FINAL PROJECT

RESEARCH TOOLS AND TECHNIQUES

TITLE:
EFFECTS OF CORPORATE SOCIAL RESPONSIBILITY ON
ORGANIZATIONS
RESEARCH: Basic Research
RESEARCHERS:
HIBA KHALID

FA12-BBA-141

MAHAM MANGRIO

FA12-BBA-110

MEHWISH KHAN

FA12-BBA-101

AHMED KHALID

FA12-BBA-127

HAROON KAMAL

FA12-BBA-197

Submission Date:
12TH NOVEMBER, 2014
Submitted To:
MAM UZMA NAEEM
Department of Management Sciences
COMSATS Institute of Information Technology Islamabad
1

TABLE OF CONTENTS:
Pg No.
EXECUTIVE SUMMARY..4

PROBLEM STATEMENT...4
SAMPLING DESIGN..4
DATA COLLECTION.4
RESULTS.4
RECOMMENDATIONS.5

INTRODUCTION....5

PROBLEM STATEMENT....5
RESEARCH OBJECTIVE....5
BACKGROUND OF THE STUDY..5

LITERATURE REVIEW..6
THEORATICAL FRAMWORK...7
HYPOTHESIS...8
RESEARCH DESIGN...8

Purpose Of Study...8
Types Of Investigation...8
Extent of Researcher Interference..8
Study Setting..8
Unit Of Analysis.8
Time Horizon..9

OPERATIONAL DEFINATION.. 9-11

MEASURING DATA ANALYSIS..12
DATA ANALYSIS...12
RESULT AND FINDINGS13-22
CONCLUSION.22
RECOMMENDATIONS..23
LIMITATIONS..23
2

ACKNOWLEDGEMENT.23
REFERENCES..24-28

APPENDIX...28

EXECUTIVE SUMMARY:
3

The purpose of this research is to check whether the corporate social responsibility affects the
organizations both internally and externally or not? The variables which are linked with
corporate social responsibility are productivity, shareholders and stake holders commitment,
profitability and financial performance, whereas needs and wants of shareholders and
stakeholders are acting as moderating variable. The effect of all these variables has been
observed on corporate social responsibility in the Banking sector of Pakistan. 50 responses are
collected from banking organizations, questionnaires are being filled by different banks and
responses on CSR of both male and female has been collected. The results show that there is
significant positive relationship between intrinsic and extrinsic factors with job satisfaction. We
will accept the null hypothesis and accept the alternative hypothesis.

PROBLEM STATEMENT:
To what extent is corporate social responsibility effecting the
organizations both internally and externally?

SAMPLING DESIGN:
Our research design is based on Judgment sampling because subject was selected on the
basis of their expertise in the subject investigated. Data was collected from the banking
sector.
STATISTICAL TOOL:
The tool which we used for data collection is questionnaires.

DATA COLLECTION:
We collected data through Questionnaires to know that corporate social responsibility
really affects the organizations or not? Data was collected from 50 members of different
Banks.

Data Analysis: We have used Regression, correlation, Scale(reliability),histrogram

and bar chart.

RESULTS:
We have applied regression, co-rrelation and reliability and through our research results
we come to analyse that all the null hypothesis are being accepted and alternative
hypothesis are rejected. It also shows that:
There is a positive relationship between productivity and CSR.
An increase in profitability and financial performance leads to an increase in
CSR.
Also a positive relation between shareholder and stakeholder commitment.
RECOMMENDATIONS:
Variables such as productivity, profitability, shareholder and stakeholder commitment and
financial performance affects corporate social responsibility both internally and
externally, we recommend that if the organization focuses on all of these and will provide
4

sufficient resources and attention than the organization will become more socially
responsible on the other hand if the organization ignores and take for granted these
variable than this will affect the image of organization and it will also affect the social
responsibility of organization. However it is also recommended on the basis of results
that variables like profitability and shareholder commitment are more positively related
to CSR as compare to other variables, so the organization must focus on these variables
more as compare to other variables.

INTRODUCTION

Problem Statement

To what extent is corporate social responsibility effecting the organizations both internally and
externally?

Research objective

Corporate social responsibility is a management concept whereby companies integrate social and
environmental concerns in their business operations and interactions with their stakeholders.
The objective of this research is to find that whether corporate social responsibility really affects
organizations both internally and externally or not?

Background

Throughout the years, many researchers have been wondering that what really affects the
corporate social responsibility of organizations both internally and externally. How willing are
organizations to work on social responsibility? How much interest they take in it and how much
internal and external factors affect the social responsibility of organizations. Through careful
analysis of many literature and its reviews many researchers have pinpointed opinions on these
factors and variables, on how organizations behave as regards to social responsibility, specially
members in the banking sector.

LITERATURE REVIEW
Researchers have defined the effects of corporate social responsibility (CSR) on organizations in
various ways. CSR has been effecting the organization in terms ofProfitability (Arlow and
Gannon, 1982), in their recent review of the relationship between profitability and corporate
5

social responsibility they indicated that assessing profitability is a relatively clear-cut process but
assessing social responsibility is not and that there exists a close relationship between
profitability and social responsibility. Another researcher investigates the possibilities and
problems of benchmarking Corporate Social Responsibility (CSR),after a methodological
analysis of the advantages and problems of benchmarking, the researcher developed a
benchmark method that includes economic, social and environmental aspects as well as national
and international aspects of CSR(Graafland,2004).

The role, function and responsibilities of the business enterprise were described by another
researcher, he describes that CSR is a truly sensitizing concept, both in itself and in its
implementation. Repositioning the business enterprise in contemporary society is not a task that
can be accomplished overnight, and we are witnessing a multitude of attempts to grasp the true
meaning of CSR, here true implementation means translating the contextual meaning of CSR
into the business proposition. This means reconsidering present business strategies and practices
(Jonker, 2010).
Another researcherindicates that organizations that prefer their customers or community are more
likely to construct distinctive identities through CSR activities and they establish ethical and
social values within their corporate statements and cultures( Bravo, Sep 2011).Another
researcher outlines that social responsibility of organization is to focus on the requirements of
people who are outside the organization but directly or indirectly affected by organizations
existence (Craig smith, 2003).Another researchernarrated that organization must ensure that
managers social needs are fulfilled properly because managers are the persons who are involve
in organizations decision making and organization should fulfill their needs by getting involved
in social responsibility(Hemingway and Maclagan,2004).
Another researcher relates that CSR provides competitive advantage to firms (Yasemin,
2010).Some researches focuses on another dimension of CSR that most of the people have no
reach to their favourite brands because of unavailability of those brands in their local markets,so
its a corporate social responsibility of those respective organizations to make those brands
available in their consumers reach(Amaeshi,andNnodim , 2008).
Researchers also focus on importance of CSR activities towards customer relationship.
Organizations which use proper CSR activities will enjoy better customer relationship, because
customers are the driving force of any organization and organizations should have to translate
their satisfaction into products and also solving their problems regarding products through proper
customer relationship management (Imran, Irshad, 2010).Another researcher talks about
increased shareholders commitment if organization is socially responsible(Pridge, J, 1998).
(Marina and Damani, 1998) focuses on productivity,(Frank L. McVey,1903)relates that CSR

improves ethical responsibility(Garriga and Mele, 2004) talks about the organizations better
position in society .
Another researcher describes that CSR can be practiced on the basis of the following traditional
arguments which are moral argument ,the license to- operate (legal) argument , the
sustainability argument and financing the reputation (brand image) argument, these arguments
leads to innovation and change in CSR ( Asongu2007). The researcher also highlights that CSR
should not just be considered an expense, but rather an investment. Researchers like ( McGuire,
Sundgren andSchneeweis, 1988) indicates that financial performance is a very important variable
which is influencing CSR,the researcher suggests that reducing the firm risk highly benefits the
social responsibility.
Another researcher (Nikolay A Dentchev, 2004) describes that firms who are socially responsible
influences stakeholder groups like employees, customers, investors,community, natural
environment and supplier in a positive way which is profitable and beneficial for the
organization. Researcher describes that firms are engaging in Corporate Social Responsibility
because they know that there is a competitive market and resource based perspectives that help
out to understand the CSR and through it the organization get both internal and external benefits.
The investment which is made within the organization is included in internal benefit which gives
better resources to the firm. The external benefit which the organization gets is the reputation
which it earn through making its position in society or market. CSR gives motivation, clear
stance of working and high commitment to the work (Branco, 2006).

Theoretical Framework
Productivity of
organization

Shareholder and
Stakeholder
Committment
Profitability and
Financial
performance

Corporate Social
Responsibility

Needs and Wants

Independent Variable
Moderating variable

Dependent Variable

HYPOTHESIS
7

H1: The greater will be the productivity of organization, the more the organization will be
socially responsible.
H2: There will be a significant positive correlation between shareholder and stakeholder
commitment and chances for organization to become socially responsible.
H3: superior corporate financial performance and profitability leads to higher levels of CSR in
organization.
H4: If the needs and wants of shareholders and stakeholders are adequately fulfilled,
organization will become more socially responsible.

RESEARCH DESIGN
1. Purpose of the study:
The purpose of our study is hypothesis testing because on our research topic Effects of
social responsibility on organization ample amount of data was available and we
developed different hypothesis on our research data.

2. Type of investigation
The type of investigation is casual study because we developed number of cause and
effect relationship between different variables.
Example: Profitability Cause , CSR Effect

3. Extent of research interference :

The researcher interference was minimum because there was no change in environment
so the study was field study.

4. Study setting :
Our study in non-contrived because it is conducted in natural environment.

5. Unit of analysis :
The unit of analysis is organization because the research is conducted on effects of social
responsibility on organization.

6. Time horizon :
It is a cross-sectional study because in research data is collected at one point in time.
8

OPERATIONAL DEFINITION

Productivity of
organization

Innovatio
n

Sales

Do you think
innovation
can improve
the
productivity
of

Are the
distribution
channel well
defined?

Shareholder and
stakeholders
commitment
Is the satisfaction
Is
theof
goal of
level
maximizing
stakeholders
Investme and
shareholders
shareholder
nt
wealth being
directly
linked
satisfied?
with Satisfaction
their level of
commitment?

Needs and wants of

shareholder and
stakeholder

Do you think the

Does of
themouth of
word
number
of
the
investors
Feedback
complaints
effect the credit 9
increase
rating
of the
significantly
company?
Word of
over time

mouth

Profitability and
Financial performance

Are the quality

control
Quality of the
organization
Maintenanceare
efficient enough
to achieve
profitability goal?

Are the capacity

utilization
Expand of the
organization
are
Business
efficient enough
10
to expand
business?

Corporate social
responsibility

Society

Does CSR portrait

a positive image
in the minds of
the employees
that may lead to
increase output?

Humanity

Is CSR providing
ample
opportunities in
protecting the
environment?

DATA ANALYSIS:
We have collected data through 50 questionnaires and we have applied correlation, regression
histogram, Bar chart, Scale as statistical tool. We targeted banking sector and members of the
banks

SILK BANK
HBL
ALLIED
BURJ BANK

11

Have provided us with their responses regarding corporate social responsibility and the variables
affecting it. We have analyzed the questionnaires using different tools and found that there exist a
positive relation between CSR and the variables.

RESULT AND FINDINGS

Descriptive analysis table shows mean, median, mode, standard deviation and others

12

Statistics
Profitability AND Shareholder AND
PRODUCTIVITY
N

Valid

Financial

stakeholder

performance

commitment

CSR

50

50

50

50

Mean

3.5200

3.4900

3.5200

9.1400

Std. Error of Mean

.12532

.12079

.08596

.24245

Median

4.0000

3.5000

3.5000

9.5000

4.00

4.00

3.50

10.00

.88617

.85410

.60786

1.71440

.785

.729

.369

2.939

-.521

-.710

-.310

-.631

Std. Error of Skewness

.337

.337

.337

.337

Kurtosis

.301

.181

-.493

.173

Std. Error of Kurtosis

.662

.662

.662

.662

Range

4.00

4.00

2.25

7.50

Minimum

1.00

1.00

2.25

4.00

Maximum

5.00

5.00

4.50

11.50

Missing

Mode
Std. Deviation
Variance
Skewness

This table shows that total 50 values are taken the mean ,median,mode of all the variables shows
that the people are more in the favor of the relationship between CSR and other variables which
are effecting CSR.

13

FREQUENCY GRAPHS:
This bar chart shows the frequencies of productivity:

This bar chart show the frequencies of profitability and financial performance:

14

This bar chart show the frequencies of stakeholder and shareholder commitment

This bar chart show the frequencies of CSR.

15

HISTOGRAMS:
This histogram shows the normality distribution of Productivity.

This histogram shows the normality distribution of profitability and financial performance.

16

This histogram shows the normality distribution of Shareholder and stakeholder Commitment.

This histogram shows the normality distribution of CSR

17

CORRELATION:
The table given below shows the correlation of two variables:
Correlations
PRODUCTIVITY
PRODUCTIVITY

Pearson Correlation

Sig. (2-tailed)

.166
.249

N
CSR

CSR

50

50

Pearson Correlation

.166

Sig. (2-tailed)

.249

50

50

Pearson correlation results shows that there is weak positive relationship between productivity
ans CSR . This means that increase in CSR will somehow cause increase in productivity and vice
versa. Our hypothesis is accepted.
The table given below shows the correlation of two variables:
Correlations
ShareholderAND
stakeholercommi
CSR
CSR

Pearson Correlation

tment
1

Sig. (2-tailed)
N
ShareholderANDstakeholerco Pearson Correlation
mmitment

Sig. (2-tailed)
N

.678**
.000

50

50

.678**

.000
50

50

**. Correlation is significant at the 0.01 level (2-tailed).

Pearson correlation results shows that there is strong positive relationship between stakeholder
and shareholder commitment and CSR . This means that increase in CSR will cause increase in
18

stakeholder and shareholder commitment and vice versa. and statistical significance level is 1%
which less than 5% which shows a strong relationship. Hypothesis accepted
The table given below shows the correlation of two variables:

Correlations
ProftabilityAND
Financialperfor
CSR
CSR

Pearson Correlation

mance
1

Sig. (2-tailed)
N
ProftabilityANDFinancialpe Pearson Correlation
rformance

Sig. (2-tailed)
N

.715**
.000

50

50

.715**

.000
50

50

**. Correlation is significant at the 0.01 level (2-tailed).

Pearson correlation results shows that there is strong positive relationship between profitability
and financial performance and CSR . This means that increase in CSR will cause increase in
profitability and financial performance and vice versa. And statistical significance level is 1%
which less than 5% which shows a strong relationship. Hypothesis accepted.

19

REGRESSION:
Following tables explain the regression that explain change in CSR due to change in Independent
variables.:
This table explains the Model Summary:
Model Summary

Model

Std. Error of

Square

the Estimate

R Square

.795a

Adjusted R

.632

.608

1.07344

a. Predictors: (Constant), Profitability AND Financial

This table

performance, PRODUCTIVITY, Shareholder AND stakeholder

provides us the

commitment

value of R i.e.

0.79 which

shows moderate

degree of

correlation between CSR and other variables. The value of R2shows 0.632.

ANOVA table explains about the regression line fitness of the data i.e. shown below:

ANOVAb
Model
1

Sum of Squares

df

Mean Square

Regression

91.015

30.338

Residual

53.005

46

1.152

144.020

49

Total

F
26.329

Sig.
.000a

a. Predictors: (Constant), ProftabilityANDFinancialperformance, PRODUCTIVITY,

ShareholderANDstakeholercommitment
b. Dependent Variable: CSR

In this table we can see that F value is more than 5 which shows a strong relationship.

20

This table provides information to predict CSR according to independent variable:

Coefficientsa
Standardized
Unstandardized Coefficients
Model
1

Coefficients

Std. Error

(Constant)

1.930

.983

PRODUCTIVITY

-.139

.181

ShareholderANDstakeholerco

1.194

1.002

Beta

Sig.
1.963

.056

-.072

-.766

.448

.308

.423

3.878

.000

.216

.499

4.634

.000

mmitment
ProftabilityANDFinancialperfo
rmance
a. Dependent Variable: CSR

1.930 0.139(productivity) + 1.194(shareholder and stakeholder commitment)

+1.002(profitability and financial performance)+e
By this we can accept the null hypothesis because significance level of motivation is more than
0.05.
These all results show the positive relationship between CSR and independent variables..

RELIABILITY
For Q1,Q9,Q14
Reliability Statistics
Cronbach's Alpha
.613

N of Items
4

Alpha is 0.6% which shows that our questions were 60% reliable
For Q8,Q11
21

Reliability Statistics
Cronbach's Alpha

N of Items

.619

Alpha is 0.6 % which shows that questions were 60% reliable

For Q6, Q7,Q15,Q16,Q17

Reliability Statistics
Cronbach's Alpha

N of Items

.782

Alpha is 0.7 % which shows our question are 70% reliable.

CONCLUSION:
On the basis of our results we accept our null hypothesis. The purpose of this research project
was to check the relationship between CSR and Profitability, Productivity, Finacial performance
and shareholder and stakeholder commitment. Different variables were chosen and the effect of
these variables on CSR has been verified. The results all the tools Regression, Correlation, Scale,
Histogram and Bar chart shows that there exist a positive relationship between all the variables
and CSR and increasing the effect of these variables will affect the CSR positively and vice
versa. So the organization who focuses on such variables and provide adequate resources will
become more socially responsible and flourish and will have a superior positive image. However
profitability and stakeholder commitment are strongly positively related with CSR as compared
to other variables as indicated in the results.

RECOMMENDATIONS:

22

Variables such as productivity, profitability, shareholder and stakeholder commitment and

financial performance affects corporate social responsibility both internally and
externally, we recommend that if the organization focuses on all of these and will provide
sufficient resources and attention than the organization will become more socially
responsible on the other hand if the organization ignores and take for granted these
variable than this will affect the image of organization and it will also affect the social
responsibility of organization. However it is also recommended on the basis of results
that variables like profitability and shareholder commitment are more positively related
to CSR as compare to other variables, so the organization must focus on these variables
more as compare to other variables.

LIMITATIONS:
During research we the researchers face many difficulties in data gathering and analyzing it.
Time for the research was very limited so we were unable to conduct the research on the large
sample due to which we collected data from only fifty employees of different organizations. It
also cost expensive to go to different organizations and collect data as we are students and was
unable to spend much on the research. Another limitation which we faced was the availability of
insufficient sample for collection of data as fifty is not the sufficient sample to collect the
accurate data for research purpose. There was much other complication also in collection of data
which was faced by us during research.

ACKNOWLEDGEMENT:
Firstly we would like to thank Allah Almighty for providing us an opportunity to do something
productive. Without His blessings we wouldnt be able to come so far. Then we would be
thankful to our respected teacher maam UZMA NAEEM who encouraged and motivated us to
accomplish our work sincerely. This research project wouldnt be possible without her
cooperation and continuous guidance.

REFERENCE:

23

Ali, I., Rehman , K., Yilmaz, A., Nazir, S., Ali, J (2010). Corporate Social Responsibility
Influences, Employee Commitment and Organizational Performance. Journal of Business
Management, 4(12) , 2796-2801

Aaker ,D (1994).Building a brand :the Saturn story. Joural of California management

review, 36(2), 114-121

Abagail , M (2001).Corporate Social Responsibility : Theory of the firm perspective.

Academy of Management journal, 25 ,117-127

Abbey,D (2004),Global profit and global justice: Using your Money to change the
world.New society publishers, 4, 22-44

Abelson,M (1983).The impact of goal change on permanent perception and behavior

of employees. Journal of management, 9, 65-79

Aggarwal ,P (2004).The effects of brand relationships and norms on consumer

attitudes and behavior. Journal of consumer research , 31, 1

Ahmed,N.,Montagno,R.,Flenze,R (1998).Organizational performance and

environmental consciousness:An empirical study. Journal of management decision,
36, 57-62

Akerlof,A (1970).The market for lemons quality uncertainity and the market
mechanism the quarterly. Journal of economics, 84, 448-500

Alexander,D (2006).The employers Responsibility to the community. Academy of

Management journal ,15, 132-148

24

Ali , I., Rehman ,K., Yilmaz, A.,Nazir,S.,Ali,J (2010). Effects of Corporate Social
Responsibility on Consumer Retention in Cellular Industry of Pakistan. Journal of
Business Management, 4(4), 475-485

Amaeshi, K., Osuji, O., Nnodim, P (2008). Corporate Social Responsibility in Supply
Chains of Global Brands: A Boundaryless Responsibility? Clarifications, Exceptions and
Implications. Journal of Business Ethics, 81, 223-234

Asongu, J (2007). Innovation as an Argument for Corporate Social Responsibility.

Journal of Business and Public Policy, 1, 20-40

Bansal,P (2004).Corporate socil responsibility :Why Good people behave badly in

organization. Ivey business journal ,7, 1-5

Barak,E.,Nissly,J.,Levin,A (2001).Antecedents to Retention and turnover among

child welfare ,social work and other human service employess. The university of
Chicago , 75, 4

Bonner,R (1921).The organization of the ten thousand .The classical journal , 9 , 7

Branco,M (2006).Corporate social responsibility and resource based perspective.

Springer journal of business ethics, 69, 21

Bravo, R (2011).Corporate Social Responsibility as a Vehicle to Reveal the Corporate

Identity: A Study Focused on the Websites of Spanish Financial Entities. Journal of
Business Ethics, 107, 129-146

Carroll, A (1979). A Three-Dimensional Conceptual Model of Corporate Performance.

The Academy of Management Review, 4, 497-505

25

Frank,L (1903).The social effects of the eight hour day . Academy of management
journal ,8 , 521-530

Fred,M.(2008).Corporate social responsibility. Journal of business ethics,9, 21-44

Garriga,E.,Mele,D (2004).Corporate social responsibility theories mapping territory.

Journal of business ethics, 53, 2

Graafland, J. (2004). Benchmarking of Corporate Social Responsibility:

Methodological Problems and Robustness. Journal of Business Ethics, 53, 137-152

Hemingway, C., Maclagan, P (2004). Managers' Personal Values as Drivers of Corporate

Social Responsibility. Journal of Business Ethics, 50, 33-44

Vitell,S.,Ramos,E.,Nishihara,C (2004). The Role of Ethics and Social Responsibility

in Organizational Success: A Spanish Perspective. Journal of business ethics, 91,
467-483

Jonker, J (2010). The Challenge of Organizing and Implementing Corporate Social

Responsibility. Journal of Business Policy, 79, 128-142

Karaibrahimoglu,Y (2010). Corporate Social Responsibilities in Time of Financial Crises.

Journal of Business Management, 4(4), 382-389

Kenneth,E (1985). An empirical examination of the relationship between corporate

social responsibility and profitability, Academy of management journal, 28, 446-463

Kole ,P.,Richard,R.,Brown,A (2001). A corporate social responsibility audit within a

quality management framework. Journal of business Ethics, 31, 4
26

LEtang, J (1995). Ethical Corporate Social Responsibility: Framework for Managers.

Journal of Business Ethics, 14, 125-132

Lacey , R., Hensel, P (2010). Longitudinal Effects of Corporate Social Responsibility

on Customer Relationships. Journal of Business Ethics, 97, 581-587

Lewis,H (1914).Social organization. Academy of Management journal, 20, 68-97

Max,B (1995).A stakeholder framework for analyzing and evaluating corporate

social performance.Academy of management journal , 20,92-117

McGuire, J (1988). Corporate Social Responsibility and Firm Financial Performance. The
Academy of Management Journal, 31, 854-872

Negro,N (1920),Labor organization. Monthly labor review, 11, 12

Padgett,R.,Galan,J (2010).The Effect of R&D Intensity on Corporate Social

Responsibility.Journal of business ethics, 93, 407-418

Philip,L (1984).Effects of industrialism upon political and social ideas. Academy of

management journal, 27, 42-56

Pridge,J (1998).Corporate lives :New perspective on the social life of the corporate
form. Academy of management journal, 52, 97-118

Smith, N (2003). Corporate Social Responsibility: no whether but how.Journal of

Commerce, 03, 1-35

27

Sotorro, L (2008).Corporate Social Responsibility of the Most Highly Reputed

European and North American Firms. Journal of Business Ethics, 82, 379-390

Wood, D (1991). Corporate Social Performance Revisited. The Academy of Management

Review, 16, 691-718

Appendix
a sample of questionnaire is enclosed with the report which is a statistical tool which we used to
collect data.

28