The impact of corporate social responsibility on the financial performance of selected small and medium-sized enterprises in District III, Manila

ABSTRACT: The purpose of this study is to determine the impact of corporate social responsibility (CSR) on the financial performance of selected small and medium-sized merchandising enterprises in District III, Manila. This study considered the enterprises type of business and number of employees. This study used random sampling under probability sampling technique which accumulated forty-two (42) respondents, and utilized both qualitative and quantitative kind of research that made this study fall under the descriptive type of research. The data were gathered using survey questionnaires and financial statements acquired from Securities and Exchange Commission (SEC). This study used the four dimension measures of CSR by Sweeney and Coughlan : (1) customer care; (2) environment protection; (3) employee care; and (4) community care. The financial performances of the respondents were measured by the profitability ratios return-on-assets (ROA) and return-on-equity (ROE). The impact was assessed using Pearson Correlation. Based on the gathered data, all the respondents are engaged in merchandising industry and have number of employees ranging from 10 to 199. It was also revealed that respondents engaged themselves to CSR by giving most attention to their customers followed by their employees and environment, and with the least attention to the community. Benchmarking was used to figure out the ideal performance on the given industry using the stated profitability ratios. Findings revealed that thirty three percent (33%) of the respondents were above the ideal financial performance using ROA ratio while sixty two percent (62%) of the respondents were above the ideal financial performance if ROE ration was used. Results of this study showed that CSR has a significant positive impact on the financial performance of the selected small and medium-sized merchandising enterprises using both ROA and ROE ratios. This research concludes that the engagement in CSR affects the financial performance of a company directly proportional; implying a company that is more engaged in CSR has a higher financial performance than a company that is less engaged. The researchers recommended small and medium-sized enterprises (SMEs) to engage themselves in CSR for this study has statistically proven that such engagement has a significant positive impact on the financial performance of a company. Also, CSR activities are encouraged to be implemented well for this can be a strategy for sustainability of the business.

Filipiniana