The effect of corporate social responsibility on the financial performance: case study Roofings Limited

Abstract

Corporate social responsibility is concerned with the ability of a company to care for and give back to its stakeholders as a way of caring for the community. This paper seeks to find out if the engagement of a company in corporate social responsibility activities has an effect on the financial performance of a business organization. Corporate social responsibility involves activities like good labor practices of the company towards the employees, community outreach programmes which are geared towards ensuring that people living in the communities have better lives through provision of better social services and timely and efficient tax payment behavior by the company. Financial performance is the way a company fairs in terms of profits received in a given time period and it can be measured by factors like return on assets which is how much a company gains from assets it has acquired, return on sales referring to how much money is made from sale of products and return on equity which are other sources of income besides the sales made. The research is qualitative in nature and therefore will use interviews and questionnaires to gather information from the respondents who are fifteen in number out of the twenty eight in the sample size. Roofings limited engages in Corporate social responsibility and sinks approximately twenty million shillings annually in carrying out different activities like donations, health drives, fund raisers, seminars, workshops and sponsorship of different games. This has enabled the company build a name for itself among the public because of the positive effects the activities have on the well being of the people and the love people have developed towards buying the company products, as a gesture of appreciating what they are doing. This has led to more sales made due to presence of repeat customers and capturing of new customers who are buying Roofings Limited products and this leads to a positive effect on the profits made. The same activities by Roofings Limited have also given the company a sounding name among other corporate companies due to the recognition received for outstanding performance in the field of tax payment and since it is related to a company being responsible, it has attracted potential investors who feel Roofings Limited is the right company to invest in.