Management, 7 (3), 160–171.
Wang, H., & Qian, C. (2011). Corporate philanthropy and corporate financial performance: The roles of stakeholder response and political access. Academy of Management Journal, 54(6), 1159-1181.
Xie, X., Jia, Y., Meng, X., & Li, C. (2017). Corporate social responsibility, customer satisfaction, and financial performance: The moderating effect of the institutional environment in two transition economies. Journal of Cleaner Production, 1(50), 26-39.
Yin, J., Rothlin, S., Li, X. & Caccamo, M. (2013). Stakeholder perspectives on corporate social responsibility (CSR) of multinational companies in China. Journal of International Business Ethics, 6(1-2), 57-71.
DOI: http://dx.doi.org/10.61426/sjbcm.v11i2.2908
Refbacks
- There are currently no refbacks.
This work is licensed under a Creative Commons Attribution 3.0 License.
PAST ISSUES:
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.