The Effect of Community Related CSR on Performance of Manufacturing Firms in Kenya

Abstract

Business units are nowadays considered as social units such that they are expected to be sensitive to multiple stakeholders. Although corporations are making a lot of money from their business operations, their contribution to the welfare of society where they are located or do business is limited. Pressure on the earth’s resources is becoming increasingly severe owing to industrialization. Corporate Social Responsibility (CSR) has been used to mitigate the adverse effects of the externalities posed by organizations’ operations on society. Community relations help to cement the loyalty of the public to the firm hence enhancing its competitive advantage and performance. This article sought to determine the effect of community relations on performance of manufacturing firms in Kenya. Descriptive survey research design was used in this study. The study population consisted of 854 manufacturing firms registered with Kenya Association of Manufacturers (KAM). The sample constituted of 202 firms selected by purposive sampling, where 112 respondents were responsive. Primary data was obtained by use of a self administered questionnaire and secondary data obtained from organizations’ reports, newsletters, books, research articles and company websites. Pilot test constituted of 20 respondents, where the research instrument was tested for validity and reliability. Regression analysis was used to test the relationship between community relations and firm performance by use of SPSS, where data was presented in descriptive and inferential statistics. The findings of the study revealed that community relations had a positive and significant effect on performance of manufacturing firms in Kenya. The study recommends the promotion of community relations through health, education, donations, projects, recruitment, purchasing, sports and volunteer work to enhance firm reputation.

Keywords: Corporate Social Responsibility (CSR), Community Relations, Firm Performance, Manufacturing Firms, Competitive Advantage