THE PERCEPTION OF CORPORATE SOCIAL RESPONSIBILITY STRATEGIES AND CORPORATE FINANCIAL PERFORMANCE: EXPERIENCES FROM GHANA (Part 1)

 

1.1 BACKGROUND OF STUDY

Globally, the relationship between the corporate sector and society has shifted significantly in recent years (Latapí et al., 2019). As a result, a new approach to business-society ties has emerged. Ślęzak (2021) posits that the modern approach largely known as Corporate Social Responsibility (CSR), is a notion in which businesses consider the interests of society by accepting responsibility for the impact of their operations on communities, shareholders, employees, competitors, suppliers, customers as well as their environment.

Rodrigues and Mário (2019) argues that companies are increasingly understanding that reducing their own environmental and social consequences, as well as tackling the larger social and environmental concerns that their stakeholders face, will be critical to their long-term success and financial performance. Interestingly, Ashrafi et al (2018) note that many organisations are conscious of the need to willingly incorporate both environmental and social improvement in their operations and philosophy.

In developing countries, CSR activities have been spearheaded by large companies within the telecommunication, distribution, oil and gas, manufacturing, mining and other industrial sectors. These corporations arguably have been instrumental in the social development of communities where they operate and the country at large (Atuguba and Dowuona-Hammond, 2006). According to Asumah (2016), the plausible reason behind the CSR initiatives of these firms among other things is to offset the negative impacts of the operations of these companies in the environment where they operate. In the words of Boocock (2002), the assertion is true especially for most mining companies because their operations have a lasting impact on the land, air, water bodies and biodiversity.

In spite of the various efforts and concerns of corporate entities in bettering the lives of people, Rowley and Berman (2000) contend that much deliberation remains as to the precise nature of CSR as the roles of corporate bodies in societies evolve. A perusal of literature on CSR hints that much of what is known and experienced as CSR is dominated by the context of multinational organisations and academics in developed countries (Latapí et al., 2019). There is, therefore, some level of lingering curiosity among stakeholders about the understanding of the relationship between CSR strategies and corporate financial performance within the context of socio-cultural and economic conditions of developing countries, with Ghana no exception.

Considering the growing concern of interest in CSR genre and the status of corporate financial performance to businesses and society, it is critical to delve into research studies to probe into the subject and hence this study.

1.2 STATEMENT OF PROBLEM

Studies done within social investment and business sustainability sectors attest to the fact that the perception of Corporate Social Responsibility (CSR) strategies and companies’ financial performance is becoming more sensitive of late (Nyuur et al., 2018). This is mainly because CSR is a complex concept that is all-encompassing, ambiguous and progressive. Thus, the scope of CSR has been widened to comprise facets of corporate conduct that affect the environmental, economic, social and human right concerns of organisations’ stakeholders, in addition to the function it plays in alleviating poverty especially in the developing parts of the world through business relations (Ashrafi et al., 2018).

The inability of governments to fully provide the welfare needs of its populace is a common
phenomenon in developing countries. In Ghana, though the overall number of the poor has
been decreasing in the past years, poverty in some parts of the country is on the rise (UNDP, 2022). Despite the government’s continual effort towards providing the basic needs of its people, it is still not devoid of the pressures of other sectors of the economy such as education and health development. As a result, companies often step in, in the name of CSR, to pay their quota towards nation’s economic growth and prosperity (Arko, 2013).

However, in the face of tremendous revenue generated by corporations, there is a growing concern amongst populace as regards to the country’s real benefits (Hope & Kwarteng, 2014; D’Amato et al., 2009). The role of companies in the socio-economic development of developing countries, particularly in terms of CSR, has been a current development issue among policy think tanks, with many questioning the need for companies to implement effective CSR policies and dedicate more resources to the sustainable development of their stakeholders and surroundings (Wan, 2014; Appiah-Agyei, 2013).

Nyuur et al (2018) have expressed that many establishments in the global south have frequently been blamed for shirking their social responsibilities for the sustainable development of communities that their operations affect. This behaviour by companies is often attributed to the lack of a robust and clear-cut national policy framework on CSR in developing countries (Niber et al., 2019). Hence, many corporations undertake CSR programs in response to moral values rather than legal obligations.

With a reasonably well-known and attractive mineral resource base, Hope and Kwarteng (2014) allude to the assertion that areas like mining communities in Ghana have little to show in terms of socio-economic growth and investments despite the adverse impacts of mining operations on the environment. This has often resulted in cases of conflicts and growing uneasiness between communities and mining establishments (Mensah et al., 2015; Wan, 2014). On the other hand, Rodrigues and Mário (2019) have argued that in response to the externalities corporations cause, they occasionally attempt at engaging in CSR acts as a form of compensation to stakeholders in order to strengthen their social connections and broadening their operations.

Corporate entities in Ghana, with the status of their financial performance, have initiated several CSR interventions. However, much empirical studies have not been done on the perception of CSR strategies and corporate financial performance in Ghana to corroborate or refute the assertion of critics. Earlier efforts have concentrated more on the effects of CSR activities of mining firms in Ghana (Asumah, 2016; Arko, 2013; Ofori & Hinson, 2007) without necessarily undertaking a detailed and holistic analysis of CSR interventions and financial performance of corporate Ghana. Specifically, the findings of studies on CSR activities of mining firms cannot be used to generalize the perception of CSR strategies and corporate financial performance in Ghana since corporations have different CSR activities and financial performances and mostly operate in different communities with diverse needs.  

This gap in literature invariably have led to little intervention in tackling the shortcomings of corporate social investment by business community in a comprehensive manner. It is in view of this that the study attempted to delve into the perception of CSR strategies and corporate financial performance in Ghana.

1.3 OBJECTIVES OF THE STUDY

1.3.1 General Objective

The study sought to analyse in details the perception of CSR strategies and corporate financial performance in Ghana.

1.3.2 Specific Objectives

Specifically, the objectives of the study include:

       i.          To explore how Corporate Social Responsibility (CSR) is conceptualized in Ghana;

     ii.          To examine the perceptions of CSR interventions in Ghana;

   iii.          To review how CSR interventions affects corporate financial performance; and

   iv.          To determine policy measures to enhance CSR interventions in Ghana.

1.4 RESEARCH QUESTIONS  

The study questions that assist in the achievement of the research objectives are:

1. How is Corporate Social Responsibility (CSR) conceptualized in Ghana?
2. What are the perceptions of CSR interventions in Ghana?
3. How are CSR interventions affecting affects corporate financial performance?
4. What are the policy measures to enhance CSR interventions in Ghana?

1.5 SCOPE OF RESEARCH

The focus of the study is Ghana. It is located in the southern part of West Africa. The country shares boundaries with Burkina Faso to the north, Cote d’Ivoire to the west, Togo to the east and Gulf of Guinea to the south.

1.6 JUSTIFICATION OF THE STUDY

The case for the significance of this study can be argued for in three arenas: policymaking,
academia, and practice. With respect to policymaking, the call for Corporate Social Responsibility (CSR) varies widely according to financial availability, location, situation, regulations, and population. As hinted already, most of the concepts of CSR are adopted from developed countries and multinational organisations which have or are very little in common with financial availability, location, situation, regulations, and population of developing countries including Ghana. Also, Ghana has no clear-cut policy framework on CSR, hence a study of this nature which seeks to present ‘on-the-ground’ experience on CSR activities of corporate Ghana helps in creating and defining a concept of CSR that suits the perspectives of Ghana.

In relation to academia, this study augments previous studies, make available empirical data, and also serve a useful reference point or material on the subject of CSR for other research to be carried out. The study also seeks to engender a researched-based discourse on CSR activities and financial performance of firms in relation to sustainability.

Finally, in terms of practice, the study is a right step in direction in bringing to light impact of the perception of CSR strategies and corporate financial performance in Ghana. The study likewise presents an analytical perspective to national authorities in understanding the relationship between CSR policy and corporate financial performance for the sustenance of corporate Ghana. The study would also be a wakeup call to national authorities to move beyond corporate license to social license in order to promote socio-economic wellbeing of society. This would help to optimize CSR interventions without compromising on sustainability.  

1.7 SUMMARY OF METHODOLGY

1.7.1 Research Design

In order to achieve the objective of the study, the case study approach is adopted. A case study helps to understand the nature and dynamism of social problems needing lasting responses. Its reliance on multiple sources of evidence provides for triangulation to limit biases or inaccuracies in collecting data. Thus, the case study research strategy is chosen because it permits for both comparative and independent analysis of data.

1.7.2 Research Strategy

The study employs the qualitative research in examining the perception of CSR strategies and corporate financial performance in Ghana.

1.7.3 Unit of Enquiry

Two (2) units of enquiry are selected for the research and these include (i) CSR companies (Ghana National Petroleum Corporation, Tullow Ghana Limited, Newmont Ghana Gold Limited, MTN Ghana and Vodafone Ghana); and (ii) Ghanaians (beneficiaries of CSR initiatives). The purpose for selecting these units is to help triangulate data in order to limit the biases in data collection.  

1.7.4 Sample Size Technique

The study will use the convenience and purposive sampling techniques to select the unit of enquiries. Premised on time and financial resources constraints, the convenience sampling technique will be used to select 100 Ghanaians (beneficiaries of CSR initiatives) for the study. Purposive sampling technique also will be used to select CSR organisations in Ghana including Ghana National Petroleum Corporation, Tullow Ghana Limited, Newmont Ghana Gold Limited, MTN Ghana and Vodafone Ghana.

1.7.5 Methods of Data Collection

The study will rely on various data sources to provide answers to the research questions. The analysis will use both primary and secondary data sources in ensuring data triangulation. Primary data related to this study apply to all field data gathered through interviews with Ghanaians (beneficiaries of CSR) using a research tool - semi-structured questionnaire. The research tool will consist of questions on perceptions of CSR strategies and corporate financial performance in Ghana. With respect to the interviews, a face-to-face approach will be used in administering the semi-structured questionnaire.

Secondary data, on the other hand, refers to the data obtained from journal articles, academic studies and other online published materials. The secondary data will be collected using a checklist to cover the following sub-topics: (i) CSR conceptualization; (ii) perceptions of CSR interventions; (iii) impact of CSR interventions on corporate financial performance; and (iv) measures to enhance CSR interventions. These data will be obtained through reviews of documented reports including programmes of action and annual reports of the selected CSR organisations in Ghana.

1.7.6 Analyses of Data

The data collected through primary and secondary sources will be processed and analysed. Processing of the data will involve a careful examination of the collected data to ensure accuracy and consistency with other data gathered. The analyses of the data collected will capture the followings:

(i) Conceptualization of CSR

Content analysis of CSR strategy of corporate organisations will be undertaken to assess the factors that influence the adoption and implementation of corporate social initiatives.

(ii) Perceptions of CSR interventions

After the content analysis of the CSR strategy of corporate organisations, the study will shift from the policy framework to perceptions of CSR interventions. The responses that will gathered from beneficiaries concerning CSR interventions will be examined critically and matched with the intended goals and objectives of CSR strategy of corporate organisations.

(iii) Impact of CSR interventions on corporate financial performance

The underlying impact of CSR interventions, both positive and negative, which affect corporate financial performance will be reviewed.

1.8 ORGANISATION OF THE STUDY

The study was structured into five key chapters. Chapter one presents the background information of the research and the problem statement. It explores the nature of the problem, causes of the problem, and effects. Chapter two highlights a review of literature in relation to the study from global and national perspectives and also provide the theoretical basis for the research. Chapter three also outlines the research setting by describing the study area in detail as well as the research methodology used for the study to arrive at the findings and conclusions of the study. This includes the research design and strategy, unit of analysis, sampling technique, methods of data collection as well as the approaches to analyzing the collected data. Chapter four concentrates on the results, analysis and findings emanating from the study. The chapter is devoted to discussion of results and managerial implications on CSR conceptualization; perceptions of CSR interventions; and impact of CSR interventions on brands. Lastly, Chapter five concludes on the findings of the study and recommend ways to enhance CSR interventions identified through the analysis.

 

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