Effect Of Corporate Social Responsibility On Organizational Profitability: The Case Of Awash Bank S.C West Addis -Ababa District

Abstract

The main purpose of this study was to examine the effect of corporate social responsibility on organizational profitability in the case of Awash bank S.C West Addis Ababa district. To achieve the research objectives, the researcher employed both descriptive and explanatory research designs. The study used both primary and secondary data sources and as well a quantitative research approach was used. Structured questionnaires were used to gather data from the targeted group of the study, and both probability and non-probability sampling technique was employed. Purposive sampling from non-probability and simple random sampling from probability sampling was used. Five Likert scale structured questionnaires were used for data collection. The validity and reliability of the questionnaire were checked by using the pilot test and Cronbach's alpha test, respectively. The study targeted employees of Awash ban West Addis Ababa district. Yamane sample size formula was used to obtain 255 respondents from company employees. Data was collected using a closed ended questionnaire. The collected data were presented and analyzed using the SPSS statistical software package. Data collected were coded and analyzed using both descriptive statistics (frequency, percentage, mean and standard deviation) and inferential statistics (Multiple regression and Pearson correlation) with the help of the Statistical Package for Social Science (SPSS). Philanthropic activity with beta value and p-value of (β=0.565 and P=0.036) and legal activity (β=0.240 and P=0.043) have a strong effect on the profitability while economic activity (β=0.120 and P=0.025) and ethical activity with (β=0.15 and P=0.031) have a moderate effect. The study showed that philanthropic activities, ethical activities, legal activities, and economic activities affect organizational profitability, have a positive relationship, and are statistically significant. Generally, all CSR activities in this study have been taken place in the bank and the bank is practicing them as these have positive effect on its profitability. The bank should consider establishing a separate department for CSR, which is responsible for formulating policy and strategy of CSR and its integration with the daily operations of the bank. As the bank is the leading and the first profitable private bank in the country, it should enhance its reputation and goodwill by achieving CSR more and that will help the company to retain its reputation and attract more customers that leads to better profitability for the bank.