CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

Interdependence between organizations and their environments is becoming more and more important. In

order to be successful, no corporation can operate in a vacuum. Instead, it must be linked to a local

community. If the primary actors, namely the population, the government, and corporate business entities,

are not in sync, it is difficult to achieve outstanding progress and development in any society.

As a result, in order for the community (and society at large) in which the business operates to see its

impact, the organization must play certain practical roles. One way to improve air and water quality

around nearby plants is to use pollution control technology. A rise in the cost of production and,

consequently, a rise in the price of goods produced could result. Managers, like the rest of society, are

becoming more and more aware of the interconnectedness of their organizations. Businesses in particular

are no longer seen as purely private enterprises free to pursue their own goals so long as they don't break

the law. Instead, their actions are viewed as having public ramifications that go beyond simply serving

their clients and bringing in profits for the owners of the business. Hence social responsibility has become

a major issue for today's CEOs and board members. That is why the literature on corporate social

responsibility and organizational performance has been thoroughly and critically evaluated in this section.

2.2 Organizational Performance

Organizational performance, according to Chebet and Muturi (2017), is an examination of a company's

performance in relation to its goals and objectives. Three key outcomes are evaluated within corporations:

financial performance, market performance, and shareholder value performance (in some cases,

production capacity performance may be analyzed). A substantial amount of effort has been expended in

determining the impact of CSR activities on organisational performance (Husted & Salazar, 2016;

Marom, 2016; Moneva, Bonilla & Ortas 2017; Orlizky, Schmidt & Rynes, 2003). According to Pava and

Krausz's (2015) comprehensive review of empirical studies on the relationship between CSR and

organisational performance, organisations thought to meet social responsibility standards outperformed or

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performed similarly to other firms that are not necessarily socially responsible. This beneficial

relationship is supported by a recent meta-analysis of the relationship between CSR and organisational

performance (Orlitzky et al., 2003). Corporate social responsibility aims to boost organisational

performance. Corporate social responsibility has become an essential and irreversible component of

business behaviour. CSR programmes and projects, when properly managed, can yield enormous benefits

in terms of reputation and profits, as well as employee motivation and loyalty. CSR can also aid in the

strengthening of mutually beneficial collaborations. Nordberg (2014) asserts that, when properly

implemented, CSR initiatives can generate competitive benefits, citing a positive relationship between

strategic social responsibility actions and competitive advantage.

Measuring organisational performance is difficult, especially for businesses with multiple objectives such

as client retention, productivity, profitability, the ability to adapt to an ever-changing environment,

employee satisfaction, growth, and social responsibility, to name a few. Organizational performance has

traditionally been measured in financial terms; however, some researchers have advocated for a broader

performance construct that includes non-financial variables such as effectiveness, efficiency, quality, and

company image (Waiganjo, Mukulu & Kahiri, 2012).

Perception, values, and attitudes all have a significant impact on performance. There appear to be so

many variables influencing job performance that keeping track of them all appears to be difficult

(Puskpakumari, 2008). Performance refers to the outcome of an employee's, groups, or organization's

work on the job. Effort is an internal force that motivates a person to work cheerfully. Employees develop

a connection to their job or strive to perform better when they are satisfied with their job and their needs

are met. Increased effort leads to better results. Organizational performance, as defined by Richard et al.

(2009), is defined as an organization's actual output or results as compared to its expected outputs (or

goals and objectives). The three explicit categories of company outcomes that are frequently covered by

organisational performance are financial performance (profits, return on assets, return on investment, and

so on), product market performance (sales, market share, and so on), and shareholder return (total

shareholder return, economic value added, etc.). According to Market Business News (2019),

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organisational performance is analysing a company's performance in relation to its aims and goals. In

other words, organisational performance is the comparison of actual to projected results or outputs. It also

refers to how well a company performs or meets its predetermined objectives and goals. Richard (2009)

views organisational performance as the achievement of organisational goals and objectives.

Organizational performance should be measured not only in terms of market share, ROI, and financial

profitability, but also in qualitative and quantitative metrics.

2.3 Corporate Reputation

Academics in the field of management have long regarded a company's reputation as one of its most

important intangible assets (Jang, Lee, & Hu, 2016; Kanto, Run, & Isa, 2016). Managers use corporate

reputation as a strategy to gain a competitive advantage. Ozdora Aksak, Ferguson, and Atakan Duman

(2016), for example, see a company's reputation as a key intangible asset for its success. From the

perspective of Roberts and Dowling (2002), an instant mental picture of the entity grows over time as a

result of high quality, standardisation in operations, and a customer-centric approach to long-term

progress. The reputation of a company is defined as the public's perception of its brand (Roberts &

Dowling, 2002). In literature, a company's good name and reputation are attributed to customer loyalty,

charging high premium prices, competitive advantage, and overall customer satisfaction (Walsh &

Wiedmann, 2004). The use of corporate reputation as a strategic tool for achieving a company's objectives

is not a new concept (Porter, 2008).

Corporate reputation (CR), as defined by Newburry et al. (2019), is an organization's collective memory

of its past activities and beliefs about its future activities. Gotsi and Wilson have also demonstrated that

CR is the future marketing strategy that will impact both the company's internal and external shareholders

(2001). CR refers to the process of bringing together consumers and vendors. (Jeffrey and colleagues,

2019) Furthermore, a strong business reputation allows for a novel approach to employee hiring, training,

and retention. The degree and level of consideration and respect accorded to a company's partners'

perceptions is referred to as CR (Newburry et al., 2019). The term "stakeholder value" refers to

stakeholders' perceptions of a company's ability to meet or exceed expectations (Rettab & Mellahi, 2019;

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Hameed et al., 2021). Furthermore, a company's reputation is influenced by the market's perception of its

behaviour (Jeffrey et al., 2019).

Corporate reputation, according to Barnett, Jermier, and Laffert (2006), is the common perception of

observers of an organisation based on the company's financial, socioeconomic, and environmental

impacts over time. A person's reputation can also be defined as the sum of his or her past, present, and

potential future actions. Insights into a company's past and future activities, as well as expectations for the

company's current state, derived from a set of agreed-upon criteria (thus a relative, rather than an absolute

indicator). A company's reputation, according to Fombrun and Rindova (1996), is a collective

presentation of its past activities and results that describes the company's ability to provide useful outputs

to various stakeholder groups. It assesses the company's competitive and institutional environment, both

internally, with employees, and externally, with stakeholders.

2.4 Customer Loyalty

Customer loyalty is the most important factor in ensuring a long-term relationship with a company in

terms of customers (Ailawadi et al., 2014). The stability of a company's customer base increases its

competitive advantage as a result of customer loyalty (Kotler & Armstrong, 2008).

Nyadzayo and Khajehzadeh argued that both researchers and marketers are interested in customer loyalty

(2016). Jacoby and Kyner (1973) stated that customer loyalty is both an attitude and a behaviour. Thakur

(2016) defines loyalty as a consumer's habit of making repeat purchases as a result of their commitment.

The term "customer loyalty" refers to a customer's desire to develop a long-term relationship with a

company (Singh & Sirdeshmukh, 2000). This is one of the most important goals for businesses in order to

maintain a long-term competitive advantage (Kotler & Armstrong, 2010). As a result, businesses strive to

focus on the most important aspects of their customers in order to establish long-term relationships with

them.

If there is a high level of customer dissatisfaction, it becomes difficult to keep customers loyal. Customer

satisfaction (Herrmann et al., 2007), trust (Pratminingsih, Lipuringtyas, & Rimenta 2013, service quality

(Cho & Pucik, 2005), corporate reputation (Helm & Tolsdorf 2013), CSR initiatives (Martnez & del

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Bosque, 2013), and corporate social responsibility (CSR) initiatives have all been found to influence

customer loyalty. Having a loyal customer base has numerous advantages. Researchers discovered, for

example, that people who are loyal to a specific brand and see a high switching cost in purchasing another

brand are less likely to switch (Leventhal, Mascarenhas, Kesavan, & Bernacchi, 2006).

2.5 Corporate Social Responsibility

Corporate Social Responsibility (CSR) is the practise of corporations or institutions engaging in activities

that benefit society while also profiting the company (Khanifar, Nazari, Emami, & Soltani, 2018). CSR

operates on four levels of accountability: economic, legal, ethical, and philanthropic, all of which must be

met in order of priority. Economic responsibilities include profitability, providing good and safe working

conditions, and providing quality products; legal responsibilities include compliance with laws and

regulations; ethical responsibilities include doing what is right above and beyond the requirements of the

law by conducting their businesses in a just, accountable, and transparent manner; and philanthropic

responsibilities include voluntarily supporting society by contributing resources to charitable

organisations.

Corporate Social Responsibility (CSR) is a business strategy for gaining a competitive advantage (Ching,

Yin, Pei, Zhi & Pei, 2018). CSR enhances corporate image and reputation, resulting in increased

competitiveness (Carroll & Shabana, 2018; Chung & Safdar, 2018; Togun & Nasieku, 2018). It entails

managing multiple stakeholder relationships at the same time, lowering the likelihood of negative

regulatory, legislative, or budgetary action and attracting socially conscious consumers and investors

(Freeman et al., 2018). Stakeholder engagement enhances and supports revenue generation by improving

relationships with employees, customers, and other stakeholders (Harrison & Wicks, 2018). The

relationship between business and society has changed dramatically, with the old view of company

performance as a profit-maximizing economic actor giving way to a more ethical perspective that

considers business's broader impact on society (Safwat, 2017).

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2.5. Dimensions of Corporate Social Responsibility

1. Economic Responsibility: This about the responsibility the business has to make a profit for its

owners. “Business is considered the basic economic unit with the principal role to produce goods

and services that consumers need and want and to make an acceptable profit in the process”

(Jimoh, Mukaila, & Azeez, 2015). Examples include profitably maximizing revenue, minimizing

cost and making strategic decisions to improve performance.

2. Legal Responsibility; as a partial fulfilment of the social contract between the business

organization and society, businesses are expected to pursue their economic missions within the

framework of the law. This means businesses are supposed to obey all laws, adhere to

regulations, and fulfil all contractual obligations.

3. Ethical Responsibility; This aspect of responsibility talks about businesses conducting their

activities(economic) and practices in a way that is fair and just to everyone in the society, even

though they are not codified into law. This is because the society expects businesses to act

ethically. Examples include not using child labor to carry out its operations, treating employees

fairly by paying them fair wages, avoiding questionable practices, asserting ethical leadership etc.

4. Philanthropic Responsibility; This can be seen as the social responsibility that a business has

towards its society. It encompasses business actions that are in response to society’s expectations

that businesses be a corporate citizen. “This responsibility is purely voluntary and the decision is

guided only by the desire of businesses to engage in social roles not mandated, not required by

law and not even expected in an ethical sense” (Jimoh, Mukaila, & Azeez, 2015). Some of these

activities includes donations and charitable gifts to residents and institutions within the

community, volunteerism, and sustainable development.

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2.6 Review of the Relationship between Corporate Social Responsibility and Organisational

Performance

2.6.1 Corporate Social Responsibility and Organizational Performance

Corporate social responsibility (CSR), according to Uddin, Hassan, and Tarique (2008), is the ongoing

commitment of businesses to act ethically and contribute to economic development while improving the

quality of life of the workforce and their families, as well as the local community and society at large.

CSR is a philosophy that describes a company's relationship with its stakeholders. Holme and Watts

(2000) views CSR as the development of long-term livelihood capacity. It values cultural diversity and

looks for commercial opportunities in the development of employees', the community's, and the

government's capabilities. CSR has been defined as an organization's obligation to be accountable to its

stakeholders and the environment in ways that go beyond monetary considerations (Gossling & Vocht,

2007). Joyner and Payne (2002) discovered an association between corporate social responsibility and

profit.

Profitability influences corporate social responsibility because only companies with strong economic

health and profitability are eligible to participate in social programmes (Beliveau, 1994). Waddock and

Graves (1997) discovered that investing in corporate social responsibility increases profits. Berman,

Wicks, Kotha, and Jones (1999) argued that some CSR aspects have a positive and significant impact on

short-term profitability. Amole, Adebiyi, and Awolaja (2012) discovered a link between CSR initiatives

at banks and profitability. Customer retention is regarded as a critical goal for a company's survival and

success; developing a loyal customer base has not only become a major marketing goal, but it is also a

critical foundation for developing a long-term competitive advantage (Dick & Basu, 1994). Lee, Kim,

Lee, and Li (2012) discovered a positive relationship between economic CSR and customer retention.

Economic CSR, according to Nareeman and Hassan (2013), has a positive and significant impact on

customer retention. Luo and Bhattacharya (2006) investigated the impact of corporate social

responsibility on organisational performance and discovered a positive relationship between CSR and

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customer satisfaction. Overall customer satisfaction, according to Yu et al. (2005), has a positive impact

on customer loyalty and retention.

Employees are more likely to stay with a company that they believe is socially responsible, resulting in

lower turnover intentions (Hansen, Dunford, Boss, Boss & Angermeier, 2011). Hagen, Huse, and Nielsen

(2009) concluded that there is a positive relationship between employees and CSR awareness. Lindgreen,

Swaen, and Campbell (2009) reported that there is a positive relationship between employee

attractiveness and CSR. CSR success, according to Albinger and Freeman (2000), is positively related to

employee attractiveness. CSR activities, according to Edmans (2011), can increase employee loyalty and

satisfaction.

Shareholders are the owners of a company. The primary goal of a corporation, according to theory, is to

maximise shareholder wealth (Waston & Head, 2010). Knox, Catlin, Casper, and Schlosser (2005)

discovered a link between corporate social responsibility and financial performance. Salvioni and Astori

(2013) concluded that corporate social responsibility and shareholder value have a positive relationship.

Verschoor (1998) discovered advantageous synergies between business success and a strong stakeholder

relationship.

A corporation can assist the local community by making financial contributions, providing

products/services, creating job opportunities, encouraging entrepreneurship, and cultivating an inventive

culture (Hohnen, 2007). Bowman and Haire (1975) discovered a link between corporate social

responsibility and financial performance. Blowfield (2005) argued that in order to reduce poverty and

promote community development sustainability, CSR initiatives should be constantly monitored and

reported. Hamid et al. (2007) stated that the most common CSR disclosure theme was community, and

firms have used community disclosure as a tactic for legitimacy. From the viewpoint of Berman et al.

(1999), corporate social responsibility has a positive impact on the community. Kim and Kim (2014)

discovered CSR in the tourism industry and investigate whether CSR boosts community value.

Kandel (2018) in the context of Nepal argued that CSR is all about how businesses manage their business

processes in order to have a positive overall impact on society. Chapagain (2010) claims that the majority

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of respondents from both sectors have positive strategic and moral attitudes toward CSR. Kafle and

Tiwari (2014) argued that if the organisation is to engage in CSR activities, timely resource procurement

and cooperation from senior management should be prioritised. Dhungel (2008) discovered a link

between community-based CSR and financial performance.

2.6.2 Corporate Social Responsibility and Corporate Reputation

Businesses today are in a state of perfect competition, and the most well-known corporations are using

CSR as a competitive strategy to meet the needs of multiple stakeholders (Lii & Lee, 2012). In corporate

reputation management, stakeholder perceptions of a company's overall performance are regarded as a

critical construct (Walsh & Wiedmann, 2004). According to academic research, CSR has a direct impact

on a company's reputation (Van Marrewijk, 2003). As a result, according to Husted and Allen (2007),

CSR initiatives aid in the development of positive relationships with stakeholder groups and the

enhancement of the company's reputation. CSR is viewed as a way for businesses to strengthen ties with

their local communities while also improving their public image. CSR initiatives such as sustainable

business, renewable energy, and green HRM, in the eyes of consumers, are indicators of a company's

values and ethics (Maignan & Ferrell, 2004). A company's reputation is affected by its level of corporate

social responsibility (CSR).

Corporate social responsibility (CSR), a self-regulatory business model, enables social accountability for

an organisation, stakeholders, and members of the general public (Farid et al., 2019). Being a socially

responsible business can improve a company's image and brand by allowing it to consider its impact on

the economy, society, and the environment. As a result, CSR enables employees to make effective use of

a company's resources (Kim et al., 2017). Any organisation views CR as an intangible, valuable resource.

It is a critical determinant of competitive advantage, particularly for a product with a narrow target

demographic (Arikan et al., 2016; Baudot et al., 2019). Benitez et al. (2017) argued that customers

evaluate and evaluate newly launched services and products based on their current market image.

Furthermore, because CR is a natural byproduct of a company's operations, it protects against negative

customer perceptions. CSR initiatives, on the other hand, are regarded as the most profitable method of

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establishing a positive reputation and image in the minds of customers and stakeholders (Lee et al., 2017;

Lee, 2019). As a result, businesses that do good deeds and give back to their communities are perceived

as more trustworthy (Gulzar et al., 2018). The consumer perspective of CSR initiatives, according to

Melero-Polo and López-Pérez (2017), has a positive influence on the development of CR. Firms with

appropriate social activities have higher CR, according to Forcadell and Aracil (2017). Previous research

has found that CSR is associated with a lower risk of coronary heart disease (Brammer & Pavelin, 2016;

Gardberg et al., 2019; Khan et al., 2020a).

2.6.3 Corporate Social Responsibility and Customer Loyalty

The primary focus of the study is on the benefits of CSR in relation to customer loyalty. Customer

response is increasingly influenced by a company's ethical and social practises. As a result, the quality

and price of the products or services it offers are no longer the most competitive business preferences (Al-

Ghamdi & Badawi, 2019; Bernal-Conesa et al., 2017). Customers look to CSR activities as evidence of a

company's commitment to social responsibility to demonstrate that it cares about its customers (Ajina et

al., 2020; McNamara et al., 2017; Raza et al., 2020a).

Customers' attitudes and behaviour are influenced by stakeholders' perceptions of CSR, according to

previous research (Kim & Kim, 2016). According to previous research, consumers prefer to buy products

and services from companies that engage in CSR activities (Palacios, Florencio, Garci del Junco,

Castellanos-Verdugo & Rosa-Daz, 2018; Stanaland and Lwin, 2011). The relationship between CSR and

customer loyalty can be explained using social identity theory (Tajfel & Turner, 1986). Customers who

identify with a company that is perceived to be socially conscious are more likely to value their

relationship with that company and to be loyal to it (Miles, 2012). Customer loyalty and CSR initiatives

have been shown to have a strong correlation.

CSR is the best way to cultivate long-term customer relationships, according to Mandhachitara and

Poolthong (2011). Building customer loyalty in the telecom industry is difficult due to the similarity of

the products offered by competitors. As a result, researchers discovered a strong correlation between a

company's CSR practises and the perceptions of its products held by its customers (Balcombe, Rigby, &

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Azapagic, 2013; Chitrabhan Bhattacharya & Sen, 2003; Akbari, Mehrali, et al. 2019). CSR and customer

loyalty have been linked in the literature (Crespo & del Bosque, 2005; Marin, Ruiz, & Rubio, 2009;

Martnez & del Bosque, 2013). Although some researchers believe that CSR initiatives do not increase

customer loyalty, they are one of the most effective ways to highlight the company's policies that are

consistent with societal values (Polonsky et al., 2005). In contrast, Pérez et al. (2013) discovered a link

between corporate social responsibility (CSR) and customer loyalty.

2.7 Theoretical Review

2.7.1 Stakeholder Theory

This theory postulates that the firm has a relationship with its stakeholders, and the processes and

outcomes of these ties are of interest (Hillman & Luce, 2012). It asserts that because organizations must

appeal to both financial and non-financial stakeholders, CSR initiatives that appear to be important to

non-financial stakeholder groups should be prioritized. This is due to the firm's long-term viability

necessitating the participation of both of these groups. Freeman and Reed (2013) distinguished two types

of stakeholders: those who influence and are influenced by the firm, and those who provide resources to

the firm. Stakeholder theory emphasizes the long-term consequences of stakeholder actions on the

organization. Pedersen (2014) puts forward that increasing the value of one's stakeholders increases the

value of the company. Stakeholder relationships will also benefit trade. Kakabadse, Rozuel, and Lee-

Davies (2015) argued that a firm must interact with a variety of constituents other than its owners in order

to function properly. Jensen (2012) believes that in order for an organization to thrive, it must perform a

variety of functions for society. Corporations, according to Zingales (2010), can only succeed if they

maintain a positive relationship with society.

Freeman (2014) asserted that a company has both formal and informal agreements with multiple

stakeholders and is thus required to follow all of them. This enables the company to establish its

reputation. By retaining this link, implied contracts become self-regulating, and the cost associated with

these contracts falls as well (Telser, 2014). Tesler also suggested that it improves the firm's performance

and reputation. The responsibility of management is to balance the demands of various current

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stakeholders. CSR is positively related to business financial performance, according to stakeholder

theory. However, scholars such as Sternberg (2013) have raised concerns that the theory calls into

question shareholders' property rights. Furthermore, Sternberg claims that the theory undermines

capitalism by relegating the role of government and thus jeopardises the free market process.

2.7.2 Slack Resource Theory

Cyert and March (2013) stated that slack resources are any free or underutilised resources that can be

redeployed for use by the company. Organizations with limited resources, according to this hypothesis,

have an opportunity to invest more in CSR initiatives, thereby improving their corporate social

performance (Wissink, 2012). Waddock and Grave (1997) state that a corporation can engage in CSR

activities when its financial performance has improved due to the availability of slack resources.

According to this viewpoint, CSR is an added expense, and social actions by firms can only be carried out

if the firm has additional resources or financial flows (McGuire, 1988). The effective and efficient use of

spare resources can help organisations achieve their goals. Buchholtz (2014) goes on to say that this

enables a company to successfully respond to internal burdens for policy adjustment or external burdens

for policy modification.

While CSR can have an impact on a company's financial performance, this concept takes a unique

approach by incorporating a CFP-CSP interaction. The independent variable is financial performance, and

it is the one that drives the dependent variable, corporate social performance (Ahmed, 2014). It

exemplifies an intriguing cycle in which responsibility and improved performance go hand in hand. There

is no conclusive evidence that a lack of resources increases or decreases financial success (Zhong, 2011).

Managers can make decisions that encourage the use of their extra resources in worthwhile projects,

thereby improving performance. However, (Ross, 1973) differs in that it suggests that surplus resources

may be a source of agency problems, causing inefficiencies and thus negatively influencing performance.

2.7.3 Legitimacy Theory

Legitimacy theory is another theory that contributes to CSR. Businesses, according to the theory, are

bound by a social contract in which they commit to carrying out various socially valued behaviours in

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exchange for approval of their objectives and other rewards, which eventually generates their continued

existence. Legitimacy is defined as a broad sense or presumption that an entity's actions are desirable,

legitimate, or appropriate within some socially formed system of norms, values, beliefs, and definitions

(Van der Laan, 2009). The thesis asserts that there is interaction between groups and society.

Organizations are a part of society, and they exist because certain groups in society believe they are

legitimate. Depending on an organization's perception of its legitimacy state or level, it may employ

'legitimacy' strategies (Laan, 2009) to establish, extend, maintain, or defend its legitimacy (Tilling, 2004)

and control for potential, existing, or perceived legitimacy gaps in the aftermath of legitimacy threats

(Vourvachis, 2008). The concept contends that firms strive to operate within the parameters of what is

acceptable in society, which is the essence of CSR. Stakeholder theory and legitimacy theory have

emerged from a broader political economy perspective. Despite their differences, they both centre on the

company's relationship with its operating environment (Van der Laan, 2009).

2.8 Theoretical Framework

The study will be based on the stakeholder theory, which states that because organizations must appeal to

both financial and non-financial stakeholders, CSR initiatives that appear to be important to non-financial

stakeholder groups should be prioritized. This is due to the firm's long-term viability necessitating the

participation of both of these groups. Freeman and Reed (2013) distinguished two types of stakeholders:

those who influence and are influenced by the firm, and those who provide resources to the firm.

Stakeholder theory emphasizes the long-term consequences of stakeholder actions on the organization.

Pedersen (2014) asserted that increasing the value of one's stakeholders increases the value of the

company.

2.9 Empirical Review

Empirical research on corporate social responsibility and its relationship to organizational success has

been conducted. The scholars' perspectives and findings are as follows:

Ojenike et al. (2014) used a survey research design to study the perception of Corporate Social

Responsibility in Nigeria among 300 business leaders in South West Nigeria. Their findings indicated that

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business leaders' perceptions of corporate responsibility include legal, ethical, philanthropic, and

environmental responsibility; however, the study did not address why businesses require corporate social

responsibility or the extent to which corporate social responsibility influences organizational

performance.

Ullah et. al. (2020) measured the impact of corporate social responsibility expenditure on corporate

reputation, customer loyalty and organizational performance of four major banks in the banking sector of

Pakistan. The study was based on the primary data collected from 308 banking customers from the four

banks. Convenient sampling was used in selecting the four banks and their customers. The study

employed the used of Structural equation modeling technique for data analysis in other to find the

relationship between the dependent and independent variable. The results from the study reveal that CSR

has a significant and positive relationship with CR, CL and OP in the banking sector of Pakistan. So the

study concludes and recommend that Banks must include CSR in their long-term strategic plans to

improve overall customer experience because banks’ CSR activities result in customer identification,

which improves their repute and ultimately enhances their performance.

Igbal and pramanik (2014) measures the Impacts of CSR Initiatives on Customers’ Loyalty from

commercial banks in Bangladesh. The study was carried out by conducting a survey on 320 visitors

(customers) with a response rate off 88.75 percent, that is only 284 customers properly filled the

questionnaires. The 320 customers were sampled out using the convenient sampling technique. The study

employed Exploratory Factor Analysis (EFA) alongside with the Structural Equation Modeling (SEM) to

test for the relationship among the variables. The findings from the study indicate that there is a strong

positive relationship between CSR practices and customer loyalty. So the study concluded that CSR

initiatives will help the marketers of financial institutions to attract and retain their customers, ultimately

developing loyal customers, which is vital for success.

Aliyu and Ayuba (2018) conducted a study with the aim of examining the relationship between CSR and

corporate reputation in the Nigerian banking industry. The analysis they used for the study was

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descriptive statistics and multiple regression analysis, to test the formulated hypotheses which reveals

that, “there is a strong positive relationship between CSR and corporate image of the studied Deposit

Money Banks (DMBs) in Nigeria, implying that CSR has significant influence in shaping the perception

of corporate stakeholders about corporate reputation. The methodology used to get their findings was a

survey research design and the main research instrument was structured questionnaire. The population of

their study was 986 employees and the sample size was determined using Yamane’s formula to arrive at a

sample size of 285. Of the 285 total questionnaires distributed, 281 representing 92.3 percent response

rate were returned and was used for analysis.

Amole, Sulaiman and Awolaja (2012) postulated that the rising cost of running business organizations in

Nigeria and the lack of basic infrastructure, as well as divergent views in literature regarding the type of

relationship that exists between CSR and organizational performance necessitated their examination of

the relationship between CSR and profitability in the Nigerian banking industry using First Bank Plc as

the case study. Their study employed annual reports as the main source of secondary data and covered the

period between 2001 and 2010. The data collected for the study were analyzed using correlation and

regression techniques. The findings revealed that for every unit change increment in the CSR expenditure,

there was .945 or 95 percent increase in profit after tax of the company. The study concluded that there is

a positive relationship between banks CSR and profitability and recommended that banks need to

demonstrate high level of commitment to CSR based on stakeholder’s theory in order to enhance their

profitability in the long run.

Akanbi and Ofoegbu (2012) investigated the effect of the dimensions of CSR on organizational

performance in the banking industry with a particular reference to United Bank of Africa, Lagos. The

study employed survey research. Primary data was used for the study with questionnaires as research

instrument. 250 employees were selected using stratified sampling technique cut across all cadres and

departments in the organization. Data was analyzed using t-test, regression, Pearson correlation and

analysis of variance (ANOVA). The study revealed that the dimensions of CSR have effect on

organizational performance. Hence, it concluded that social responsibility performance is hindered by

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factors such as excessive taxation, lack of corporate and public awareness etc. Therefore, for

organizations to embrace CSR, they must harmonize and reconcile the significant degree, the corporate

objectives and social needs.

From the review and assessment by various scholars above, it is clear that they all conclude that CSR

initiatives and practices have a positive effect on organizations in terms of enhancing organizations’

reputation, creating loyal customers and ultimately increasing organizational performance. So it is

important that banks keep up their CSR practices because it is an investment in the organization that will

secure its future success in the tough business environment in Nigeria today.

2.6 Conceptual Framework

A conceptual framework is a graphical representation of the relationship between the dependent and

independent variables. A variable is a measurable trait with varying values among participants. Corporate

social responsibility is the independent variable in this study, and the dependent variables are

organizational performance, corporate reputation, and customer loyalty. The following is a diagrammatic

representation:

Organisational
Performance

Corporate Reputation
Corporate Social
Responsibility

Customer Loyalty

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Figure 2.1: Conceptual Framework of the Study

Source: Author’s construction (2022)

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