Impact of CSR on Firms’ Financial Performance: A Case Study of Ghee and Fertilizer Industry in Southern Punjab-Pakistan

Abstract

This paper has focused to measure the impact of corporate social responsibility (CSR) on firms’ financial performances in Ghee and Fertilizers industry in southern Punjab Pakistan. This is exploratory type of research and its objective is to find out the influence of independent variables that is CSR on financial performance of the firms. Both qualitative and quantitative research methods were in this study. Primary data was collected through a structured questionnaire while likert scale was used to measure the attitude of selected companies towards CSR Secondary data was collected from the annual financial reports of the selected firms. Major focus of the study was to investigate under which circumstances firms’ social responsibility has influenced firms’ financial performances in a positive way. The results were drawn from different angles. For example, it was noted that. Society-oriented, environment-oriented, workforce -oriented, market-oriented corporate social responsibility implemented by ghee and fertilizer industry has resulted in the increase in sales revenues and high return on capital of the companies involved in CSR. According to evidence, Ghee, and Fertilizer industry, public limited companies are highly socially responsible whereas few private limited companies are also found engaged in CSR. The results were robust and significant and they can be generalized for all other industries in the region and in other developing countries. The evidence of our study has proved the fact that the firms which are highly involved in CSR get better reputation, better sales, and better profitability besides satisfying the customers.

Keywords: Corporate Social Responsibility, Financial Performance, Profitability.