Urgenthomework logo
UrgentHomeWork
Live chat

Loading..

Relationship between corporate social responsibility and financial performance

  50 Download     📄   65 Pages / 16060 Words

DISSERTATION

Abstract

This study has focused on the relationship between corporate social responsibility and the corporate financial performance of the companies. The study has followed positivism philosophy, deductive approach and explanatory design for the research. Secondary data has been used during the investigation. Considering the findings in the review of the previous researches, it has been determined that CSR influences the financial performance of the companies. However, in the particular case of Unilever, the scenario is bit different. Considering the analysis on the impacts of CSR on the financial performance, it can be stated that the impact of CSR on the financial performance is positive if the higher management and lower level managers perform actively; otherwise the result can be different. Hence, it is proved that the impact of CSR on the financial performance of the business completely depends on the management of the company.

However, considering the findings in the study, some recommendations have been provided so that the companies can utilise the CSR activities for the improvement of their financial performance. The study has recommended that the companies must be innovative at the time of developing CSR strategies. At the same time, the study has also suggested that the companies need to analyze the needs of the society and consider the issues in the society while developing the CSR strategies.

Chapter 1: Introduction

1.1 Introduction

“Corporate Social Responsibility” is a very common term in modern business world. This term indicates the responsibilities of the organizations towards society. In the present scenario, companies in different sectors adopt different strategies to fulfil their social responsibilities in a better way. According to Kumar et al., (2018), fulfilling the corporate social responsibilities is nowadays mandatory for the long-term survival of the organizations. In support of this, Platonova et al., (2018) mentioned that corporate social responsibilities performed by the organizations indicate how far the organization is careful about the social developments and improvements. There are some common strategies that the organizations adopt in order to fulfil their social responsibilities. For example – companies invest for the education of the poor children or companies invest for free health check-up of the poor people or companies invest for reducing the pollution level in the ecological environment.

In this study, the primary matter of investigation is to derive the relationship between social responsibilities performed by the organizations and the financial performance of the organizations. The study has focused on this particular area of investigation because in the present scenario many people believe that the financial performance standard of the organizations is highly affected by their social responsibilities. Hence, performing an investigation has helped to understand the actual relationship between the two variables. In order to make the study more concise the investigation has focused on the business of Unilever, which is UK based multinational company deals with consumer goods.

1.2 Background of the study

As stated above, in the modern scenario of business world, companies are much conscious about their social responsibilities. Different organizations adopt different strategies in order to fulfil their responsibilities towards the society. For example, Nestle has performed its social responsibility by investing in the nutrition awareness campaign. The higher authority of the company has believed that providing a healthy life to the people they can contribute to the social improvements. The company has also contributed in the developments of the rural places in different countries like, India and Africa. It means through the CSR activities the companies are actually contributing to the social progress. In this context, Wang et al., (2018) mentioned that CSR is the best way of gaining the attention of the people towards the business. At the same time, Kim et al., (2018) believed that CSR is actually a tactic applied by the companies to create a positive and strong brand image in the market. On the other hand, Rettab and Mellahi (2019) stated that there are some companies which are failure to gain the advantage in the market after investing much in the social activities. This is true that there are several companies which have failed to create a strong position in the market after investing much on the social responsibilities. For example, Nokia invested much on the development of the lifestyles of the people in the local communities in different countries but failed to keep its market at a stronger position.

In this context, Gangi et al., (2019) stated that there is no assurance that the business will be successful if it invests in the social responsibility activities; however, the chance of developing a better position in the market increases if the company takes care of its social responsibilities in a proper way. In support of this, Kim et al., (2018) mentioned that social responsibilities need to be understand perfectly while developing the strategies for Corporate Social Responsibilities. It is a fact that the need of every society is not same. For example, the needs of the society in the United Kingdom are not similar to the needs of the society in India. Therefore, in the context of the multinational companies it can be stated that the higher managements of the companies need to identify the social needs first and based on that they need to develop different strategies for different societies.

According to Platonova et al., (2018), CSR and the sustainability of the companies are closely related to each other. In detail it can be stated that if the companies perform CSR activities properly it creates a strong image in the market, which helps the company enhancing number of customers and revenue. If the company becomes successful in enhancing the revenue, it can improve its financial position and as a result it can achieve competitive advantage and sustainability in the market. Therefore, it can be stated that there is a relationship between CSR and sustainability of the companies. However, Aybars et al., (2019) argued that in the competitive scenario of the current market sustainability and financial performance of the companies depend not only on the CSR activities, but it also depends on the other activities and strategies also. For example, sustainability depends on relationship of the company with its stakeholders. Therefore, it cannot be stated that financial performance and sustainability depends completely on the CSR. Therefore, in this scenario, the dependence of financial performance on the CSR of the companies is a debatable issue. Hence, further investigation is required in this area of investigation.

1.3 Rationale of the study


What is the issue?

The primary issue with which this study has dealt is that there is no certain relationship between CSR and financial performance of the companies. In some cases, it can be identified that CSR has helped the companies in developing better position in the market; on the other hand, in some other cases, it can be noted that the companies faced losses even if they have invested in the CSR activities. Therefore, there is confusion whether CSR positively affects the companies and their financial performance or it has no relationship or negative relationship with the financial performance of the company. This confusion actually created the issue of this study.

Why is it an issue?

The above stated situation is an issue because due to this confusion companies sometimes cannot understand whether they should take more care of their social responsibilities and how much they should invest in the CSR activities. As CSR activities need much investment, it affects the profitability or the income level of the companies also (Malik and Kanwal, 2018). Therefore, in this situation the confusion regarding the relationship between social responsibility activities and the financial performance of the companies is definitely a big issue to the companies.

Why is it an issue now?

The above mentioned issue is a major issue in the current scenario because the scenario in the present market is highly competitive. In this competitive environment the sustainability of the companies highly depends on the satisfaction and support of the communities. On the other hand, for survival, earning a standard amount of income is also very important for the companies (Phillips et al., 2019). Therefore, understanding how much investment needs to be made in the CSR activities is very important to the companies. However, as this is not clear to the companies, the situation is indicating a major issue in the current scenario.

What could the research shed light on?

Though the stated issue is a major issue in the current scenario of the businesses, this particular study has focused on investigating the relationship between the two variables – CSR and the financial performance of the companies. This investigation has helped in deriving some needful suggestions for the companies which are operating in the current market scenario.

1.4 Research aim and objectives

The aim of this research is to determine and understand the relationship between Corporate Social Responsibility and Corporate Financial Performance of the companies. In order to achieve this particular aim, the study has developed some objectives which are stated below:

Objectives:

  • To identify the Corporate Social Responsibility activities performed by the companies like, Unilever in the current market scenario
  • To identify and evaluate the benefits of CSR activities from the perspective of Corporate Financial Performance of the company
  • To understand the way in which the Corporate Financial Performance of the company is affected by the CSR activities of the company
  • To provide some recommendations which can help the companies utilising the CSR activities in a positive sense for improving the financial performance

1.5 Research questions

The questions that the study has followed are stated below:

  • What are the Corporate Social Responsibility activities performed by the companies like, Unilever in the current market scenario?
  • What are the major benefits of CSR activities from the perspective of Corporate Financial Performance of the company?
  • How the Corporate Financial Performance of the company is affected by the CSR activities of the company?
  • What are the possible ways that can help the companies utilising the CSR activities in a positive sense for improving the financial performance?

1.6 Significance of the study

This study has specifically focused on the social activities of the companies in the present market scenario and at the same time, it has tried to identify the relationship between social responsibilities and the financial performance of the companies. It means with the help of this particular study the companies developed an understanding how their financial performance is affected by their social responsibility activities. It means the companies now onwards will be capable of developing better strategies for their CSR activities, which will contribute to the development of the companies in the current market scenario. At the same time, the companies will be capable of taking care of their financial performance while initiating the CSR activities. Hence, the study or its findings will be much significant for the companies in the current scenario of the business world.

1.7 Structure of the dissertation

The study has followed a simple structure including five different chapters, which are shown in the following diagram:

1.8 Summary

This chapter has disclosed the primary aim of this study that is to derive and understand the relationship between CSR and the corporate financial performance of the companies. The chapter has mentioned that the study will focus on the business of Unilever in particular. At the same time, the chapter has also mentioned that the main problem on which the study has focused is the confusing relationship between CSR and financial performance of the companies in the present market situation.

Chapter 2: Literature Review

2.1 Introduction

One of the most important chapters in a research work is the literature review chapter. It is because during the literature review the existing literature on the similar study areas is evaluated critically in order to understand the background of the research in a better way. At the same time, it can also be stated that the literature review also helps in understanding the perspectives or views of the other previous researchers in the similar context. However, in this particular chapter the literature review for this particular study has been conducted in order to strengthen the research background in a better way.

2.2 Previous studies

Several researches have been conducted on the topic of CSR and its impacts on different areas of business. One of such studies has been conducted by Malte Kaufmann and Marieta Olaru. The title of their study was “The impact of corporate social responsibility on business performance – can it be measured, and if so, how?” In this study, the authors have indicated that the impact of CSR activities on the performance of the businesses can be measured by identifying the satisfaction level of the stakeholders, the revenue of the company and the market share of the business. The authors have also indicated that higher level of shareholders’ satisfaction and higher level of revenue and market share of the companies indicate that the CSR activities are done in a better way. It means the authors have indicated that CSR and revenue and market share of the companies have a relationship and that relationship is positive. In this context, it is important to be observed that the authors in the mentioned study have ignored the incidents or examples of the companies where companies have failed to gain the opportunities in the market after investing and focusing much on the CSR activities. Therefore, it can be stated that the findings in this study are partially true.

In another study, “Impacts of Positive and Negative Corporate Social Responsibility Activities on Company Performance in the Hospitality Industry” conducted by Kyung Ho Kang, Seoki Lee and Chang Huh, it has been determined that in the case of the hospitality industry the impact of CSR on the financial performance of the companies depends on the strategic decisions of the companies. In this study, the authors have indicated the fact that the impacts of CSR can be positive or negative and it completely depends on the efficiency of the companies in the context of determining the strategies for CSR. It means the study has been conducted from a neutral perspective. The authors have critically examined the impacts of CSR on the financial performances of the companies. However, in this context, it is important to be mentioned that the study has been performed by considering only the scenario of the Hospitality industry. It indicates that the situation or results may differ if the industry is changed. It means the findings of this study are also true partially. Therefore, more discussion and review of literature are needed to be performed in order to understand the background completely.

In another study, “Corporate Social Responsibility for Social Impact: Approach to Measure Social Impact using CSR Impact Index” by Ramendra Singh and Sharad Agarwal, the impacts of CSR activities have been evaluated from the social perspective. At the same time, it is also mentionable that the study has been done by considering the CSR activities and the society in India. The study has mentioned that due to the increased trend for the CSR activities in the market of India, the society has been positively influenced. In the study, the authors have mentioned that due to the CSR initiatives adopted by the companies the deprived people in the Indian society have been benefited because the companies are investing for their developments and improvements. It means the study has indicated the fact that the Indian society has been positively influenced by the CSR activities of the companies. However, in this context, it is important to be mentioned that the authors have not considered the impact of the CSR activities on the financial performances of the businesses. It means though the findings of the mentioned study are true the contribution of the study in this current study is very nominal. It means more investigation is required for this particular study.

2.3 Conceptual framework

2.4 Concept of Corporate Social Responsibilities

Corporate Social Responsibility refers to the responsibilities of the companies towards the broader society in the countries. Lin et al., (2019) has defined CSR as the pillar of success for a business. Hasan et al., (2018) mentioned that CSR has created a way through which companies can reach to the societies in a better way. At the same time, Miller et al., (2018) has indicated CSR as the way of communication between society and the organizations. If the concept of CSR is discussed in detail, it can be identified that the concept of CSR was originated from the needs of the companies to create a positive brand image in the market. However, according to Hou (2019), the CSR concept was originated in the business world from the needs of the society. In the other words, it can be stated that the concept of CSR was originated because for making social development financial contribution of the companies is necessary. It is not possible for any government to improve and develop the society properly through investment. Due to this private investment is very important. This necessity along with the necessity of the companies for creating a positive brand image has influenced the companies taking part in the CSR activities.

The concept of corporate social responsibility can also be defined as the responsibility of the companies towards one of their stakeholders. In the other words, it can be stated that society or communities are the stakeholders of the companies and due to that it is the duty of the companies to take care of the interests of the stakeholder that is community or society in a better way. Therefore, from this perspective, it can be stated that the CSR concept was originated from the needs of the companies. On the other hand, Maqbool and Zameer (2018) mentioned that CSR is the concept that has been generated due to the modernization of the companies. If the scenario of the business world in the earlier days is considered, it will be noted that there was no matter of CSR in the market; however, with the modernization in the business world the concept of CSR actually initiated in the business world.

Therefore, from the overall discussion regarding the concept of CSR, it can be stated that the concept was developed from the needs of the both parties – companies and the society. The companies need CSR activities for creating positive brand image and society needs CSR activities for its development. Therefore, it can be stated that CSR is helpful for both the parties.

2.5 Theories related to the Corporate Social Responsibilities

Though in the above discussion regarding the concept of CSR activities it has been identified that the concept of CSR has been originated from the needs of the companies and the society, it is important to be mentioned that there are several theories behind the concept of CSR in the business world. Here, some of the core theories of CSR are discussed below:

Stakeholder theory of CSR – The concept of CSR has been supported by the stakeholder theory. As per this particular theory a business is supposed to serve the needs of the stakeholders in a better way. In the other words, it can be stated that as per the stakeholder theory as the society is the part of the stakeholders’ group of the company, it is important for the company to meet the needs of the society. The theory also states that meeting the needs of the society is important for the organizations because stakeholders have direct impact on the business (Malik et al., 2018). As it is known to all if the stakeholders of the company are satisfied properly the business is affected positively by the stakeholders and vice versa. Therefore, from this theoretical perspective it can be stated that CSR activities are needed to be performed in order to create a positive impact of the society on the activities and growth of the business.

Business ethics theory of CSR – The concept of CSR has also been supported by the business ethics theory. As per this theory, the CSR activities are needed to be performed on three ethical grounds – i) the social expectations towards the companies have changed and at the same time, social responsiveness has also changed; ii) CSR is important for the social justice, fairness and for the human rights; iii) in order to be a better citizen in the society the corporations need to invest in the wellbeing of the society. Therefore, if these three ethical grounds are considered, it can be stated that the activities are required in order to maintain proper business ethics in the most efficient manner. Ruggiero and Cupertino (2018) stated that the business ethics theory has considered the CSR activities as the responsibility of the organizations on the ethical grounds. It means in order to operate the business in an ethical manner, it is important for the companies to perform the CSR activities.

The stakeholder value theory – This is another theoretical perspective that has described the importance or need for the CSR activities in the current scenario. The theory states that creating higher value to the stakeholders is one of the major responsibilities of the companies. As per this theory, as the society is the stakeholder of the companies, maximizing their values by operating business in the legal form is the responsibility of the companies (Lian et al., 2019). At the same time, the theory has also stated that CSR activities are the ways to fulfil the social obligations of the companies and CSR is the strategic instrument for the companies in this context. Therefore, considering the theoretical views of this particular theory, it can be stated that performing the corporate social responsibility activities is not the needs of the society; rather it is the mandatory requirement of the companies for operating business in the society.

2.6 Evaluation of the benefits and scopes of CSR from the perspectives of the companies

If the CSR activities done by different companies are considered, it can be noted that most of the companies have contributed for the development of the poor people, children and the overall ecological developments in the societies. In this context, if the CSR activities of the companies are discussed in detailed, it will be observed that the companies adopt the corporate social responsibility activities in order to gain some benefits in the market and enhance the scopes for the business in the market. The benefits that the companies may gain from the CSR activities of the business are stated below:

Good corporate image – This is the key benefit that the CSR activities help the companies gaining in the market. Investing in the social developments like, development of schools for the poor children, adoption of the new technologies for reducing carbon emission in the market help the companies developing a strong image in the minds of the people or prospective customers in the market. Singh and Dangwal (2018) stated that if the customers or the people identify a company is supportive to the social development they get motivated to purchase the materials or products and services of that company. This helps the companies developing strong brand image in the market. High brand image helps the companies securing proper income of the business. Hence, this can be considered as one of the benefits that influenced the businesses or companies for undertaking corporate social responsibility activities.

Long-term sustainability – The corporate social responsibility activities also help the organizations to survive in the market for a long-time. As mentioned in the previous point that CSR activities create a strong brand image in the market, it is important to be understood that with the help the CSR activities, the companies not only develop strong brand image, but they also ensure better sustainability with the help CSR. While investing in the social wellbeing the companies influence the people believing that their interests will be safeguarded by the companies and this on the other hand influences the people to support the development and growth of the businesses (Graafland and Smid, 2019). On the other hand, if a company contributes much to the social developments, it also gets supports from the government of the country. Due to this long-term survival of the business becomes easier for the company.

Better communication with the society – Kim et al., (2019) mentioned that CSR is the best way through which companies can communicate with the society. The people in the societies get to know about the activities and existence of the company. It means though CSR activities are not promotional activities for the companies, but these activities help in promoting the brand image of the company in the market place. While investing in the corporate social responsibility activities, the companies get to know about the problems in the society or the issues that the people are facing in the society. Based on those findings the companies can contribute to the social developments (Alshehhi et al., 2018). On the other hand, when a company invests in the social developments people get to know about the brand image of the company. It means better communication network is created between the two parties. This helps the companies to survive in the society in a better way.

Gaining financial stability – This is also a major benefit that the companies gain through the investment in corporate social responsibilities. While investing in the social developments and wellbeing, the company ensures the revenue generation from the external market because it creates a positive brand image in the market (Singh and Dangwal, 2018). This on the other hand enhances the revenue as well as profitability of the company. Hence, the financial performance of the company becomes stronger in the market.

Therefore, from the above discussion, it can be understood that corporate social responsibilities are helpful for the business from different perspectives. In this context, Miller et al., (2018) mentioned that the corporate social responsibility activities performed by the companies have increased the business scopes for the companies. In support of this, Maqbool and Zameer (2018) added that when a company performs CSR activities it develops a positive brand image in the market and this brand image enhances the business scope for the company in the external world of business. However, Aybars et al., (2019) argued that CSR activities cannot ensure that the business scopes for the companies will be increased in the market. In support of this, Graafland and Smid (2019) mentioned that the scope for the business is enhanced when the company meets the needs of all stakeholders properly.

For example, investing a huge amount of money in the social development, the net income of the company may reduce. If the net income of the company is reduced, the shareholders especially the equity shareholders of the company will earn less, which will hamper their interests. Hence, the equity shareholders will invest less amount of money, which will ultimately reduce the scope for business of the company. On the other hand, Alshehhi et al., (2018) believed that when a company invests in the social wellbeing, it creates awareness about its products and services in the market, which most of the times contributes positively towards the development and growth of the company and in the cases where the companies have failed there must be some other reasons behind the failure.

Therefore, from the above discussion, it can be understood that CSR activities of the companies contributes to the creation of better business scopes for them. Hence, the companies must take care of the CSR activities. However, at the same time, the companies must also take care of the interests of the other stakeholders also in this context.

2.7 Evaluation of the limitations of CSR activities from the perspectives of the companies

In the above discussions, it has been identified that CSR activities are good for the future of the business organizations. However, in this context, it is important to be mentioned that there are some limitations of the CSR activities, which can affect the business in a negative sense. For example, corporate social responsibility activities require earning enough money, so that they can invest the required amount of funds in the development and wellbeing of the society. However, if a company fails to earn enough amount of money in any financial year or in the consecutive three or four financial years, the company cannot invest in the CSR activities. Therefore, the situation of the company will be poorer in that time because without investing in the CSR activities the company cannot develop positive brand image in the market. On the contrary, Ruggiero and Cupertino (2018) mentioned that the brand image of the companies depend on the quality of products and services that they are selling in the market. Due to this, the companies can create positive brand image through selling standard quality products and services in the market.

Another limitation of the CSR activities is that the CSR activities or the effectiveness of the CSR activities depends on the strategy that the companies adopt for performing CSR. Therefore, if the companies make any mistake in developing the CSR strategies, the company will be failure to safeguard its position in the market. Therefore, from this perspective, it can be stated that the effectiveness of the CSR activities is limited to the effectiveness and efficiency level of the managers of the companies. In this context, Kumar et al., (2018) stated about another limitation of the CSR activities of the companies and that is the limitation of the situation in the market in which the company is operating its business. If the situation in the external market is not stable the CSR activities may be ineffective or the companies may not get the scope for performing the CSR activities.

Therefore, from the above discussion, it can be stated that the CSR activities have several limitations and so while developing the CSR strategies the higher management in the companies needs to take care of several factors.

2.8 Evaluating the current trend in the context of the CSR activities of the companies

CSR is an important part of modern business world. Companies adopt the CSR strategies and conduct the CSR activities for several reasons. If the focus is made on the CSR activities trend in the current scenario, it can be noticed that different companies have adopted different CSR strategies in order to satisfy the communities or social needs in a better way. For example, Nestle has adopted the strategy of Rural Development for performing CSR in India (Nestle.in, 2019). In India the condition of the rural places and the people live there is very poor. Therefore, the company has contributed to the social need for development in the rural India. At the same time, the company has also invested in the education system of the country because the education system in India is still not much updated; hence, in this context, the company has contributed to the social need for education.

On the other hand, if the CSR activities of P&G are considered, it will be noted that the company has adopted and implemented the corporate social responsibility strategies in a different way. The company has adopted the CSR strategies in different ways for different stakeholders. For example, the company has performed CSR for the employees by providing them right amount of compensation and providing them several types of rewards so that they can live a better life in the society. It means the company has concentrated on the social status of the employees and considered this as one of its social responsibilities. On the other hand, the company has concentrated on the quality of the products to fulfil its social responsibility towards the customers and greater community (Panmore Institute, 2019). At the same time, the company has also performed its responsibilities towards the community by reducing the negative environmental impact of the business on the ecological environments in different countries. The company has disclosed all the material information about its financial and non-financial performances in the annual report to fulfil its responsibilities towards the investors of the company. Therefore, considering different strategies adopted by P&G, it can be stated that the company is much conscious about its social responsibilities in the current market environment.

If the focus is made on the CSR activities of Britannia, it can be noted that the company has also focused on its CSR strategies while operating business in the markets of different countries. In the current scenario, the company has adopted the initiate of community development by undertaking the health and family welfare programmes. Under these welfare programmes, the company has concentrated on cleaning the drinking water, arranging free education for the poor children and initiating free health check-up facilities for the poor people. Considering the initiatives under the health and family welfare programmes, it can be stated that the higher management of Britannia is much focused on its responsibilities towards the wider society in different countries (Britannia.co.in, 2019). In this context, it can be stated that the higher management of Britannia has integrated the CSR programmes with the business model of the company. This has helped the company initiating the CSR activities in a better way.

In the context of the CSR activities done by Coca Cola, it can be stated that the company has adopted the CSR strategies in a different way. The higher management of the company has emphasized on the social issues while initiating or developing the CSR strategies of the business. For example, the higher management team of the company has focused on the issue of gender inequality in the society and considering this issue the company has helped 1.75 million women in different countries in different ways so that they get equal opportunity in the society. It means the company has contributed in the development of women in the societies of different countries (En.coca-colaarabia.com, 2019). At the same time, the company has also concentrated on the problem of water pollution in the societies in different countries like, India and China. In order to reduce water pollution, the company has arranged several awareness campaigns for making the people aware of the problem that they are developing by using water in unhygienic manner. The company has undertaken community water partnership strategy to influence the communities for making safe use of water in the society for avoiding different diseases.

Therefore, if the above information about the CSR activities undertaken by different companies is considered, it can be noted that with the help of CSR activities the companies have tried to help the society in improving its current situation. In this context, it is also noticeable that all of these companies which have focused on the CSR activities are large in size. While discussing on the CSR activities or CSR initiatives of the companies, Wang et al., (2018) stated that CSR activities are mainly initiated by the large multinational firms because they have the scope or capability of investing a large amount of money in the social developments. At the same time, Gangi et al., (2019) mentioned that initiating CSR is difficult for the small and medium sized organizations, which earn a limited amount of money in every financial year. On the contrary, Phillips et al., (2019) stated there are small local firms which also contribute to the social developments but at a small level. For example, there are several local shops in the societies of different countries which provide donations to the local NGOs. It means these small firms also contribute to the social developments through the activities done by the NGOs.

Therefore, if the discussion is made on the current trend of the CSR activities in the business world, it can be stated that there is a positive trend of investing in the CSR activities by the companies at different levels. At the same time, it is also observed that there is no specific rule for performing the CSR activities. The companies have undertaken the CSR activities as per their capabilities. Along with that the discussion has also proved the fact that with the help of the CSR activities the companies have created strong image in the market, which must have helped them increasing the amount of revenue of the business.

2.9 Evaluation of the factors influence CSR activities of the companies

In each point of discussion in the above, it has been identified that the companies in the modern business world have concentrated on the CSR activities for creating a strong and positive brand image in the market. However, in this context, it is important to be mentioned that apart from developing positive brand image, there are several other factors which have also influenced the companies towards the development of better CSR strategies. Some of the factors are discussed below:

According to Miller et al., (2018), the companies in the current scenario are concentrating on the adopting of CSR activities in order to meet the legal requirements for the business. If the focus is made on the companies which are operating business in the United Kingdom, it can be noted that most of them have focused on developing the CSR strategies related to the reduction of negative impact of business on the ecological environment of the country. If this particular type of CSR strategy of the companies in UK is critically analyzed, it can be noted that this strategy became very popular and common CSR strategy after the introduction of Climate Change Act 2008. This act specifically influenced the companies in taking care of the ecological environment. On the other hand, Kim et al., (2018) stated that companies have adopted the CSR strategies in order to meet the requirements of the stakeholders in a better way. Satisfying the needs of the stakeholders is the most important activity that every organization needs to perform. In the context of the modern business world, it can be noted that there are several organizations which have disclosed their performance reports properly as a part of the CSR activities towards the investors of the business. This type of CSR activities clearly states that the CSR is influenced by the need for meeting stakeholders’ interests on the company.

The need for sustainability is also one of the major factors that have influenced the organizations for developing and practicing CSR properly. In support of this view, Maqbool and Zameer (2018) mentioned that CSR is such an activity that creates a strong bonding between the people in the society and the organization; as long as the bonding will continue the company will be capable of maintaining its position in the market. Hasan et al., (2018) stated that communities’ support is a vital factor for the development and sustainability of the company. Therefore, if this view is considered, it can be stated that the CSR activities are performed by the organizations in order to ensure their long-term sustainability in the market. However, Ruggiero and Cupertino (2018) believed that the companies adopt CSR activities or initiatives in order to compete in the market in a better way. In the other words, it can be stated that CSR initiatives by the companies reduce the level of competition for them. It is because when a company undertakes the CSR initiates it builds a strong relationship with the people in the society, which on the other hand helps the company to remain stable in the market. Hence, the competition level for the company reduces.

On the other hand, Aybars et al., (2019) mentioned that CSR activities of the companies are influenced by the companies’ need for brand differentiation. If a company initiates something very important for the society, the brand name of the company becomes famous and people consider that brand name as a different one than the others. This gives the company the opportunity of creating a strong position in the minds of the prospective customers in the society. Hence, the business achieves the benefits of separate brand recognition in the market. In this context, Malik and Kanwal (2018) noted that the companies in the current scenario adopt the CSR strategies in order to ensure organizational growth and better performance of the business in financial terms. In detail it can be stated that when a company undertakes the CSR activities it motivates or positively influences its sales or revenue. This helps to enhance the financial performance standard of the business and ensures systematic growth of the company in the competitive world of business.

Therefore, considering the overall analysis of the factors influencing the CSR activities of the business, it can be stated that there are several factors behind the CSR activities or initiatives of the companies. This also indicates that with the help of CSR activities the companies are gaining several benefits, which are ensuring their sustainability in the market for a long time span.

2.10 Gap analysis

In the above discussions, evaluations and analysis, it have been identified that there are several researchers who have investigated on similar kinds of topic of research. However, if the findings in the previous studies are considered, it can be noted that the findings in the previous researches are confusing. In some cases the findings are partially true. At the same time, there is no generalized result identified in the previous researches. However, this particular study will fulfil this particular gap in the previous researches. This study will identify the generalized result that will indicate the relationship between corporate social responsibility activities and the corporate financial performances of the organizations in the international market.

2.11 Summary

This particular chapter of the research has identified the fact that there are several factors, which generally influence the companies for initiating CSR activities. At the same time, the study has also identified that different companies in the modern business world have adopted or initiated the CSR activities in different ways. However, there are some limitations of CSR initiatives that have been indicated by the literature review of the study

Chapter 3: Research Methodology

3.1 Introduction

Methodological selection is a very vital part in the entire research work. While selecting the research methodology, several factors need to be considered. For example, the aim of the research, the available time for the research and the possible costs of the research. Considering all these valuable matters the methodology for the study needs to be selected in a systematic manner. While selecting the methodology it is important to be noted that the methodology must be simple and easily understandable so that no problem is raised while conducting the investigation. The methodologies for this particular study have been stated in this particular chapter of the study.

3.2 Methodological outline

Research philosophy

Positivism

Research approach

Deductive

Research design

Explanatory

Research data

Secondary

Data analysis technique

Qualitative

Table 1: Methodological Outline

(Source: Created by author)

3.3 Research philosophy and justification

Research philosophy is a very important element that contributes much at the time of selecting the research methodology. Ledford and Gast (2018) stated that research philosophy is the first element that needs to be selected while setting up the methodology for the study. At the same time, Kumar (2019) mentioned that while selecting the research philosophy, the researcher needs to consider all the available options for the research philosophy. There are mainly three options in the context of research philosophy – positivism philosophy, realism philosophy and interpretivism philosophy.

(Source: Created by author)

Positivism philosophy is the widely used research philosophy that focuses on the logical analysis of the research data. This particular philosophical view allows the researchers to consider quantitative as well as qualitative data for performing the investigation for the study. This particular philosophy focuses on scientific analysis of research data. On the other hand, if the focus is made on the realism philosophy, it can be stated that this philosophy focuses on the real objects in the world while investigating about something. It means the philosophy concentrates on the matters which have real existence. On the other hand, there is also interpretivism philosophy available for conducting a particular research work. This particular philosophical view indicates interpretation of some matters or area of study. This particular philosophy is very critical to understand and implement in the research work

Though all the philosophies available for a research work are efficient enough for performing an investigation, for this study the positivism philosophy has been used. The positivism philosophy has been used because the available time for this study was very limited and within that limited time, it was not possible to interpret the research matters critically or identifying the real objects that would have derived the results. Due to this the positivism philosophy has been followed. In this context, it is important to be mentioned that the positivism philosophy helped in conducting the analysis in a logical manner and with the help of scientific analytical methods. The study has also used the qualitative data which could be very investigated with the help of positivism philosophy. Hence, the selection of positivism philosophy was appropriate for this study.

3.4 Research approach and Justification

Research approach also plays an important role in making a study successful. After the selection of the research philosophy, the approach for the research is required to be selected. However, in this context, again the researcher needs to consider the available options along with the needs and targets of the research. In the context of the research approach, there are two options available for a research work – deductive approach and inductive approach.

(Source: Created by author)

Deductive approach is easy to be followed because under the deductive approach the researcher first needs to collect a wide range of data and then needs to concise the investigation and study by eliminating the less useful data and information. This approach is very effective in completing the entire investigation within limited time span (Litosseliti, 2018). On the other hand, inductive approach is just opposite to the deductive approach. Under the inductive approach the researcher continues data collection while the investigation is going on. The researcher needs to include data and information as the research progresses further. This approach of research is much critical and time consuming.

For this research investigation, the deductive approach has been followed because under the deductive approach the investigation was easier. At the same time, under the deductive approach it was possible to complete the investigation within the available limited time span. Along with that maintaining the simplicity in the research investigation and data interpretation was also important for this study (Lê et al., 2019). Considering these needs of the research, it was decided to select and follow the deductive approach for the study. Moreover, considering the positive sides of the deductive approach, it can be stated that the selection of deductive approach was beneficial for this study.

3.5 Research design and justification

As the selection of the research approach is completed, the next important methodological selection is the selection of research design. Just like the selection of research philosophy and research approach, the selection of research design also required consideration of the aim and needs of the research. At the same time, selection of research design also needed evaluation of different alternatives available for the research. There are three alternative research designs – descriptive design, explanatory design and exploratory design.

(Source: Created by author)

Under the method of descriptive design the data and information which is collected for the study is described with the help of proper theoretical and practical support (Jekel et al., 2019). This particular design of research is very simple and based on the evidences. On the other hand, there is explanatory design for the research. Under this particular design of research the matters are explained with the help of proper evidences. Most of the times, the explanatory researches are done by using the secondary qualitative data. It is because with the help of secondary qualitative data, it becomes easier to explain the matters easily. On the other hand, there is also the exploratory design of research, under which the new matters are explored with the help of new data and information collected from the external world.

The above mentioned three research designs are effective in different ways. It means different research designs are suitable for different types of research. However, for this particular study the explanatory research design has been used. The explanatory design has been used because the study has focused on such an area of discussion which has been considered by many other researchers in the previous days. Therefore, the need for the research was to identify and explain the actual relationship between the two variables of the research – corporate social responsibilities and corporate financial performance. Moreover, the explanatory research design requires less time and cost, which also helped the researcher avoiding the time and cost constraints at the time of carrying on the research investigation. Hence, it can be stated that the selection of explanatory research design was perfect for the study.

3.6 Data collection method

Data collection is the most difficult part during the study or investigation. Due to this selection of the perfect method for collecting research data is important for making the study successful. However, in this context, Jekel et al., (2019) stated that while collecting the research data, the researcher must understand which type of data will be suitable for the study. There are two types of data available in the market – primary data and secondary data. Primary data is the first time data, which is freshly collected from the market for conducting the investigation for a specific study. On the other hand, secondary data is the existing data, which is available in the external world. The methods for data collection for these two types of data are different. For example, for collecting the primary data, the methods or instruments like, survey, interview and focus group studies can be conducted. On the other hand, for collecting the secondary data, the researcher requires studying different books, journals and website information, which helps to understand the scenario in a better way. However, the type of data and the method for data collection need to be selected based on the research’s needs and aim. Therefore, before selecting the data collection method it is important to select the actual data that will be required for the study.

For this study the secondary data has been used because the information related to the financial performance of the businesses is available in the secondary sources. The study used the published annual report of the company. At the same time, the study has also used the other secondary sources of data like, the published articles, journals and books. The study has used the secondary data because with the help of the secondary data, it was possible to meet the actual needs of the research in a better way. Therefore, it can be stated that the decision for using the secondary data for the investigation of the study was useful and suitable for the research.

3.7 Data analysis technique

After collection of the needful data for the study, it is important to analyze the data properly in order to meet the aim and objectives of the study at the expected level. However, for analyzing the research data efficiently, the most important activity that the researcher needs to perform is selection of the right method or technique for analyzing the research data. The selection of data analysis technique must be done by considering the type of data and the aim and objectives of the study. There are two different types of data analysis techniques available for the study – quantitative data analysis technique and qualitative data analysis technique. Under the technique of quantitative data analysis, the research data and information are evaluated and analyzed using the mathematical and scientific techniques. The use of quantitative data analysis technique makes the data analysis activity easier for the researcher and at the same time, the accurateness of the research investigation can be proved with the help of this particular data analysis technique. On the other hand, there is also the qualitative technique of data analysis. Under the qualitative technique the research data is analyzed using the theoretical information available in the existing literature. This particular method influences in-depth analysis of the research data. This makes the investigation clearly understandable to the readers.

However, in the context of this particular study, it can be stated that the qualitative technique of data analysis has been followed for the investigation. The main reason was the nature of the data that was collected for the study. Most of the data for the study was secondary and theoretical data, which was easily interpretable with the help of qualitative technique of data analysis. At the same time, it can also be stated that with the help of qualitative technique of data analysis, in-depth analysis of the research data was possible, which helped in generalizing the research findings.

3.8 Ethical considerations

Ethics is very important for every research investigation because ethics makes the investigation more valuable and authentic to the readers. However, in this context, it is important to be noted that at the time of performing the investigation, it is very possible to raise any ethical issues. For example, ethical issue may be generated in terms of the validity of data and data analysis technique. Therefore, considering all the possibilities of ethical issues, this study has undertaken some steps which has helped in maintaining the research ethics properly. One of the important steps undertaken during this study was the use of reliable and valid sources for collecting the secondary data for the research investigation. The researcher has used only the government authorised websites and the journals and articles which have been published by authenticate sources. At the same time, valid data analysis technique has been used for maintaining the validity of the research. Moreover, for allowing the study published in the future, permission has been taken from the appropriate authority for the dissertation.

3.9 Research limitations

At the time of conducting any research different types of situations are faced; some situations are positive and some situations are negative. These negative situations create barriers or limitations for the research. In the context of this particular research, it can be stated that several limitations were there during the investigation. As the study was based on the secondary data, it was very difficult to identify the right data for making the investigation fruitful. Several websites, journals, articles and books were reviewed for deriving the accurate data and information for the investigation. This took much time during the process of data collection. In this context, it is important to be mentioned that understanding the validity or biasness of the data and information was also difficult during the process of data collection. On the other hand, there was a major limitation in this study and that was the limitation of using a wide range of data and information. As the available time for this study was very short, it was not possible to focus on a wider range of data and information, which could have made the study more useful. However, it is mentionable that though there were several limitations in this study, complete focus was made to make the study relevant and reliable to the reader.

3.10 Time tables

The time table for this study is provided below:

Activities

Week 1

Week 2

Week 3

Week 4

Week 5

Week 6

Week 7

Week 8

Selection of topic

Literature review for the study

Developing the research aim, objectives and questions

Methodology selection for the study

Data collection

Data analysis

Analysis of data

Conclusion and recommendations

Final draft preparation

Table 2: Gantt chart

(Source: Created by author)

3.11 Summary

Considering the findings in this particular chapter, it can be stated that the study has been done based on positivism philosophy, deductive approach and explanatory research design. The chapter has indicated the fact that the study has used secondary data and this secondary data has been analysed using the qualitative method of data analysis. Proper research ethics has been maintained while conducting the investigation

Chapter 4: Data analysis and interpretation

4.1 Introduction

A research is incomplete without data analysis and interpretation of the results. It means the chapter of data analysis ad interpretation is very important for a study. During the data analysis and interpretation a particular method is used for making the data analysis and interpretation valid and reliable. In this study, the data analysis and interpretation have been done using the qualitative method of data analysis. The qualitative method has been used during the data analysis because this method helps in evaluating and analyzing the theoretical data of the research. At the same time, it also helps in conducting in-depth study of research data.

In this chapter, the secondary data for this study has been analysed using the qualitative technique. During the data analysis the statistical data has been used for making the study more reliable and valid and for supporting the arguments. The data analysis and interpretation of this study are stated below:

4.2 Secondary data analysis

4.2.1 Evaluating the corporate social responsibility activities performed by Unilever in last few years

In the present international market Unilever is one of the most famous brands in the consumer goods industry. The company is operating in several countries with almost similar level of success in the market. The sustainability report of the company indicates that the higher management of Unilever is much conscious about the corporate social responsibilities of the company. The higher management of the company believes that corporate social responsibility activities are important for Unilever for developing perfect corporate behaviour among the employees (Panmore Institute, 2019). At the same time, the higher management of the company also believes that meeting the corporate social responsibility is one of the corporate purposes of the company. The CSR or sustainability report of the company indicates that CSR is the perfect way through which the company gets the chance to interact with the wider society. The company understands the fact that managing a better everyday relationship with the stakeholders like, employees, investors, society and others is important for the long-term survival of the company.

In this context, it is important to be mentioned that like, P&G, Unilever has also done different CSR activities for different stakeholders in different ways. In the literature review of the study, it has been identified that P&G has performed the corporate social responsibility activities for employees, investors and customers in different ways. In the context of Unilever, it can be noted that in the year 2017, the higher management of Unilever has developed new quality assurance policies in order to perform CSR towards the customers (Panmore Institute, 2019). The higher management of the company has mentioned that the company realizes as much as it can satisfy the needs of the customers it can enhance the number of repeat sales. It means the higher management of the company has clearly indicated that with the help of the CSR activities for the customers the company has tried to enhance the amount of revenue. It means the CSR activities have influenced the financial performance of the organization.

Apart from the customers, the higher management of Unilever has also developed strategies for performing CSR towards the employees of the organization. According to the higher management of the company performing CSR towards the employees is important because the performance of the organization is highly influenced by the employees. Due to this, satisfying the employees is very important for the company. As the CSR strategies, the company has developed holistic career development plan for its employees and at the same time, it has also developed the policy of providing competitive compensation to the employees, so that their needs can be fulfilled in a better way (Panmore Institute, 2019). Along with these two strategies, the company has focused on the safety and security of the employees so that they can work properly within the organization. Therefore, considering the steps adopted by Unilever for fulfilling its responsibilities towards its employees it can be stated that the higher management of the company has the understanding that better CSR can improve the performance of the employees as well as organization in a better way.

The company has also developed CSR policies for the investors. The higher management of the company has realised the fact that the investors get satisfied if the revenue and profitability of the company are increased properly. Due to this the company has focused on the business expansion strategy. The intensive growth strategy of Unilever proves that the company is much careful about its investors (Unilever.com, 2019). For fulfilling the interests of the investors in a better way the company has also emphasized on the innovation strategies. The company has introduced innovative and high quality products, so that the number of customers can be increased, which helped in increasing not only the revenue but also the profitability of the business. The higher management of the company has understood that the CSR to the investors can be better fulfilled by fulfilling their monetary requirements. Therefore, considering the CSR activities performed by Unilever in the context of satisfying the needs of the investors, it can be stated that the company has successfully and efficiently met the CSR requirements for the investors.

The company has adopted the Partner to Win strategy in order to meet the CSR requirements towards the suppliers of the business. With the help of this particular strategy or programme the company has ensured mutual benefits while dealing with the suppliers. With the help of this particular strategy or programme, the company has provided equal opportunity to the suppliers to grow along with the company (Panmore Institute, 2019). It means the company has thought about the business development of the suppliers also. This particular strategy has helped the company making the suppliers loyal to the business. In one hand, this strategy has helped in enhancing the benefit to the suppliers; on the other hand, this strategy has helped the company enhancing the benefits to the financial activities of the business. Hence, it can be stated that the company is successful in performing CSR perfectly towards the suppliers of the business.

The company has also performed its responsibilities towards the greater community. The company has adopted the programme of Foundation Funds Community. This particular programme helped the company contributing towards personal development, sanitation and nutrition of the people within the communities. At the same time, the company has also concentrated on enhancing the level of community involvement in different activities (Unilever.com, 2019). This has helped the company enhancing its bonding with the local communities in different countries. The higher management of Unilever has developed further strategies for the communities in the developing nations like, India, China and Bangladesh. The company has contributed towards child education, health care of the poor people and many others. These CSR strategies of the company are clearly indicating that the company is much responsible towards the development of the society.

Therefore, if the CSR strategies of the company are critically evaluated, it can be stated that the CSR strategies of the company are quite interesting, but these strategies are not innovative. Alshehhi et al., (2018) stated that in the current scenario people judge the companies based on their innovative nature. People consider innovation in the context of CSR also. However, if the CSR activities of Unilever are considered, it can be noted that the company has not developed any innovative CSR activities in the last few years; rather it can be stated that the CSR activities of the company are very common.

However, Hou (2019) mentioned that the CSR is for the development of the society and if a company can contribute towards the development of the society, it can be considered as a successful company in terms of CSR. Considering this view, it can be stated that Unilever is also a successful company from the perspective of CSR. On the other hand, if the growth rate of the company is considered, it can be observed in last one decade the company has grown much, which indicates people prefer to enjoy the products and services of Unilever. If the people would not have satisfied with the CSR activities of the company, this high rate of growth would not be possible for the company. Hence, it can be stated that the CSR strategies of the company are quite effective in the present context of the business.

4.2.2 Evaluating how far the financial performance of Unilever has been affected by the corporate social responsibility activities of the business

The literature review of this study has indicated that corporate social responsibilities are performed or fulfilled by the companies in order to improve their brand image and financial stability in the market. In order to verify the viability of this view, here, the view is tested by considering the particular case scenario of Unilever. In order to understand the impact of CSR on the financial performance of the company, it is important to identify the information – the revenue of the company and the CSR investments made by the company in last few years. The following table is showing the revenue and the CSR investment of Unilever in last few years starting from 2012:

Years

CSR investment in € million

Revenue in € billion

2017

0.82

53.715

2016

0.61

52.713

2015

0.71

53.272

2014

0.6

48.436

2013

0.63

49.797

2012

0.6

51.324

Table 3: CSR investment and financial performance of Unilever

(Source: Unilever.com, 2019)

The above table is showing the company has not undertaken any particular strategy for making investment in the CSR activities. In some years it has invested more on CSR and in some years it has invested less amount of money in CSR. However, if the revenue of the company is companies, it has been stated that in the year in which the company has increased the investment amount in the CSR activities, the revenue of the company has increased. For example, from 2014 to 2015 the CSR investment of the company has increased and along with that the revenue of the company has also increased (Panmore Institute, 2019). However, it is also observable that from 2012 to 2013 the CSR investment of the company has increased, but at the same time, the revenue of the company has decreased. Therefore, in this context, it is important to identify the relationship between these two variables with the help of regression analysis. The regression analysis is shown below:

Regression analysis:

SUMMARY OUTPUT

Regression Statistics

Multiple R

0.68282

R Square

0.46624

Adjusted R Square

0.3328

Standard Error

0.07185

Observations

6

ANOVA

df

SS

MS

F

Significance F

Regression

1

0.01804

0.01804

3.49401

0.13495

Residual

4

0.02065

0.00516

Total

5

0.03868

Coefficients

Standard Error

t Stat

P-value

Lower 95%

Upper 95%

Lower 95.0%

Upper 95.0%

Intercept

-0.82

0.7932

-1.0338

0.35964

-3.0223

1.38229

-3.02228274

1.3822883

X Variable 1

0.02875

0.01538

1.86923

0.13495

-0.014

0.07144

-0.0139518

0.0714443

Considering the above regression analysis it can be stated that as the standard error of the two data sets is indicating 0.07185, it means the level of accuracy is more or less at the standard level. On the other hand, if the value of the co-efficient is considered, it can be stated that the relationship between the two variables of the research is not that strong. The P-values are also indicating that the relationship between the corporate social responsibility and the financial performance of the company is not static. It means there is no guarantee that the revenue or financial performance of the company will be improved if the company enhances the amount of its investment in the corporate social responsibility activities.

In this context, it is important to be mentioned that though the statistical analysis of the secondary data is indicating a weak relationship between the two variables of the research, it cannot be ignored that the performance of the company is influenced by the corporate social responsibility investment made by the firm. The discussion in the previous section has indicated that the higher management of the company has accepted that CSR investment is important for the performance development and revenue enhancement of the company. It means there must be some relationship between the two variables – corporate social responsibility and the financial performance of the company. Considering the result of the regression analysis, it can be stated that the analysis is indicating there is weak relationship between the corporate social responsibility activities and the financial performance of the company. It means there is a relationship between the two.

In this context, it can be stated that it is the responsibility of the higher management and the managers at the lower level of the company to take care of the relationship between the two variables. It is the duty of the higher management to develop some strategies, which can be used for making the corporate social responsibility activities more effective for the performance development of the company. On the other hand, it is also the responsibility of the lower level manager of the company to execute the strategies in a perfect manner so that the effectiveness of the strategies can be obtained properly. Considering the performance of Unilever in the years in which the revenue of the company was low though the investment in the CSR activities was high, it can be stated that the management failed to utilise the CSR strategies in the effective sense. This can be one of the reasons behind the weak relationship between the two variables.

4.2.3 Evaluating whether Unilever has been positively or negatively affected by the corporate social responsibility activities

The analysis in the previous section has indicated that the relationship between corporate social responsibilities and the corporate financial performance of Unilever is much weak. It can also be stated that the above analysis has indicated there is no static relationship between corporate social responsibilities and the corporate financial performance of Unilever. However, the discussion has not indicated whether the relationship between the two variables of this research is positive or negative. In the other words, it can be stated that the analysis has not shown whether the corporate financial performance of the company has been affected positively or negatively by the corporate social responsibilities of the company. In order to understand how the corporate social performance of the company has been affected by the corporate social responsibilities of the company, it is important to gather evidences that show the performance or the brand image of Unilever has been positively affected by the corporate social responsibility activities.

The brand name of Unilever is much popular in the international market and there is no doubt on that. However, in this context, the failure of Unilever in the context of fulfilling corporate social responsibilities under the leadership of Polman can be mentioned. In this context, Ruggiero and Cupertino (2018) stated that in several times Unilever has tried to prove itself as a responsible corporate in the international market, but its artificial “feel good” strategies have affected the financial performance of the company and the brand image of the company negatively. In support of this Hasan et al., (2018) stated that under the leadership of Polman, Unilever took the policy of “sustainable evangelist”, however, in the practical sense the company failed to create any contribution to make the world sustainable. This affected the trust of the stakeholders on the activities of the company and at the same time, it also affected the financial performance of the company.

On the other hand, statistical reports of Unilever show that the Sustainable Living brands launched by Unilever have been grown by 50% in last few years. These sustainable living brands were introduced by the company as a part of the CSR strategies of Unilever towards the community and environmental development. Hence, growth in these brands indicates that the CSR of the company has affected the performance of Unilever positively. At the same time, it is also noticeable that the higher management of the company has claimed that the demand for the sustainable living brands of Unilever is increasing in the markets of different countries. At the same time, the higher management of the company has also claimed that Unilever understands the important of maintaining communities’ health at a standard level and due to that the company has invested much in the context of corporate social responsibilities. Moreover, the higher management of the company has also claimed that the number of customers of the company has also grown through the sustainability strategies. Therefore, the claims of the higher management of Unilever are indicating that the company has been benefited by the corporate social responsibility activities of the business.

According to Singh and Dangwal (2018), in order to perform corporate social responsibilities, a company needs to be ethical enough while dealing with its stakeholders. However, in the context of Unilever, it can be observed that the company has faced controversies several times regarding sexual harassments and others. These controversies have proved that the company is not perfect in ethical terms. This has also created a fake image of the company and due to that the corporate social responsibility activities of the company failed to generate positive result to the business.

Therefore, considering the overall scenario of Unilever, it can be stated that sometimes the company has been benefited by the corporate social responsibility activities and sometimes it has not been positively affected by the same. However, in this context, it is also important to be observed that at the points where Unilever has failed to create positive impact on the business through its corporate social responsibility activities the higher management of the company was responsible. The CSR activities of the company failed because the higher management of the company failed to create a positive and ethical image of the business in the market place. The artificial “feel good” strategies of the higher management created a fake image of the business in the market and due to that the trust of the people has been negatively affected. Due to this the entire revenue level of the company has declined. However, it does not indicate the corporate social responsibility activities are ineffective for the business growth and financial performance of the company. The analysis has proved that whether the corporate social responsibility activities of the company will positively or negatively affect the business not only depends on the corporate social responsibility strategies, but it also depends on the other factors like quality of the higher management team of the company.

Hence, it can be stated that deriving the positive results from the corporate social responsibility activities is the responsibility of the higher management of Unilever. They need to develop better strategies for that.

4.3 Discussion

During the data analysis it has been observed that the higher management of Unilever is much conscious about the corporate social responsibilities of the business. The higher management of the company understands the importance of corporate social responsibilities for the sustainability of the business. However, considering the findings of the data analysis it can be stated that the higher management of Unilever needs to be more careful for gaining the actual benefits of corporate social responsibility activities. During the analysis of the secondary data it has been observed that the financial performance and the investment made by Unilever in the corporate social responsibility activities indicate a very weak relationship. It can be referred neither as positive relationship nor as negative relationship. This is very unfortunate for the company that it failed to gain the benefits of corporate social responsibility activities.

It has been mentioned by many scholars that corporate social responsibility activities are performed by the organizations in order to improve their brand image in the market. However, in the context of the business of Unilever, it can be stated that the company could not improve its brand image using the CSR strategies. The company failed to avoid the controversies through CSR and at the same time, the tag of “not ethical” is also associated with the brand name of Unilever. Being an international company it was not very difficult for the company to build a strong relationship between its corporate social responsibility strategies and the corporate financial performance of the business. Though the higher level management if the company claims that the financial performance of the company has improved, the financial results in the annual report do not indicate the same. The financial reports of the company indicate the business should improve its performance in the context of revenue generation. The financial reports clearly indicate that the company failed to maintain a static growth in the revenue earning since 2012 to 2017. If the analysis is made from the perspective of corporate social responsibilities, it must be stated that the financial performance of the company has not been influenced much by the corporate social responsibility activities.

However, in the context of the corporate social responsibility activities of Unilever, it must be stated that the company has adopted different strategies for fulfilling its corporate social responsibilities in a better way. Moreover, the company has adopted stakeholder specific strategies. For example, for the customers it has adopted different CSR strategies and for suppliers it has adopted different strategies for CSR. However, it is also true there is no innovative strategy for CSR that has been adopted by the company. In the current scenario, for grabbing stakeholders’ attention especially the attention of the customers and the people in the communities companies need to prove themselves better than others from every aspect and CSR is not anything different. It means Unilever is lacking behind in this context. there are some strategies adopted by Unilever, which cannot be considered as different from the other corporate and business strategies.

For example, the company has adopted the strategy of quality assurance to meet the corporate responsibilities towards the customers. However, if the quality assurance strategy is considered, it can be stated that the strategy is a very common business strategy and people cannot separate this strategy from the other business strategies. Therefore, customers cannot identify what the company actually doing as the CSR activities towards the customers. This is one of the big factors which might have made the CSR ineffective in the context of performance improvement of the company. Therefore, this is indicating the fact that the higher authority of Unilever needs to be more conscious while developing the CSR strategies for the business. In the literature review, it has been identified that while preparing the CSR strategies the companies need to identify the requirements of the society in which it is operating business. Hence, considering the business scenario of Unilever, it can be stated that if the higher management wants to achieve or gain the benefits of CSR activities, they need to understand what the society or stakeholders actually want and based on that they need to make investment.

Hence, from the overall discussion, it can be stated that the financial performance of the company can be improved or influenced by the CSR strategies but for that the strategies need to be appropriate. At the same time, the management needs to be more careful while implementing the strategies.

4.4 Summary

This chapter of the study has analyzed the secondary data collected from different existing literature and websites as well as books. The findings in the analysis have indicated that the financial performance of Unilever has not been influenced by their CSR strategies. The reason behind this failure is the inefficiency of the higher management in the context of development and implementation of the CSR strategies. However, the analysis and discussion have confirmed that there is a relationship between corporate social responsibilities and the corporate financial performance of the company and the later can be influenced by the former.

Chapter 5: Conclusion and Recommendations

5.1 Conclusion

The aim of this study was to understand the relationship between corporate social responsibilities and the corporate financial performance of the companies. The investigation in this study has proved that there is a positive relationship between the corporate social responsibilities and the corporate financial performance of the companies. However, this positive relationship depends on the efficiency of the mangers in terms of developing corporate social responsibility strategies. In the literature review of the study, it has been noted that corporate social activities are much beneficial for the companies. There are many companies in the international market, which adopt and perform the CSR strategies in order to improve their brand image and the financial performance standards. At the same time, the literature review of the study has also indicated the fact that there are several constraints that the companies face while performing the CSR activities.

However, during the secondary data analysis, the study has indicated Unilever has failed to enhance its financial performance standards using the corporate social responsibility strategies. During the data analysis, it is observed that the company has adopted several strategies in order to fulfil its corporate responsibilities. However, the higher management of the company could not develop any innovative CSR strategies for the stakeholders and community and the study has indicated this might be one of the reasons for which the company has failed to gain the advantages of CSR. Though from an overall perspective it can be understood that the aim and objectives of the study have been fulfilled, in order to clarify it is important to link the objectives with the findings of the study. The objectives of this study are linked in the following section.

5.2 Objectives linking

Objective 1: To identify the Corporate Social Responsibility activities performed by the companies like, Unilever in the current market scenario

In order to achieve this objective of the study, secondary data analysis has been done during the investigation. The specific corporate social responsibility strategies related information of Unilever has indicated the company has adopted several strategies as the part of CSR. The data analysis has also indicated the company has adopted different CSR strategies for different stakeholders. For example, for the employees, the company has developed holistic career development plan, so that the employees get better opportunities for their career development. At the same time, the data analysis of the study has indicated the company has developed Partner to Win strategy for fulfilling the corporate responsibility of the company towards its suppliers.

For satisfying the needs for CSR towards the investors the company has focused on the business expansion strategy. Therefore, the corporate social responsibility strategies particularly of Unilever have been identified and evaluated. On the other hand, the literature review of the study has indicated the CSR strategies of some other companies like, P&G, Nestle and many others. If the findings of the literature review are compared with the findings in the data analysis, it can be noted that the CSR strategies of Unilever are more like the CSR strategies of P&G. Both the companies have adopted different CSR strategies for different stakeholders. Therefore, it can be stated that the first objective of the study has been fulfilled properly by the investigation in the study.

Objective 2: To identify and evaluate the benefits of CSR activities from the perspective of Corporate Financial Performance of the company

In order to achieve this particular objective of the study, thorough literature review and data analysis have been done. During the literature review, it has been identified that the companies have achieved several benefits with the help of performing CSR activities. In the literature review, it has also been identified that there are many companies which have invested in the CSR in order to improve the financial performance and brand image in the market. At the same time, with the help of the corporate social responsibility activities the companies have ensured their long-term sustainability in the market. On the other hand, the CSR activities have also helped the companies in developing strong bonding with the stakeholders, which is very important for the growth and survival of the company.

During the data analysis, the study has identified that Unilever has earned several benefits through CSR activities. During the data analysis, the study has identified the fact that the higher management of Unilever believes for improving the financial performance the company needs to invest in the CSR strategies or activities. However, at the same time, the study has also indicated the company that is Unilever has failed to gain the benefit of CSR properly in the context of financial performance. According to the analysis, this has mainly happened because of the inefficiency of the higher management in the context of developing CSR strategies. Hence, considering the findings in the literature review and the secondary data analysis, it can be stated the second objective of the study has been achieved successfully.

Objective 3: To understand the way in which the Corporate Financial Performance of the company is affected by the CSR activities of the company

This objective of the study has been fulfilled by the literature review as well as secondary data analysis of the study. In the literature review, it has been identified that corporate financial performance of the companies is sometimes positively and sometimes negatively influenced by the corporate social responsibility activities performance by those companies. In the literature review, it has been indicated that the corporate financial performance of the company is influenced by the CSR because CSR helps the companies creating strong brand image in the market and bonding with the customers and other stakeholders. Due to this people prefer to buy the products and services of the company which performs better CSR. Hence, the corporate financial performance gets improved. At the same time, the literature review has also disclosed the fact that there are some companies which have failed to improve their financial performance by investing much on the CSR activities.

During the data analysis, the study has also indicated that Unilever has failed to improve its financial performance through CSR. It means the findings in the data analysis have supported the fact that has been disclosed in the literature review. At the same time, the data analysis has clearly mentioned that financial performance of the company has not been improved rather it has decreased because of the inefficiency of the higher management in the context of developing corporate social responsibility strategies. It means the way in which CSR can affect the corporate financial performance of a company has been clearly mentioned by the literature review and data analysis of the study. Hence, it can be stated that the third objective has also been achieved successfully during the investigation in the study.

Objective 4: To provide some recommendations that can help the companies utilising the CSR activities in a positive sense for improving the financial performance

Considering the findings in the data analysis and in the literature review of the study, it can be stated that there are several ways through which the companies can use pr utilise CSR in a positive sense in the context of improving the financial performance. In the literature review, it has been indicated that for achieving the benefits of CSR the companies need to understand the needs of the stakeholders or communities in a better way. Different stakeholders and communities have different needs and considering those needs the corporate social responsibility strategies are required to be developed.

On the other hand, during the secondary data analysis of the study, it has been identified that Unilever has failed to gain the benefits of CSR in a proper way because of the inefficiency of the higher management in developing CSR strategies. The management of the company has developed very common strategies for CSR, which cannot be separated from the general business strategies. Hence, this finding is indicating in order to utilise the CSR strategies in positive sense, the higher management of the company needs to develop innovative strategies for CSR so that the company gets attention of the people. This will help the company improving its brand image and revenue. Therefore, considering the findings, it can be stated that the fourth objective of the study has been fulfilled perfectly through the investigation.

5.3 Recommendations

Here, some recommendations have been provided for helping Unilever and other companies in developing better CSR strategies through which they can improve their financial performance. The recommendations are stated below:

  • CSR by considering the social issues – The management of the companies should develop the CSR strategies always by considering the social issues. Corporate social responsibility activities are the best way through which the companies can contribute to the social development. Therefore, it is important for the companies to remove the social issues by adopting the corporate social responsibility strategies. Hence, it must be remembered that the CSR strategies need to be developed based on the social issues.
  • Innovative CSR – The companies like, Unilever or others which are operating at a large scale and have strong brand reputation must concentrate on innovative CSR. As these companies are reputed in the market people expect more from these organizations. Therefore, these organizations need to develop something new as the CSR so that the attention of the stakeholders can be grabbed in a better way, which will help in improving the performance standard of the business.
  • Proper evaluation – At the time of developing the CSR strategies the higher management of the companies need to conduct proper evaluation of the internal and external scenarios of the business. This is very important for developing effective and realistic CSR strategies, which can help in improve the brand image and corporate financial performance of the companies.
  • No fake promise – The companies must not make any fake or artificial promise to the stakeholders for showing that they are doing corporate social responsibility activities. The companies must conduct the CSR as per their capabilities. If the companies have lack of financial strength the CSR can be done at a small scale. The companies must remember that fake or artificial promise can break the trust of the people on the company, which is bad for the future development and sustainability of the company in the long-run.

5.4 Future scope of the study

This study has focused much on the relationship between corporate social responsibilities and corporate financial performance of the companies. The findings in this study will be highly useful to the researchers who will conduct research on the similar area in future. The findings in this study can be used as the existing literature. Data and information can be gathered by the future researchers from this particular study. At the same time, the future researchers can develop new area of study by identifying the gaps in this particular research. It means this study can be a great influence to the future researchers in the context of deriving a new matter of investigation.

Reference list

Alshehhi, A., Nobanee, H. and Khare, N., 2018. The impact of sustainability practices on corporate financial performance: Literature trends and future research potential. Sustainability, 10(2), p.494.

Aybars, A., Ataünal, L. and Gürbüz, A.O., 2019. ESG and Financial Performance: Impact of Environmental, Social, and Governance Issues on Corporate Performance. In Handbook of Research on Managerial Thinking in Global Business Economics (pp. 520-536). IGI Global.

Britannia.co.in. (2019). [online] Available at: http://britannia.co.in/pdfs/statutory_disclosures/Britannia%20Industries%20Limited-%20CSR%20Policy.pdf [Accessed 7 Apr. 2019].

En.coca-colaarabia.com. (2019). Corporate Social Responsibility: it’s in our DNA. [online] En.coca-colaarabia.com. Available at: https://en.coca-colaarabia.com/our-company/corporate-social-responsibility-it-s-in-our-dna [Accessed 7 Apr. 2019].

Gangi, F., Mustilli, M. and Varrone, N., 2019. The impact of corporate social responsibility (CSR) knowledge on corporate financial performance: evidence from the European banking industry. Journal of Knowledge Management, 23(1), pp.110-134.

Graafland, J. and Smid, H., 2019. Decoupling among CSR policies, programs, and impacts: An empirical study. Business & Society, 58(2), pp.231-267.

Hasan, I., Kobeissi, N., Liu, L. and Wang, H., 2018. Corporate social responsibility and firm financial performance: The mediating role of productivity. Journal of Business Ethics, 149(3), pp.671-688.

Hou, T.C.T., 2019. The relationship between corporate social responsibility and sustainable financial performance: firm‐level evidence from Taiwan. Corporate Social Responsibility and Environmental Management, 26(1), pp.19-28.

Jekel, M., Glöckner, A., Fiedler, S., Allstadt Torras, R., Dorrough, A., Mischkowski, D., Franke, N., Goltermann, J. and Miketta, S., 2019. The Impact of Open Science Practices on Research Methodology: A Case Study for Research in Judgment and Decision Making. Open Science 2019, Trier, Germany.

Kim, K.H., Kim, M. and Qian, C., 2018. Effects of corporate social responsibility on corporate financial performance: A competitive-action perspective. Journal of Management, 44(3), pp.1097-1118.

Kim, S., Wagner, S.M. and Colicchia, C., 2019. The Impact of Supplier Sustainability Risk on Shareholder Value. Journal of Supply Chain Management, 55(1), pp.71-87.

Kumar, A., Sinha, A., Arora, A. and Aggarwal, A., 2018. Impact of CSR activities on the financial performance of firms. MUDRA: Journal of Finance and Accounting, 5(1), pp.75-89.

Kumar, R., 2019. Research methodology: A step-by-step guide for beginners. Sage Publications Limited.

Lê, J.K., Smith, A.D., Crook, T.R. and Boyd, B.K., 2019. Why Research Methodology in Strategy and Management Remains as Important as Ever. In Standing on the Shoulders of Giants: Traditions and Innovations in Research Methodology (pp. 1-13). Emerald Publishing Limited.

Ledford, J.R. and Gast, D.L., 2018. Single case research methodology: Applications in special education and behavioral sciences. Routledge.

Lian, Y.M., Wei, C.Y., Wu, J.B. and Tong, A.G., 2019. Analyzing the Relationship between Corporate Social Responsibility and Financial Performance. International Research Journal of Applied Finance, 10(1), pp.43-54.

Lin, W., Ho, J. and Sambasivan, M., 2019. Impact of Corporate Political Activity on the Relationship Between Corporate Social Responsibility and Financial Performance: A Dynamic Panel Data Approach. Sustainability, 11(1), p.60.

Litosseliti, L. ed., 2018. Research methods in linguistics. Bloomsbury Publishing.

Malik, M., Al Mamun, M. and Amin, A., 2018. Peer pressure, CSR spending, and long-term financial performance. Asia-Pacific Journal of Accounting & Economics, pp.1-20.

Malik, M.S. and Kanwal, L., 2018. Impact of corporate social responsibility disclosure on financial performance: case study of listed pharmaceutical firms of Pakistan. Journal of Business Ethics, 150(1), pp.69-78.

Maqbool, S. and Zameer, M.N., 2018. Corporate social responsibility and financial performance: An empirical analysis of Indian banks. Future Business Journal, 4(1), pp.84-93.

Miller, S.R., Eden, L. and Li, D., 2018. CSR Reputation and Firm Performance: A Dynamic Approach. Journal of Business Ethics, pp.1-18.

Nestle.in. (2019). [online] Available at: https://www.nestle.in/investors/documents/policiescodeofconduct/nestl%C3%A9-india-csr-policy-10nov2016.pdf [Accessed 7 Apr. 2019].

Panmore Institute. (2019). Procter & Gamble’s Corporate Social Responsibility & Stakeholders - Panmore Institute. [online] Available at: http://panmore.com/procter-gamble-corporate-social-responsibility-stakeholders [Accessed 7 Apr. 2019].

Panmore Institute. (2019). Unilever’s Corporate Social Responsibility & Stakeholders - Panmore Institute. [online] Available at: http://panmore.com/unilever-corporate-social-responsibility-stakeholders [Accessed 7 Apr. 2019].

Phillips, S., Thai, V.V. and Halim, Z., 2019. Airline Value Chain Capabilities and CSR Performance: The Connection Between CSR Leadership and CSR Culture with CSR Performance, Customer Satisfaction and Financial Performance. The Asian Journal of Shipping and Logistics, 35(1), pp.30-40.

Platonova, E., Asutay, M., Dixon, R. and Mohammad, S., 2018. The impact of corporate social responsibility disclosure on financial performance: Evidence from the GCC Islamic banking sector. Journal of Business Ethics, 151(2), pp.451-471.

Rettab, B. and Mellahi, K., 2019. CSR and Corporate Performance with Special Reference to the Middle East. In Practising CSR in the Middle East (pp. 101-118). Palgrave Macmillan, Cham.

Ruggiero, P. and Cupertino, S., 2018. CSR Strategic Approach, Financial Resources and Corporate Social Performance: The Mediating Effect of Innovation. Sustainability, 10(10), p.3611.

Singh, P.K. and Dangwal, G., 2018. IMPACT OF CSR DISCLOSURE PRACTICES ON THE FIRM'S FINANCIAL PERFORMANCE: A Study of Selected Chemical Manufacturing Companies. NICE Journal of Business, 13(1).

Unilever.com. (2019). [online] Available at: https://www.unilever.com/Images/global-challenges-local-actions_tcm13-5100_tcm244-409749_1_en.pdf [Accessed 11 Apr. 2019].

Wang, Z., Hsieh, T.S. and Sarkis, J., 2018. CSR performance and the readability of CSR reports: Too good to be true?. Corporate Social Responsibility and Environmental Management, 25(1), pp.66-79.

Buy Relationship between corporate social responsibility and financial performance Assignment Answers Online

Talk to our expert to get the help with Relationship between corporate social responsibility and financial performance Assignment to complete your assessment on time and boost your grades now

The main aim/motive of the management assignment help services is to get connect with a greater number of students, and effectively help, and support them in getting completing their assignments the students also get find this a wonderful opportunity where they could effectively learn more about their topics, as the experts also have the best team members with them in which all the members effectively support each other to get complete their diploma assignments. They complete the assessments of the students in an appropriate manner and deliver them back to the students before the due date of the assignment so that the students could timely submit this, and can score higher marks. The experts of the assignment help services at urgenthomework.com are so much skilled, capable, talented, and experienced in their field of programming homework help writing assignments, so, for this, they can effectively write the best economics assignment help services.

Get Online Support for Relationship between corporate social responsibility and financial performance Assignment Assignment Help Online


Resources

  • 24 x 7 Availability.
  • Trained and Certified Experts.
  • Deadline Guaranteed.
  • Plagiarism Free.
  • Privacy Guaranteed.
  • Free download.
  • Online help for all project.
  • Homework Help Services

Testimonials

Urgenthomework helped me with finance homework problems and taught math portion of my course as well. Initially, I used a tutor that taught me math course I felt that as if I was not getting the help I needed. With the help of Urgenthomework, I got precisely where I was weak: Sheryl. Read More

Copyright © 2009-2023 UrgentHomework.com, All right reserved.