Examining the nexus between corporate social responsibility and business value- evidence from the Ghanaian banking sector

Abstract

The importance of CSR in today's global world is growing. It is becoming mandatory for companies to engage in socially responsible activities to support the growth of their business.It is argued that companies pursuing CSR initiatives can gain a competitive advantage over other competitors due to creation of a good public image or reputation and generate higher profits and a return on investment however some authors disagree with this. Due to public concerns and regulatory forces, managers are paying increasingly more attention to corporate social responsibility (CSR). Efforts to improve CSR are widely believed to be beneficial for increasing a firm value; yet, evidence on how CSR creates business value has been mixed. This study therefore examined the nexus between CSR and business values of Ghanaian banks. The study adopted quantitative research methodology. Employees GCB bank, Republic Bank, Awutu Emasa Rural Bank and CBG Bank were sampled. A total of 167 valid and usable questionnaires were used for the analysis. Structural equation modelling (SEM) was used to analyse the data to address the hypothesized relationships. The conducted analysis revealed that CSR implementation positively predicts business values (economic value, human capital value and reputational value). This study therefore, concludes that CSR must not be regarded as a cost centre, but an investment instrument that can accrue various dividends such as improved financial status, better human capital outcomes, attractive and appealing corporate reputations.