It is both legal and ethical obligation for a company to perform in the best interest of the society. Main categories of CSR activities include philanthropic, ethical, legal and economic activities (Werhane, Freeman, and Dmytriyev 2017 p.10; Chakraborty and Bass 2015, p.488). This classification is due to the assumption that average profit maximization can be achieved due to company's responsibility towards the society. CSR is established on the relationship between business world and society, and on the behaviour of the company's towards its main interest groups.
Organizations that mostly have used the corporate social responsibility have become more successful as they have encouraged employees into a commitment to performance towards the company (Jamali, Lund-Thomsen, and Jeppesen 2017, p.15; Ali, and Kramar 2015, p.231). The only way to become successful is by use of social responsibility initiatives that provide room for different workers to make their differences in the job.
The microfinance finance institutions are faced with portfolio risks due to the nature of lending practices and support services, especially in developing countries (Patten 2016, p.5; Yusof et. 2015, p.117). By now, not much is known about how the MFIs can reduce the risk of offering loans to poor borrowers in the third world countries. Nevertheless, the microfinance institutions have consistently carried out CSRs to create social and economic wealth, though the impact is still minimal.
Aims and Objectives
The aim of the study is to interrogate the role of CSRs within MFIs and how it can be included and aligned with the firm’s primary strategy/ goals.
Literature Review
Various proposals written by different researchers have become the main theories on normative Corporate Social responsibility despite the variety and complexity of approaches related to CSR (Brusseau 2018, p.2). There are theories among the arguments on normative CSR, such as the theory of social costs, agency theory, stakeholders theory, and relational theory (Manimalar, and Sudha 2016, p.12).
Methodology
In this section, various methods used to conduct this research were analysed and discussed. The research design and the target population were identified, then a sample was selected using various sampling techniques. This section also describes the techniques of data analysis, which helped in analysing the data, and the models used.
Research Design
A descriptive design was implemented as it leads to various discoveries among different variables. To seek for underlying principles, an explanatory case study is preferred. The design is considered appropriate in carrying out in-depth findings where much emphasis is placed on the analysis of effects of CSR on the MFIs (Jose et al. 2015, p.320; Marconatto et al. 2015, p.180).
Target Population and Sample Design
The population targeted for this study was the active Microfinance institutions involved in the day-to-day lending exercise, which has invested in the use of CSR for at least two years. The sampling design that is to facilitate the research is a no probabilistic sampling design since data to be used is from those corporations that used the CSR in the year 2016 and 2017.
Data Collection Method
Primary and secondary data were used for analysis in this study. Moreover, data analysed was from the annual reports from the company’s shareholders. Statement of financial position and comprehensive income and annual reports to stakeholders was used. The study period was one year.
Data Analysis
The data collected were analysed by the Statistical Package for social sciences (SPSS) to the relationship between the firm investment on CSR and profitability. Moreover, the strength of the relationships was to be analysed using covariance correlation coefficient.
References
Ali, F. and Kramar, R., 2015. An investigation of how changes to corporate governance in Nepalese microfinance institutions may increase outreach while maintaining their financial performance. Asia Pacific Journal of Management, 32(1), pp.229-249.
Brusseau, J., 2018. Three theories of corporate social responsibility. The Business Ethics Workshop, 18(1).
Chakrabarty, S. and Bass, A.E., 2015. Comparing virtue, consequentialist, and deontological ethics-based corporate social responsibility: mitigating microfinance risk in institutional voids. Journal of Business Ethics, 126(3), pp.487-512.
Jamali, D., Lund-Thomsen, P. and Jeppesen, S., 2017. SMEs and CSR in developing countries. Business & Society, 56(1), pp.11-22.
Jose, S., Khare, N. and Buchanan, F.R., 2015. Serving the poor: captive market CSR and repurchase intention. International Journal of Bank Marketing, 33(3), pp.316-329.
Manimalar, R. and Sudha, S., 2016. Corporate ethical and legal responsibility: effects of CSR on consumer trust and brand loyalty. Prabandhan: Indian Journal of Management, 9(6), pp.7-19.
Marconatto, D., Cruz, L.B. and Pedrozo, E.A., 2015. When microfinance meets CSR. Development-oriented corporate social responsibility: locally led initiatives in developing economies. Organizações & Sociedade, 1, pp.169-188.
Patten, M.L., 2016. Proposing empirical research: a guide to the fundamentals. Taylor & Francis.
Werhane, P.H., Freeman, R.E. and Dmytriyev, S. eds., 2017. Cambridge handbook of research approaches to business ethics and corporate responsibility. Cambridge University Press.
Yusof, J.M., Manan, H.A., Karim, N.A. and Kassim, N.A.M., 2015. Customer's loyalty effects of CSR initiatives. Procedia-Social and Behavioural Sciences, 170, pp.109-119.
